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 • Not doing what you want: But the demands of sustainability mean that your priorities may have to change. The profitable part of the enterprise has to come to the fore, so that: − it now gets the lion’s share of investment − it may occupy the best premises, marketing and promotion − it occupies more of the manager’s time − directors take notice of what it does − it may be managed by its own subsidiary company to make sure its interest are properly looked after. The sources of tension: Is this what all the sweat equity in setting up your enterprise has come to? Some staff and directors may feel uneasy that business has taken over, and there may even be resentment. • People who joined the organisation to work in the successfully trading business will not have the same feelings for the social project which kicked it all off. To them it’s ‘just a job’. Volunteering, social activity and board level management may even appear to them as weaknesses. • To the stalwarts who brought the enterprise this far, their involvement is a commitment, sometimes their whole lives. The new paid workers are undermining the cause, weakening the venture. These are serious challenges which can undo years of dedicated hard work if they are allowed to become divisive. Holding it all together: But the damage can be avoided with sensitive but firm management: • Keeping your soul separate from your pocket: It is perfectly possible in most enterprises to separate business activity from social objectives. There is no need to lose your soul if you keep mammon in another room, and make sure the interests of the organisation’s social heart are properly served – with separate activities and promotions, volunteer or supporter groups, a proper place in the annual report etc. • If they can’t be separated: Sometimes the business and the social purpose cannot be separated – as in the case of the plastics recycling business which provided work for people with learning disabilities and discovered the staff could not work fast enough to fulfil their main contract. This is not an argument for not becoming involved in social enterprise activities, because it is extremely rare for an organisation to abandon its social goals altogether to become a purely trading organisation. But it can raise difficult questions about: − the planning and costing involved in preparing contract bids, and 210
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 − what the social purpose really is – as in the low-paid, low-skill housing estate security contracts delivered by community businesses in Scotland in the 1990s. • Facing up to the divisions: The divisions which start to open up between the pioneers who started the venture and the ‘just-ajob’ workers who will inevitably join later are pretty well universal in social enterprise organisations. So bear in mind that: − it’s not anyone’s fault − it’s survivable − it’s something for everyone to talk about together without recrimination or ill feeling, to share your feelings and clear the air • Preparation and training for business culture: − New trading ventures should invest in training and support for all directors and all paid staff, irrespective of their level of involvement. This will create a better understanding of the business environment and the fact that change is unavoidable if the organisation as a whole is to become viable. In practice this type of training happens very little. − In the end you have to face the fact that business may not suit everybody, but there may be no alternative. As some business managers have been known to say: ‘We have a clear choice between doing exactly what we want today, or still being around next year as and achieving part of it.’ − it’s a sign of growing up, becoming a real business organisation with real staff and real jobs which don’t demand appalling self-imposed sacrifice and dedication – in fact, its something to celebrate as well as mourn. 211
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