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Aspire Group Ltd

Author: Julie Caulier Grice
Published Date: 13 April 2008

Mark Richardson and Paul Harrod, both recent Oxford University graduates, felt that many homelessness projects failed because they focused on the symptoms, rather than on the root causes of homelessness. A focus on providing full-time employment for homeless people to help them move away from benefit dependency was absolutely central to effectively addressing homelessness.

Richardson and Harrod set up Aspire to produce a not-for-profit fair trade catalogue. Homeless people would leave the catalogue at homes to which they could later return to collect orders. The homeless person was able to work outdoors with little or no supervision, and customers felt they were helping the homeless in a compassionate and constructive manner. Homeless people were guaranteed a wage which was not based on sales but on the hours they worked.

Based on research into public attitudes towards the homeless, and insights from Harrod’s own experience as a door-to-door catalogue salesman, Richardson and Harrod secured a £5,000 grant from the Prince’s Trust, as well as donations from local businesses and residents to start Aspire. Helped by local media interest, initial sales were reasonably strong, and even though it was not profitable, Aspire managed to be self-sustaining. Thirteen months after it was launched, Aspire had attracted 4,000 regular customers, had a turnover of about £150,000, and employed 15 staff. The business began to attract considerable interest from all quarters. Scaling up Towards the end of 1999, Terrance Roslyn Smith, who had previous social enterprise experience behind him, joined the management team of Aspire. Like the founders, he believed that Aspire had to grow if it was to achieve necessary economies of scale. It was agreed that franchising was the quickest and most cost-effective way to do so. In July 2000, an ambitious franchise strategy was drawn up to create 30 outlets by the end of 2003. Harrod’s charismatic personality made it relatively easy to secure the £400,000 needed to fund the expansion. Aspire Group was established in late 2000 to lead the franchise operation.

Harrod said they wanted a ‘decentralised structure’, to enable each social entrepreneur who took on a franchise to take Aspire’s core idea and ‘run with it’. The advantage of this strategy was that the business could be expanded quickly, but significant challenges arose because headquarters had no control when franchises experienced problems. By September 2001, even though the original business had yet to make a profit or undergo a proper evaluation, nine franchises were opened, most of which were embedded within existing charitable organisations. Moreover, although all franchisees had some experience of working with the homeless, only four of the nine had business or social enterprise experience. Optimism remained high and during Harrod’s time as CEO, Aspire established 12 franchises, taking 300 homeless people off the streets as sales reached £1.3 million.

The press was overflowing with praise, and the then Prime Minister Tony Blair called Aspire’s employees an ‘inspiration’. The government started to look at Aspire as a potential model to combat social exclusion and HRH Prince Charles told its founders,”Your track record to date is most impressive”. As one franchisee said “As we set off, it seemed we were sailing into fair weather. Risk analysis didn’t feature very strongly in our discussions or planning. We were told the business model worked, government and funders wanted us to roll out, and sooner or later the economies of scale would make the figures stack up”.

It soon became clear that the narrow range of products in the catalogue attracted a narrow range of customers. The business was also highly seasonal, with the vast majority of sales taking place in the run-up to Christmas. All franchises started to lose money and many began to ask questions of the Aspire Group, even suggesting that they had been misled into thinking that the catalogue was a stand alone, profit-making business. Harrod now acknowledges that whilst recruiting franchisees, Aspire often overplayed the feasibility of the business, thus creating a culture of distrust between franchisees and headquarters.

Another major problem was that the model lacked clear boundaries. For example, when the original model proved unprofitable, franchisees branched out into secondary businesses, such as bicycle repairs, window cleaning and furniture manufacturing. Aspire Group set up a direct-mail business operating independently of the franchises with an even stronger focus on supporting fair-trade producers. As a result of this trend, the ties between franchisor and franchisees became increasingly weaker. Yet another challenge for franchises was the lack of basic skills among homeless and ex-homeless employees, in addition, many employees also struggled with addiction and mental health problems. Franchises were reluctant to lay off staff because of the obvious repercussions for an already vulnerable group of people. Yet, many franchises were forced to do so, significantly lowering morale.

In 2002, a further investment of £250,000 came from a group of individual investors, banks, and social venture capitalists with the condition that the year-round catalogue business be reduced to two four-month seasons surrounding Easter and Christmas. This change forced franchisees to give up one of their primary goals, which was to employ homeless people full-time and year-round. Relationships between Aspire Group and the franchisees became increasingly tense as Aspire Group’s priorities shifted to financial survival, while the franchisees remained committed to their social objectives.

Every franchisee, including the original Aspire Bristol, was losing money and by 2002, franchises in Brighton and Birmingham were closed. Harrod deeply regrets the closure of Aspire Brighton, and admits that he would have replaced the manager had the option existed. However, the lack of centralised control that resulted from Aspire’s franchising approach meant this was not a possibility. In July 2003, Aspire Group faced a cash flow crisis and put payments to creditors on hold. Harrod decided to step down as CEO five months later, and the catalogue business folded in June 2004. In hindsight, Paul Harrod suggests it would have been better to keep the legal, financial and governance structure centralised; Aspire should have operated with a local advisory group with limited authority. He thinks the lack of control when issues arose in local groups caused problems that affected the entire organisation. In addition, he says it was a mistake to take on short-term loan finance from groups such as the London Rebuilding Society, as more ‘patient capital’ would have been more appropriate. Harrod also wishes he had stepped aside earlier and brought in a more experienced CEO. But he acknowledges that handing over control of your business to other people is “easier said than done… when you believe passionately in the cause and working 16-hour days, the fear that another person would not have a similar commitment, or that the project would fail without you, is ever present. Nor would it be likely that the business would have found someone prepared to work for low wages”. Harrod himself did not earn a regular salary for over two and half years.