The views of our members, partners and other sector representatives.

2023 is the first year where Plunkett’s new 5 year strategy has been embedded in our business plan and will feature across all of our work streams. In order that we achieve our central ambition of growing the rural community-ownership sector by 20% over the next 5 years we made two key commitments in the strategy.

  • Firstly, Plunkett will offer a ‘universal’ support service, making sure that we are offering access to our advice and expertise for established businesses, as well as supporting newer developing projects.
  • Secondly, and in relevance to this blog, we want to be as collaborative as possible and work with a range of partners across the UK to ensure that community businesses are operating in a supportive and informed environment.

To start the year off we have canvassed our members, advisers, partners and other representatives of the community-ownership sector to get their views of the year ahead. In this piece we will explore their anticipated opportunities and challenges for community businesses in rural areas.

In response, we will set out what is Plunkett’s role in supporting the creation of innovative, inclusive and impactful spaces through creating community-owned businesses.

Community businesses are already having to make difficult decisions to safeguard their future amid the current financial turmoil. It was not surprising to see in the ‘predictions’ received that many of our contacts believe that more tough choices will have to be made in 2023. This ‘crisis management’ activity, in the face of the challenges faced, will also need to be managed at a time when the role of these businesses in supporting rural communities has never been more important.

Richard Harries, from the Institute of Community Studies shares this view and commented “the vital role of community businesses in supporting rural communities will be never more needed” when he offered his reflections, also stating that it is currently quite hard to be optimistic for the year ahead. Against a backdrop of an enduring war in Ukraine, global uncertainty in trading markets and domestic inflation Richard also expressed that “government and national funders must re-double their efforts to level up the country, balancing their support for concentrated urban areas with the pressing needs of more dispersed rural communities.”

Plunkett Foundation has long supported calls to effectively ‘rural proof’ government policy, support and funding allocations. This relates to the fact that the needs of those living and working in countryside are often overlooked, or ‘hidden’ by data which does not represent the challenges faced by rural communities. To make sure that our network is supported amidst the challenges we all face, these calls will have greater significance.

Of course it is not just business operators that will suffer as a result of the cost of living crisis. Everyone involved with a community business, be they customers, community shareholders, committee members, volunteers or staff will all have additional pressures on their household budgets.

Tristan Robinson, from Thakeham asked the question “are community-owned businesses able to compete in the wider market, as people’s finances are stretched?” Plunkett’s Community Business Manager, Alison Macklin also made the point that “clearly this is going to be a year where businesses will have to adapt and diversify, in order to survive.”

Undoubtedly there are going to be challenges ahead however a key reason community businesses have, to date, enjoyed an amazing 96% long-term success rate, has been their ability to pivot their services to keep meeting community needs, even in the face of crisis. This course of action often helps to retain a customer base and nurtures the vital community support that is needed to get through harder times.

Karen Evans, Plunkett Community Business panel member and member of Cwmni Cymunedol Cletwr believes that “businesses will need to devise new strategies” to keep meeting community need and that it will be important to “ask the community, don’t presume” in respect of what services to provide. She feels that social events will continue to be a critical activity, to bring local residents together this year. Karen’s advice is that “you need to be part of your community to know what is needed”.

We are already seeing some great examples of this proactive action happening again, with community businesses offering welfare support to residents, ‘pay what you can afford’ lunches and offering warm hubs for the community.

Plunkett’s training hub has already (and will continue to) run a range of webinars and online “forums” to help groups learn from each other’s activities and our adviser network remains available to work on a one-to-one basis to consider the financial implications of diversifying services now.

For newer groups and developing projects, the pressures on household budgets have the potential to derail fundraising efforts, including community share offers which have been so integral to our sector in recent times. This is a concern shared by Tim Coomer from Cooperative and Community Finance, Hannah Morris from Cwmpas and Morven Lyon, Community Shares Scotland. Morven explains “that the discontinuation of Social Investment Tax Relief will make it more difficult to attract investors, particularly those with larger sums of money to invest” however “given the known benefits of community ownership in terms of sustainability and resilience…there is an opportunity to advocate for more sector support.”

Community shares are not only a way of raising significant funds though.

This form of finance has also often been used to foster inclusivity in a project and create wide membership bases for community businesses. Whilst the potential for diminishing returns from community share offers is a concern, it will be more vital than ever that groups looking to create community-owned assets that they continue to involve as many local people as possible. Match funding is clearly going to be vital and funds like the Community Ownership Fund or UKSPF will have greater importance in the year ahead.

The blended finance model including grants, repayable finance and community fundraising will be a really important consideration for all projects this year.

John Dawson, from the Community Shares Unit does however point out that there could actually be an attraction for more groups to use community shares in 2023. Particularly for those community businesses with fixed-term loans who will see their borrowing costs rise significantly if their deals expire this year. While this raises the cost of debt financing, does it make community share financing more appealing? “Rather than relying on the Bank of England, communities effectively set their own interest rates through community shares. They are also the best judge of the riskiness of any investment because they are the ones who do business with it,” suggests John Dawson.

As energy costs rise and income falls, reducing costs and cutting expenditure will be vital to tackle the cost-of-living crisis. We know from our own cost of living analysis, completed last November that 95% per cent of community businesses have been affected by the crisis and believe rising costs are their biggest challenge. Over half are struggling to cover their day to day costs and 16% of businesses say they’re either “unsure” or “not confident” about their business’s future in 2023.

With the Energy Bill Relief Scheme also due to be reduced significantly on 31 March, this is likely to add further pressure to businesses struggling with spiralling costs unless energy bills come down in price.

Sarah Crush from Thakeham predicts that “The energy cost crisis will be a huge issue for community businesses.” The reduction in support from Government means that it is even more important that businesses continue looking at other ways to reduce their operating costs, such as reducing their opening hours. This however will have a knock on effect the services they are able to deliver and potentially reduce their social impact.

The reduction in opening hours may be a necessity for some though, as “the profit margin may not cover the cost of opening when it is so quiet” commented Paul Jennings from the Loxley Community Benefit Society. Paul does however acknowledge that businesses also don’t want to be in a situation where they are closed for significant amounts of time, or on regularly evenings which could impact customer support.

Morven Lyon, Community Shares Scotland warns that “retaining volunteers, managing staff burnout and finding suitable board members could be ongoing challenges for many community businesses this year.” As explained above, with the current crisis impacting everyone, people’s contributions to community businesses could be impacted in the year ahead. Sarah Crush from Thakeham does however point out that there “could be an opportunity to tap into corporate volunteering time as more companies seek to demonstrate their corporate social responsibility credentials.”

Plunkett’s is already in touch with a growing network of corporate partners and have a willing bank of volunteers looking for opportunities to get involved in community action, please do get in touch if this would interest you.

Grant Peisley, Plunkett adviser and Cyfarwyddwr Director believes that many community businesses are already struggling with energy costs but at the same time looking at how they can ‘future proof’ their operations. “The increases in energy prices are making more people consider their energy use and generate their own electricity. More funders are expecting sustainability plans and routes to carbon zero for individual businesses. These two forces will lead to a greater shift in energy efficiency, on-site generation, carbon management practices and consideration of what actions can be stopped to reduce costs and emissions (including waste).”

John Dawson from the Community Shares Unit adds that as more communities are actively exploring the energy efficiency of their buildings and energy supply out of necessity that we need to be using this moment to make the case for mass affordable investment in retrofitting lower carbon solutions into community assets.

Plunkett advocates for the incentivising energy efficiency actions for businesses, and would like to see proactive guidance for groups to pursue this course of action in existing funding programmes like the Community Ownership Fund. Furthermore as John suggests we need to make retro-fit activity affordable, be that through VAT reduction/relief or through a separate funding programme – which could link to the Government’s Net Zero targets too.

Whilst John and Grant’s views look to the future, others like, Paul Jennings from the Loxley Community Benefit Society foresees short-term action as the immediate priority. “As a community pub, we need to have the oven on and the fridges and freezers on whether we have one customer or 50 in that day for food. How can we reduce these costs?”

The situation Paul raises is replicated across many businesses and Plunkett’s membership team have already been working with external agencies to look at how energy audits can help to identify short-term savings. It’s not going to be a course of action that is applicable for everyone, but for some it will make a significant difference to their operating costs. For example as a result of audits, there are community shops switching off their chillers, as it costs more to run them than what the business can make from the products it stocks. It’s worth looking at all running costs to see what changes can be made.

In our experience, rural communities have demonstrated resilience most strongly when they work together to take control of assets and services they value and need. One of our key objectives for 2023 is to extend our reach and build awareness of the community business model and our support for business UK-wide. ‘Growing the sector’ also means uniting the network of rural community businesses to work together and be recognised as a cohesive movement.

Plunkett advisers are working with groups to review cash flow forecasts, revise business plans and looking at all and any efficiencies that can be made in a business’s operation. In some cases, we are supporting community businesses to fundraise, crowdfund, and re-launch community share offers in order to support their very existence.

It is clear that our offer of support will not solve the crisis on its own. We aim to represent our members and the wider community-ownership movement in all our policy and advocacy activity and in response to this crisis it is no different. Plunkett is already working with partners, from across the sector to coordinate our efforts and make the case that community-owned businesses must be supported or risk being closed for good.

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