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
Avoiding responsibility: Many directors (and some managers)
believe that it is enough to delegate full authority to a competent
and trusted paid employee to manage the business on the board’s
behalf, and advise directors on all the important decisions. But
the directors – or at least some of them – also need to watch and
understand the finances in order to:
• evaluate the advice which they receive from staff and other
professionals and have different perspectives available for taking
sound decisions
• avoid placing too much responsibility in one place, and
overburdening or isolating individual employees
• provide supervision, identify skill gaps and training needs
• provide continuity in the event of staff absence or resignation
• offer support and guidance if things go wrong
• detect dishonesty and reduce the possibility of suspicion about
dishonesty.
Undermining the business cause: Some directors, while well
intentioned, can have a undermining effect on their colleagues if
they personally have difficulty in making the transition from grantfunded
community group to social enterprise.
• These are the ones still arguing for a jumble sale or a Big Lottery
bid to boost poor trading figures, rather than tackling the
causes of the problem. Conventional fundraising probably has
its place, but not at the expense of sound financial management
of trading activities.
• If your directors have this tendency to lose the financial
monitoring plot, they need to be exposed to training in basic
business management. If they still cannot adapt they will
probably be more helpful monitoring the delivery of services
than finances.
Obscurity: Don’t give ground to accountants and other
professionals who use language you don’t understand. If they
are being paid to provide help they need to learn about social
enterprise activity and to speak to directors and staff in an
accessible language without jargon or obscure technical terms.
Excuses for monitoring failures: Excuses for failing to carry out
financial monitoring are usually transparent and easy to expose:
• ‘We don’t know how’ – indicates an urgent training issue,
• ‘We didn’t know it was necessary’ – a sign of faulty business
planning or poor communications; make sure that financial
monitoring is immediately written into the organisation’s
policies and procedures
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