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
− making direct contact with support agencies
− making preliminary checks on financial institutions.
• Now do the analysis. Weigh it all up by considering:
− what is still confusing and incomprehensible, and what
questions do you still need to answer?
− what are the main practical options available to you? do you
fully understand them?
− what seem to be the most reliable sources of information?
• Work with your advisors: You need the patience, attention,
time and honesty of the people who are advising you. They are
more likely to give you that if you have an open relationship,
with mutual trust and respect. That means taking their advice
seriously. If you ignore your advisors, they will probably ignore
you in future. So if you don’t want to take their advice, explain
why it won’t work.
So where will investment funding come from?
Considering the wider possibilities: Don’t let your horizons
be restricted by a narrow choice between grants and loans.
The following list is not exhaustive, but it gives a flavour of the
wider possibilities:
Grants: Grants don’t have to be bad for you if you are not going
to be wholly dependent on them and if they help to release the
potential of a dynamic and innovative enterprise. If you talk to the
right funders you will find that they will understand what you are
trying to do and want to help without getting in your way.
Earned income: This is the way many businesses grow. Letting
property, for instance, can generate significant income to reinvest
in new trading activities if there are no loan repayments to
make and there is a market for the accommodation. Enterprises
with a range of different sources of earned income (commercial
contracts, fees and charges for services etc) may find themselves
with surpluses provided they are not also struggling to fund an
expensive core of managers and administrators. But there can be
major problems:
• using profits to fund an expansion can involve a lot of painful
‘sweat equity’ in the form of long unpaid staff hours or
voluntary activity
• using the profits on an existing trading activity to fund the start
of another business could undermine the long-term health of
the venture which is producing the wealth: it’s obviously better
if a successful enterprise invests in its own expansion
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