Is trading for you?
If you are thinking about developing a trading idea the points
below should helpyoudecide if trading is for you.
Before embarking on trading, organisations must first check
their governing documents to make sure it ispermissable. Both
charity and tax law are extremely complex so no action should be
taken without first seeking independent legal advice. Organisations
can seek to contact WCVA's Helpdesk or the Charity Commission for further advice and
One of the biggest obstacles to overcome in developing a trading
idea is to foster an entrepreneurial culture amongst staff,
management and trustees. There is sometimes a reluctance to adopt
new business practices and this must be managed carefully. There
must be a readiness to embrace new ideas and working practices.
As with any approach todeveloping new ways of workingeffective
planning and management is essential. A thorough planning exercise
must take place to explore all opportunities available and to
identify and manage risk. This applies not only to setting up a
tradingactivitybut also maintaining future success and development.
Effective planning can also help to manage shortfalls and any
decision to cease trading activity before any significant losses
When undertaking any new venture or trading activity it is
inevitable that start-up costs will need to be looked at. How much
start-up finance and type of income is required depends very much
on the nature of the trading activity. For instance, is there a
requirement to purchase land, buildings or equipment or can
existing space be used? However, it is imperative from the outset
that all start-costs are budgeted for to avoid any unexpected
Training and skills
More than often trading requires the need for organisations to
develop new skills, such as marketing, promotion or financial
management. Conducting askillsaudit will determine what skills are
available in-house and what may be needed to ensure the success of
the new trading venture.
Pricing versus cost
There is a real need to ensure that when developing a trading
idea the true cost of the project is realised and all costs can be
recovered.This is concerned with full cost recovery.Care should be
taken to ensure that an organisation should not subsidise trading
activity but seek to cover its costs and if it becomes more
More information: www.fullcostrecovery.org.uk