A guide to third sector trading - WCVA

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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 • the reasons for crisis management: − pressure of work and understaffing − poor time management − lack of time or disregard for proper advance planning − operations which have tight unmissable deadlines − temperament – it suits some people to work this way • results: − poor control, accident-proneness − failure to deal with longstanding or underlying business weaknesses (eg poor staff skills, work flow planning, quality control) − frustrated staff, burn out − (or conversely) gains in efficiency and productivity through working under constant high pressure • preventative measures: − reviews of productivity and working systems; staff consultation − redesigning working systems and procedures − staff and management training. Credit control: This is critical for businesses which give customers time to pay. See section 6.3. Controlling service quality: • The importance of good quality control measures: Maintaining standards can be a major problem for some trading organisation, particularly at the business start-up stage while paid staff are inexperienced, and usually when volunteers are involved. Managers have to be aware that workers may have no concept of what the required quality actually is unless they receive careful and sometimes repeated guidance and training. • The results of failure: − It is extremely difficult to recover lost standards once they start to slip, and even more difficult to recover lost customers after poor service or substandard products have driven them away. − Poor quality can be cripplingly expensive to rectify – a few mistakes can more than wipe out the entire profit on a contract. − If personal social services are involved, poor service can be difficult to put right, and may in rare cases actually cause harm to individuals. − Poor quality in areas such as catering can invoke legal action against both the business and responsible staff. 208
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 • You need to put in place: − clear systems and criteria which specify standards to be achieved, and how tasks should be carried out to achieve the best results − training and information to make everyone aware of legal requirements, external standards and internal policies − staff training on quality control generally, and the precise requirements of their jobs in particular − defined staff responsibilities for monitoring quality and taking action − independent means of assessing the quality of services provided and expected – eg through regular customer or client feedback. Managing business risks: Risk management has traditionally been a low priority for third sector organisation, although it is recommended for financial systems by the Charity Commission. Its value for social enterprise is that an initial review process identifies and helps to alert staff and directors to weaknesses in their systems and activities which need to be addressed or monitored. The approach is based on common sense, but it can help to improve communications between responsible workers, and allows difficulties to be pre-empted by better planning. Ask your accountant or a business advisor for suggestions on how to go about it in your organisation. Dealing with the social enterprise tensions Changing your own priorities – even if you don’t want to: It is sometimes necessary or desirable in organisations involving both grant-dependent social activities and sustainable income generating businesses to give priority to the business activity. This can amount to the downgrading of a social project which was previously the heart and soul of the organisation when it started. And this step can be very difficult. • Doing what you want: When you start developing social enterprises, the activities you are most committed to preserving may not be the ones which earn the most money. They are the projects and services which provide the motivation and focus for the directors, staff, volunteers, partners, supporters and funders. This is probably where the idealism of the organisation resides, its raison d’être, and its formal charitable objects. Plenty of people want to be involved in a financially struggling community newspaper, for instance, but what is the attraction of its sister printing service producing advertising leaflets commercially – other than the profits? 209
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A guide to third sector trading - WCVA

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