A guide to third sector trading - WCVA

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It’s an idea, but is it business? A guide to third sector trading 1: Getting started 2: First steps 3: Business planning 4: Legal and governance 5: Funding and resourcing 6: Financial controls 7: Managing growth 8: Management and governance 9: Social enterprise 10: Sources of support • start up capital • looking ahead to further investment later. Other investment and resource issues: Further information can be found in later sections: • Pursuing sustainability: see Section 5.2 • Funding subsidiary trading companies: see section 5.3 • Using property assets to develop the business: see section 7.3 • Funding for development and expansion: see section 7.2 • Raising money from shares and bonds: see section 5.4 • Taking advantage of tax breaks: see sections 7.5 and 7.6 ‘Sustainability’ or ‘growth’ What do you want your trading to achieve? The way you go about funding third sector trading activities depends on what you want to achieve. This may sound obvious, but there may be fundamental differences between: • ‘sustainability objectives’ – where the primary objective is to improve the prospects for survival of an existing organisation, and • ‘growth or development objectives’ – where the main objective is growth, in financial turnover, the number or range of services and activities, numbers of jobs or some other aspect of the business. Why you need to be clear about your goals: This distinction is rarely made in discussions about third sector trading because it is attractive to say we want both sustainability and growth. But there are good practical reasons why new businesses should be more focused. • Practitioners and support agencies are far from united on the fundamental issues of ‘viability’, ‘sustainability’ and what trading ventures should be trying to achieve. So you need to watch out for inconsistent advice, and be sure that your goals are not at odds with those who are advising you. • Ambitions for long-term expansion can be extremely important. But if you are new to third sector trading it is usually safer to have a plan for developing your business step by step rather than in giant leaps. Making an existing organisation more sustainable is a good place to start, particularly in an uncertain economic climate. 106
It’s an idea, but is it business? A guide to third sector trading 1: Getting started 2: First steps 3: Business planning 4: Legal and governance 5: Funding and resourcing 6: Financial controls 7: Managing growth 8: Management and governance 9: Social enterprise 10: Sources of support • Rapid growth can be rewarding and impressive. But it is not always good business practice – especially if you run into cash flow problems or become over-dependent on a single customer or contract. • If your aims are not clear you could waste time and energy on planning and fundraising which gets you nowhere. • Successful enterprises do not emerge from nowhere. In most cases they grow from modest beginnings and make only slow steady progress at first. If they don’t have strategies for surviving in the early years there will be no experienced organisations in a few years time with the capacity and critical mass to expand into new areas. Planning for sustainability or business development: Table 5.1 shows how the individual starting point and initial objectives of trading organisations are likely to require different strategies for resourcing their activities. It can make a huge difference, for instance, whether trading is based on an existing organisation and whether the main aim is primarily to make current activities more sustainable, or to develop new trading opportunities. 107
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A guide to third sector trading - WCVA

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