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
2: First steps
2.1 Why start trading?
This section untangles the many benefits of running trading activities so that groups can clarify what they are trying to
achieve, and distinguishes some of the things which trading ventures can’t easily achieve.
What trading organisations can’t do
The need for a sense of proportion: Trading is not a panacea.
Since the idea of social enterprise arrived on the political agenda,
we have been confronted with the risks of hype and distorted
visions of its potential benefits. There have been appalling
misrepresentations of the potential of voluntary organisations to
run businesses, and these always need to be refuted to protect
the inexperienced from making damaging mistakes. Although
there are always a few success stories, here are some of the things
community and charity is usually not good at:
• creating sustainable jobs in disadvantaged areas: Third
sector trading rarely creates large numbers of sustainable jobs,
especially in community-based groups in deprived areas. When
lasting jobs are achieved they should be a cause for celebration,
not just a routine tick on a monitoring report. This is because, as
with conventional enterprise in disadvantaged areas, jobs come
and go with grants and market conditions.
• creating well-paid jobs: Work is often low paid, and this
is exactly what we should expect when jobs are created
in marginal activities and in places with limited economic
opportunities.
• replacing grant-funding jobs: Many conventional businesses
have a tough time generating enough income to keep their own
employees in jobs. The idea that modest voluntary organisations
will be able to run businesses which make so much profit that
they can divert cash to provide salaries for community and social
projects is ambitious and unrealistic in the current climate. Yet
this view is sometimes put forward as an argument for trading.
For many voluntary organisations trading is always likely to be an
additional income stream to their other activities.
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