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
2.7 A practical guide to selecting business ideas
A community-based training organisation in a semi-rural area wanted to develop business activities to create jobs and
work opportunities for their trainees, and they had four cherished trading ideas which they hoped to pursue. They
asked a support agency for funding, but some quick calculations showed that a launderette and a transport business
were very unlikely to be viable. Though disappointed, the group concentrated on the remaining two possibilities, and
launched them after carrying out feasibility studies. Their catering and child care businesses ran for almost 20 years.
Their judgement in picking two sound prospects from a longer list which included duds was undoubtedly a factor in
their success – though the funder’s advice clearly helped.
Overview:
This chapter describes a process for selecting business ideas from
a list of possibilities, which is well suited to the third sector.
Is this really the way to start a business? Don’t worry that the
following approach may be considered hopelessly unbusinesslike
by more single-minded private enterprises. Conventional
businesses are more likely to start because people have stumbled
on one good idea, or they want to set up independently in
the same business as their present employers. Community
organisations and charities need a different approach because
their needs are quite different.
• They mostly start trading because they want or need to
generate income, in any way which is appropriate; so they may
have several options to choose from.
• They work in areas and in activities where profit margins are
narrow (because their communities are deprived or their clients
and users are vulnerable or disadvantaged); so they need to weigh
up carefully which, if any, possible enterprise is sustainable.
• They are run by individuals whose motivations are enormously
varied (securing grants, altruistic aspirations, making better use
of existing skills or facilities, pursuing personal interests etc) and
may not be business orientated; so they need to be as objective
as possible.
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