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 Planning and start up funding Do you really need grants to get started? Some voluntary organisations take the submissive view that they must have grant help before they undertake anything new. This is not necessarily the best approach for trading because: • small scale pilot trading activities which test possibilities and build expertise and confidence can be started inexpensively – a café in a village hall can start with some second hand crockery, a free course in food hygiene for a group of volunteers plus a bottle of milk and a packet of teabags (and the whole point of trading is that it pays for itself) • a group which would rather write grant bids than roll up its sleeves and have a go at earning some cash may not persuade either potential funders or its own members that it will be able to run a business. Funding for business plans: If you are applying for grants for feasibility studies and business planning your bids will usually need to show that: • the idea is potentially viable • your organisation has the capacity to manage the research process, whether you do this yourselves or employ a consultant • even before the business plan is prepared, there is some prospect that the project would not be prohibitively expensive to launch and would gain necessary approvals • there is a credible organisation to drive the project forward if it proves to be feasible • you are prepared to work in partnership with other interested parties and to deliver results which fit with the existing strategies of public bodies. (In many cases you need to be consulting with and collaborating with others as early as possible in the planning process.) Unsurprisingly, it is much easier for existing charities and community organisations than for newcomers to get funding at this stage. Launching the business: When you start a new trading activity, large or small, you are likely to need finance, and perhaps other help, to prepare for and equip the business and to meet initial operating costs. It is particularly important that you distinguish between these different costs in your fundraising (capital and revenue grants are not usually interchangeable) and while monitoring progress in the critical early days of trading. Here are some of the costs you may incur: 110
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 • business planning consultancy • a building lease (or purchase/mortgage) • redeveloping, upgrading or redecorating premises • capital equipment such as computers and office machines, a vehicle and other equipment specific to your service delivery or production work • the business launch, including recruitment, advertising and any associated promotions or events • project development, management or staffing throughout the planning period up to the launch • staff and management salaries in the post-launch period until income is fully able to cover expenditure, however long this might be (beware – this almost always takes longer and costs more than you expect). Internal resources: Existing organisations may be able to cover many of these costs from their own resources – by diverting staff, involving volunteers, making better use of space and equipment, so that they do not appear as distinct items of expenditure. That’s good news. (But charities must be conscious that this will technically involve an investment of their charitable funds, unless they are using grants they have received specifically for this purpose.) The development may also involve acquiring a building asset from a public body and peppercorn rents, donations of unwanted office equipment and furniture, deals with local businesses etc. So it doesn’t all have to be about raising grants and spending money. Outside sources of project funding: Assuming you have a business plan that demonstrates there is a market for what you want to offer, and there are reasonable estimates of cost, many organisations will want to look for grant funding too. Larger projects and more confident organisations will probably seek loans (see below and section 7.2). Grants for trading are constantly changing and you will need to evaluate each potential source carefully to see whether you might qualify and if it could meet your needs. Listing funders can be misleading. But you might explore sources such as: • funds distributed by the Welsh Assembly Government • the Big Lottery Fund, which may provide funding in Wales for acquiring and developing building assets • charitable trusts which have an interest in sustainable development such as the Coalfields Regeneration Trust • leading funding and support bodies for your particular field of activity, such as the Tourist Board • European Union funds for enterprise development, skills training etc 111
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A guide to third sector trading - WCVA

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