Commercial income generation: tips for success
On this page we are sharing ideas, tips and suggestions to help you generate commercial income and find the solutions that are right for your organisation.
Why do hospices need commercial income?
In our Future Vision report, we highlighted the importance of hospices maximising and diversifying their income streams to achieve greater sustainability. The cost of living crisis has put hospice finances under increasing pressure, resulting in an even greater need to seek out alternative sources of funding.
Over the last few years, hospices have developed a range of innovative ways to generate commercial income. There is no “one size fits all” approach, but through our discussions with hospices we have identified some key themes for success.
A strategic approach
Plan your income generation strategy over the short, medium and long term. Think about what you want to achieve for your hospice in five, 10 and even 50 years’ time. This might include developing commercial enterprises, purchasing other businesses and making financial investments.
Encourage ideas from all your staff and volunteers, but build a team of people who have the knowledge, skills and experience to take this work forward. This might mean employing people who come from a commercial rather than a hospice background.
Business development process
Develop a clear process to help you determine which projects to pursue. This will ensure a fair, transparent and consistent approach – and help make sure you have assessed each opportunity thoroughly.
Each new opportunity should be screened using set criteria to assess whether it could be appropriate for your hospice. Make sure you document all your findings. If you decide it is worth further investigation, you should carry out market research (including checking to see what other similar services are being developed or offered), check any relevant legislation and map out the project before developing a full business plan.
Write a business case that includes the benefits and risks of each commercial opportunity you want to pursue. Assess each risk and set out how you will overcome challenges.
LOROS Hospice has shared the Business Development Process it uses to assess new opportunities.
“Take time putting a comprehensive business case together and present it to the Board of Trustees…Be transparent - consider the risks of any projects as well as the potential benefits.”
Anna Shutt, Business Development Lead, LOROS
As part of your investigations into a new commercial opportunity, there are some key areas you might want to consider:
Return on investment
It takes time to make a profit and there are likely to be a few years before you see a return on your initial investment (ROI). Consider what length of time you are comfortable with, and what risk this carries.
“Be prepared for 2 or 3 years of investment before you get a return. A service like this is about long-term sustainability rather than an immediate fix."
Gemma Zweck, Commercial Director, St. Helena Hospice
Align with your community, ethos and values
Everything you do should be aligned with your values and charitable objectives.
“You don’t have to be ruthlessly commercial – the main focus of our income generation is to provide care and support”
Mark Hawkins, CEO, Rowcroft Hospice
What are your skills?
Think about what you already do well. What skills and expertise do you already have in your hospice that could be commercialised? For example, some hospices run commercial catering, complementary therapy and home care services alongside the free services they provide to patients, carers and families.
“It can often be easier to start with something you already have an understanding of”
Anna Shutt, Business Development Lead, LOROS
Reputational and financial risk
All the hospices we spoke to have registered separate companies or trading subsidiaries for their commercial activities, to mitigate financial risk.
You should always be transparent about the links between commercial enterprises and your hospice, but consider how much cross-promotion is beneficial. For example, some hospices use specific branding in their cafés because customers prefer them to look and feel different to a hospice charity shop.
Your commercial products and services should be of a high standard that can stand alone. You should not need to rely on the reputation of your hospice to guarantee a loyal customer base.
Working in partnership
Working with other organisations can be a great way to gain the expertise your commercial project needs. For example, hospices have:
- partnered with a local college or university to give work experience to beauty therapy students
- asked a local organisation to sponsor a commercial catering van
- worked with a local builder to make home refurbishments for people who need alterations so they can continue living at home.
Make sure every partnership is right for you in the long term. Think about how you can effectively share your skills with others and what opportunities this could lead to on all sides.
Income generation ideas
Hospices have shared a range of income generation ideas with us, which we’ve pulled together here. Please note that while all these enterprises have been carried out by hospices in the UK, the legal and financial context may have changed since they were developed and we cannot guarantee their commercial success.
Are you doing something different that you’d like to share? Let us know
- Cafés and coffee shops
- Catering services (including vans that can be hired for events)
- Coffee vans
- Homemade meal delivery
- Doggy Daycare
- Domiciliary care
- Funeral services
- Home refurbishment service for people who need modifications in order to continue living at home
- Beauty services
- Body care and home fragrance
- Spa services
- Selling the aromatherapy products made by complementary therapists
- Providing managed services to other hospices and small charities (for example IT, catering services)
- Working with power companies to install electric vehicle (EV) charging points (this helps the company to achieve their target number of EV points in public places, as well as benefiting and attracting hospice visitors and giving the hospice a percentage of income from every charge)
- Assessing and refurbishing properties being left to the hospice as a legacy, with a view to selling on or letting out
- Commercial cleaning companies
- Rental properties (holiday lets or residential)
- Home refurbishments for people who need alterations so they can continue living at home
- Memory bears made using clothing from a loved one who has died
- Repair shops
- Second hand clothing boutiques aimed at a specific audience e.g. wedding dresses, men’s clothing boutique (these may be permanent leases, pop-up shops or online)
- Second hand clothing subscription boxes
- Selling bags of used coffee grounds for people to use on their garden
- Selling upcycled and refurbished furniture (this often involves working in partnership with a local organisation that trains people to carry out the refurbishment)
- Turning donated flowers into home-made confetti