A guide to third sector trading - WCVA

More documents

Recommendations

Info

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 • to pick up warnings of trends in the business so that appropriate action can be planned and appropriate management decisions can be taken in good time. What if the board and manager fail to monitor? • As with everything in business, it can be easy to blame staff if things go wrong. But directors need to be constantly aware that their job is to employ and support senior staff and check that systems are in place to alert them to problems. If an enterprise fails as a result of poor financial management the cause is just as likely to be a weak financial monitoring system as poor business decision-making or individual staff errors. • People who are new to the business world often don’t realise how extraordinarily difficult it can be to control what happens. Rather than feeling that they run the business the business commonly ends up running them. Control is not a guaranteed result of effective monitoring. But it certainly won’t be achieved without it. • If a venture fails because the directors did not keep proper control of its financial affairs they can in some circumstances be held personally liable for the losses, even in a limited company (eg if they trade while insolvent, or if they misuse the funds of a charity). Being involved in regular monitoring is a good sign that directors without professional skills have behaved responsibly. • A business can slump from viability to insolvency in as little as three months. That means it can take as few as two monthly board meetings – while the manager or the treasurer present excuses rather than financial reports – to kill off an enterprise. • Why would anyone do all the work to set up and run a social enterprise, only to turn their back on it when it might need them most? Differences from other voluntary organisations: Financial monitoring is a systematic process of examining information prepared regularly for the purpose. There is little fundamental difference in arrangements for financial monitoring in a business compared with any other well-run voluntary organisation or charity with a busy bank account. So if you have a background of work in the third sector much of it will be extremely familiar. But you should also expect to see some important differences: • you need to be focused on earning money, so the information which is monitored will probably be presented and interpreted differently • unless the business consists entirely of long term contracts with unchanging income and expenditure arrangements, the monitoring must be carried out at least monthly (many charities leave administrators in charge of finance and involve trustees quarterly) 134
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 difficult trading conditions there may be no alternative to weekly or even daily monitoring of progress • some grant makers impose monitoring conditions on the organisations they fund which are more designed to protect their own reputation for financial probity than to instil good practice among grant recipients, and this has led to monitoring being dismissed as frustrating and bureaucratic; in contrast, internal financial monitoring by social enterprises is an absolutely essential part of the operation which is needed to − understand your progress − refine the effectiveness of your systems (such as marketing, distribution credit control etc) − make informed financial decisions at both a policy and an operational level − make swift responses to both new opportunities and potentially damaging problems. Where monitoring fits in: • Day-to-day records: The enterprise will need to find an employee or volunteer to keep the basic financial records of money received, money spent, bills received, etc. (There are sometimes problems with continuity when relying on volunteers, and many projects find it is essential to pay someone.) • Management accounts: Someone will also need to put this raw financial information into a meaningful and understandable format – the balance sheet, income and expenditure accounts, budgets and budget reports. These are collectively known as the ‘management accounts’, because they are necessary for running the business. Creating these reports may be a job for a financial administrator, a senior manager or occasionally a volunteer member of the board with the title ‘treasurer’. • Business management: The Manager and other staff will use this information to: − provide a sense of how the business is performing day-to-day, including individual trading activities, to guide issues such as marketing, quality control 135
Page 1 and 2:
It’s an idea, but is it business?
Page 3 and 4:
Page 5 and 6:
Page 7 and 8:
Page 9 and 10:
Page 11 and 12:
Page 13 and 14:
Page 15 and 16:
Page 17 and 18:
Page 19 and 20:
Page 21 and 22:
Page 23 and 24:
Page 25 and 26:
Page 27 and 28:
Page 29 and 30:
Page 31 and 32:
Page 33 and 34:
Page 35 and 36:
Page 37 and 38:
Page 39 and 40:
Page 41 and 42:
Page 43 and 44:
Page 45 and 46:
Page 47 and 48:
Page 49 and 50:
Page 51 and 52:
Page 53 and 54:
Page 55 and 56:
Page 57 and 58:
Page 59 and 60:
Page 61 and 62:
Page 63 and 64:
Page 65 and 66:
Page 67 and 68:
Page 69 and 70:
Page 71 and 72:
Page 73 and 74:
Page 75 and 76:
Page 77 and 78:
Page 79 and 80:
Page 81 and 82:
Page 83 and 84:
Page 85 and 86: It’s an idea, but is it business?
Page 135: It’s an idea, but is it business?
Page 187 and 188:
Page 189 and 190:
Page 191 and 192:
Page 193 and 194:
Page 195 and 196:
Page 197 and 198:
Page 199 and 200:
Page 201 and 202:
Page 203 and 204:
Page 205 and 206:
Page 207 and 208:
Page 209 and 210:
Page 211 and 212:
Page 213 and 214:
Page 215 and 216:
Page 217 and 218:
Page 219 and 220:
Page 221 and 222:
Page 223 and 224:
Page 225 and 226:
Page 227 and 228:
Page 229 and 230:
Page 231 and 232:
Page 233 and 234:
Page 235 and 236:
Page 237 and 238:
Page 239 and 240:
Page 241 and 242:
Page 243 and 244:
Page 245 and 246:
Page 247 and 248:
Page 249 and 250:
Page 251 and 252:
Page 253 and 254:
Page 255 and 256:
Page 257 and 258:
Page 259 and 260:
Page 261:
show all

A guide to third sector trading - WCVA

Create successful ePaper yourself

Delete template?

Save as template?