I set up Safeguarding Children Services in 2005, with my business partner Elaine Allison, to provide help for children who have been abused or who are at risk. We offer day services and from next summer we will be providing a special residential unit for abused children.

As a small grassroots charity, getting funding has been a real struggle. In the three years we have been going, we have been turned down for more than 50 grant applications. There is nothing wrong with the bids we write, it is simply because we are small and cannot compete with the large, established national players, which have dedicated fundraising departments.

We managed to get two contracts, one with a local authority to provide advocacy for looked-after children and one with a Primary Care Trust to provide non-psychiatric services for young people who self harm. But it was not enough — we felt we needed to take control of our income and our destiny as an organisation or it was doubtful whether we would survive.

I went to a seminar at which Liam Black, of the Fifteen Foundation, which supports social enterprises, was speaking. It was really inspiring. He said that charities needed to be businesses, and that they could no longer rely on getting grants without proving first that they were successful.

Initially, the idea of being a business stuck in our throats. It seemed to be opposed to our ethics and felt like we were making profit out of young people's misery.

Then we started selling places on a BTEC course in peer education for marginalised young people. Nobody would fund the whole course, which cost about £30,000, but local authorities were happy to buy places at £1,000 a time. It showed us that being a social business could work as a model.

Our big aim was to open a residential therapeutic unit to offer expert care for children who had been abused. Local authorities have a statutory obligation to fund places for looked-after children. We charge the same as private children's home providers, but we use only qualified professionals, which sets us apart.

We could not do this as a charity — it required too much money to start up — so we decided to run it as a social enterprise and recycle our profits back into the charity to fund other services.

We applied to Futurebuilders, a government fund that lends to charities, and within a week they told us that they wanted to take it forward. They gave us a combined loan and grant of more than £1 million, which we will repay over 25 years.

Becoming a business has been liberating. Once we got our heads around what a social enterprise is, we realised that our profits could really achieve something.

We now do not have to worry about who might not fund us, based on the work we do. If we think that a service is needed, that's what we'll provide. The decision rests with us and our board of trustees. Best of all, we are sustainable.

The residential unit opens in May 2009 and within a year we should be able to fund at least half the other services through the residential unit. We will still keep tendering for contracts, but we know that if necessary we can keep going without them.

Jaci Quennell is service director of Safeguarding Children Services, www.safeguardchildrennw.org.uk

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