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 • Authority for management: Managers need budgets to give them authority. Once directors have approved the forecasts, the chief executive officer should be free to implement the spending decisions that it identifies (assuming that actual progress is more or less in line with the budget). What did we know when we wrote the Business Plan? • If the only budget you’ve got is the work of fiction in your Business Plan which you used to impress funders, it almost certainly needs to be updated as soon as possible. • Perhaps you think it’s cheating to rewrite your financial forecasts whenever they prove to be wrong? But budget projections are not intended to be a test of your fortune telling abilities, even if it feels like that when you write them. • Any budget model which presents a picture of the development of your business is going to be useful to some extent. Then as you produce more versions each one will benefit from the feedback of your practical experience, and grow gradually closer to the way your business actually works – giving you more and more control over it. Refining the forecasts: • When you compare your actual income and expenditure, heading by heading, against your budget projection you will start to see what works and what does not. This is crucially important for monitoring sales income. • It can be extremely useful to introduce refinements, by breaking income into different types of sales and reporting on each separately. If you run a catering service, for instance, you need to have separately itemised totals for daytime cafe takings, for sales from your sandwich round and for catering at functions and events. This will tell you both profitability of each activity and may provide feedback on your marketing strategies. • You can also refine your expenditure forecasts in the light of experience and make them more detailed. But don’t forget the downside: the more information you provide, the greater the risk that directors will be distracted by less relevant details and miss the broad brush development of their businesses. Budget reports: A budget report tracks actual income and expenditure against earlier forecast, and can be a helpful measure of progress. Many non-trading third sector organisations use them too. 160
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 • When to use them: Budget monitoring is useful in the following circumstances: − in the early days of trading when the manager and directors need to know how close their business plan forecasts are to trading realities, so they can allow for timely adjustments to plans − whenever finance forecasting can be carried out reasonably reliably – eg when there are long term contracts and other stable trading conditions − when the financial situation is particularly tight: at these times regular reports against budget forecasts are usually essential, and managers should monitor them weekly or even daily at times of crisis (this is not optional good practice: anyone who has been through a financial crisis in their business will confirm that this level of monitoring is indispensible). • How much information? − the current period: A forecast for the current month or quarter is usually informative when set alongside the actual income and expenditure for the same period. − year to date: Totals so far during the financial year - both actual and forecast - give a more balanced picture than monthly totals alone, and are well worth preparing and circulating (though it is tricky to fully automate the monthly updating on spreadsheet-based systems) − month-by-month budget reports: It is possible to bring together all the monthly reports so far the current year, and include forecasts for the full year on a single sheet – and this may be useful for the detailed discussions of a finance subcommittee. But it is rarely useful for a full board meeting to have so much information in front of it. (One way to draw attention to just the current period is to use a coloured highlight or shading. But there is still a risk of producing information overload for directors.) − ‘same period last year’: Seasonal businesses in particular can benefit from reports which contain less budget information, but include a column or columns for comparable income and expenditure details for the same period last year and/ or several previous years. This can highlight the growth or decline of different trading activities and focus attention on advertising and promotion issues. 161
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:
Page 87 and 88:
Page 89 and 90:
Page 91 and 92:
Page 93 and 94:
Page 95 and 96:
Page 97 and 98:
Page 99 and 100:
Page 101 and 102:
Page 103 and 104:
Page 105 and 106:
Page 107 and 108:
Page 109 and 110:
Page 111 and 112: It’s an idea, but is it business?
Page 161: It’s an idea, but is it business?
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?