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
• They are operating over a wider geographical area, because they
have picked up contracts which might have previously gone to
smaller organisations, or because they have persuaded councils
and others that they are competent to do work which was once
carried out by public sector bodies or private businesses.
• The ratio of grant funding to earned income has significantly
reduced.
• They own or have long-term leases on property which makes
them more secure.
• They work in partnership with public sector bodies, and are
treated with greater respect (though rarely as equals).
• Their expertise is recognised by others, so they are sources
of advice and support to other voluntary organisations
(often formally as organisations which support and promote
community development or social enterprise development), and
they may sell their staff skills through consultancy work.
• They arrive in their mature, independent, self-supporting form
through a mixture of skill, hard work and blind chance helped
by the willingness of directors and staff to be flexible and take
measured risks.
How growth points work: It is not particularly surprising that
successful social enterprise organisations grow in this way. But it
has taken government and other parts of the third sector to wake
up to the significance of cultivating their success.
• Growth points are not like old-style community businesses:
Successful social enterprise growth points contrast vividly with
the stand-alone community business model with just one or
two key trading activities which developed in Scotland and in
isolated pockets elsewhere in the 1980s and 1990s. Voluntary
organisations are not good at replicating the single-mindedness
of conventional business.
• Growth is based on a mix of funding and a range of activities:
− if one activity fails it can disappear without affecting the
stability of the whole organisation, so they become more
resilient over time
− third sector enterprises often choose to subsidise their lossmaking
activities while they are getting on their feet.
• They extend into new markets wherever they can: As in the
case of dynamic conventional businesses,
− economies of scale make them more efficient
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