Commercial income generation: tips for success

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.

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.

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.

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.

Align with your community, ethos and values

Everything you do should be aligned with your values and charitable objectives.

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.

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.

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