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
• Grants are available... Special grants schemes are sometimes
introduced to encourage people to set up particular types of
service. But it can take a wizard to turn a temporary financial
cushion into an effective investment on which to build a
permanent enterprise. In many cases there is no realistic
business prospect, no matter how much people wish there
could be – as funding for community transport or after school
clubs have often shown in the past.
We think it’s viable, therefore it is: The most dangerous delusion
is the QED approach to developing a business.
• Almost anyone who comes up with a business idea to which
they are totally committed can prove that it is definitely going to
be viable – to their own personal satisfaction, at least.
• Even when its disastrous fallibility is repeatedly pointed out,
they will brush objections away as minor blemishes in an
otherwise perfect idea. This remarkable human talent, which is
closely allied to being able to prove that black is white, is utterly
lethal for business planning.
• Left to their own devices people using the QED approach will
also demonstrate that the business will be easy to run and it
doesn’t really need a business plan. They must be stopped (or at
least politely dissuaded) at all costs.
Do you want to make money?
Financial motivation: Third sector trading organisations don’t
necessarily have to be motivated by the idea of getting rich. But
your business must be led by at least one person who is keen to make
money. Their impulse will perhaps be creativity or power or greed,
and they will always be weighing up the financial consequences of
their actions – new orders won, expenditure incurred, investments
made etc. Without this drive it is much more difficult to be
successful.
Management, making money and morality: Not everyone
involved will share this motivation. So what is the role of those of
you who are motivated more by the prospects of social benefit
than the opportunity to accumulate wealth for the business?
• When your business is established you will need directors who
can ensure that it is run within the law, and if the business is
part of a charity there will be additional constraints; so you are
not unleashing a free-for-all.
• Directors also need to ensure that the business is run ‘morally’,
ie honestly and fairly, and that it conforms to the standards
which the company lays down.
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