A guide to third sector trading - WCVA

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
• In conventional businesses, stand-alone ‘viability’ is widely
regarded as an essential characteristic (though some people
argue that everyone is equally keen for grant support if they can
get it, no matter what sort of business they are operating).
Building a business with multiple income sources: In contrast
with conventional businesses, third sector trading very frequently
starts from a completely different premise. Plans for sound new
trading activities can be built on a glorious multiplicity of income
types and sources, including long- and short-term grants for
capital and revenue, sponsorship, service level agreements, service
contracts, consultancies, rents, user fees, ticket sales, membership
fees, and direct sales. Some even aspire to receive bequests in
wills. This variety is one reason why the conventional business
world has so much difficulty understanding how third sector
trading can actually work.
When survival is the starting point: Ventures which are built on a
base of charitable or community activities rarely find it easy to get
established. Success, in the early years at least, may not amount to
much more than simply surviving. To be blunt, this means:
• recognising that sustainability is not an option or a bonus: it
is a critical goal, and you will need to be tough and resilient to
get there
• planning ahead to make sure that you are aware of what might
go wrong and you are not knocked off course if business
activities don’t all pan out the way you hoped
• taking the initiative and actively cultivating the conditions in
which you are most likely to achieve it.
A ‘sustainable business’ model: Much of what you have to do in
practice to become sustainable sounds like a rather desperate effort
to rearrange seats on the deck of the Titanic to improve the view as
the ship goes down. But there is a sound business purpose to this
which is often overlooked when people talk vaguely about ‘increasing
earned income’ and ‘reducing grant dependency’. You may need to
aim for an entirely new business model for your organisation. Here
are some of the typical before-and-after features which illustrate the
type of transformation which might be expected:
• Vulnerable, non-sustainable projects and enterprises tend to be
dependent on:
− a small number of large grants, or a small number of large
contracts, or both
− a cherished key activity, the ‘heart’ of the organisation, which
is probably grant funded and may be a social project with
limited income-generating potential
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