Five top tips for charities looking to develop their business arms

Following the news that 92% of charities want to start trading, here are some ideas for voluntary organisations to consider when embracing social enterprise

On reading this week that 92% of charities want to start trading, my immediate response was to argue that where there may well be a high level of will, the way still poses some problems. This response is based partly on experience from a programme of work I have just finished leading at the National Council for Voluntary Youth Services (NCVYS) on behalf of the Catalyst consortium. Working with a variety of voluntary sector organisations to help them start and scale up their enterprise activities, we found many lacked the skills as well as the capital to even start trading. In addition, for those looking to their traditional commissioners to buy their services, there was still a huge knowledge and skills deficit, putting market expansion on a precarious and bumpy path.

On both sides however, the biggest hurdle was overwhelmingly the culture shift needed to get both public and voluntary sectors thinking that is really is OK to approach the “business activities” concept – well, just like a business.

So if that sounds familiar, you may want to read on for my five top tips on how to give your social enterprise startup a fighting chance.

1. Do what you know

Success is much more likely if you trade on existing skills rather than trying something completely new. There is no point having a great idea if you are not able to action it. Chances are that you will have to learn new business skills as it is; if you add learning to juggle fireballs to the mix, it will be too much. It is highly likely that you are already really good at something, so be realistic.

2. Identify who you will trade with

Take some time to identify what you can trade, how you trade it and to whom, before you even begin to look at what social issue needs addressing. You are much more likely to be successful, or at the very least self-sustaining, if you think about the business case first. Again, be realistic: do you have the evidence that there is a market for your products and/or services and are you confident you will be able to reach it? Have you really addressed why your potential customers will buy from you and not someone else?

3. How will you measure impact?

One of your answers to that question could feasibly be: your impact. You will certainly need to address the social issue at some point. This in addition to the fact that if you need a financial kick-start (highly likely), then you will need some facts and figures as well as a good story. Look at something like the Young Foundation’s publcaition Noticing the Change – A Framework of Outcomes for Young People in Practice and notice how important the theory of change is to the process of demonstrating impact. You will need to build this process into the very heart of your business if you want it to be truly useful to society (and it will make collating those facts and figures a lot easier).

4. Business modelling

The Young Foundation again do a great version of the business model canvas for social entrepreneurs, but if you are still in the idea phase and not ready for their Accelerator programme yet, you would be very wise to make a start either with the Business Model Generation book or the even less expensive related website. It is an absolute must for anyone wanting to get that idea off the ground, enabling you to focus in all the right places thanks to its practical exercises for the impatient, and varied examples of success.

5. Leave legal structure until last

Forget about legal structure until you have been through that modelling process and have considered all the possibilities properly. You may even need to pilot your idea before you can put this in stone, as the development, the actual “doing”, will determine what works best. When you are almost clear, invest in some independent legal and financial advice; it is worth remembering though, that you can always work a social mission into your constitution, whatever the structure.

This is not an exhaustive list and does not guarantee success. However, experience in both the commercial and social sectors, has led me to believe wholeheartedly, that “business” and “social” do not have to be mutually exclusive.

Beth Parker is a former director of service development at the National Council for Voluntary Youth Services and has since founded a collective of social initiatives and businesses under the banner Bonsai Bison

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