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
• If you plan to employ an outside consultant to write you a
business plan, you will save a lot of time and money by being
certain that you have an idea which is worth planning for.
• Even more important, doing this ad hoc evaluation yourselves
(rather than passing the job straight to a business planner) will
force you to think about what is actually involved in running the
business. No matter how little or much you know, how accurate
or inaccurate your estimates turn out to be, you will learn more
each time you refine the budget.
Estimating income: Devise a simple way of assessing your earning
capacity. The details will vary, depending on the business, but this
gives an idea:
• How much on average can you reasonably charge per sale or
for each operation to provide your service? (It helps if you know
what other people charge for similar services.)
• How many customers can you reasonably expect per day/per
week/per month once you have properly got started?
• How many complete weeks per year (or hours per week)
will your business actually be working at full capacity, ie
after deducting all the time lost to staff holidays, sickness,
maintenance, waiting around etc?
• Now using a simple formula, work out how much you might
earn in a full year if the business worked at full capacity; this is:
your average charges per sale multiplied by the number of sales
per week, multiplied by the actual number of full working weeks
per year.
Estimating expenditure: Now write down the rough cost of
everything you can think of which you will have to spend money
on to run your business in the course of a full year:
• How many staff will you need to achieve the income calculated
above? if you can’t calculate it make a guess (bear in mind that
the total number of clients/widgets you can process/make/
install/repair/dispatch will be limited in particular by the physical
capacity of your staff, the equipment they use, the premises etc).
• How much management and administration staff time will
you need?
• How much roughly will you pay each staff grade? So how much,
roughly, will your total wage bill be? Don’t forget to add about
11% to cover National Insurance contributions and more if you
plan to make a staff pension contribution.
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