Is trading for you?

If you are thinking about developing a trading idea the points below should helpyoudecide if trading is for you. 


Legal issues

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 support.


Organisational culture

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.


Planning

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 are made.


Finance

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 surprises.


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 successful, self-financing.

More information: www.fullcostrecovery.org.uk