Tips for young community businesses

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Useful dos and don’ts for community businesses who are starting out.
11 Jun, 2018

Afsheen Kabir Rashid, Co-founder and Director of Repowering London, attended the Powerful Communities: Community Business event recently and gleaned lots of useful dos and don’ts for community businesses who are starting out.

Do know your community. Your ‘community’ are your customers– what are their needs, issues and their ability to pay? This knowledge influences and shapes your business offering, price point and financial model.

Don’t underestimate trustee fatigue. There is a lot of pressure on trustees that can sometimes lead to fatigue and underperformance. Guidance, training and support in understanding their roles and responsibilities can ease their load. Check out this guide on trustees and decision making from the Charity Commission.

Do know the real cost of running your business. As a business, it is important to know the true cost of operations or a product to build resilience in your financial planning. You may be receiving certain raw materials as a donation or at a subsidized rate this may help you reduce the selling price of your product. You need to be aware that the product has a higher cost and the reliance on the donation makes the price sensitive to externalities out of your control.

Don’t rely on one source of income. A reliance on grants and irregular trading can seriously affect your cashflow. Make sure you have lots of different ways of generating income and track what works and what doesn’t. We tend to associate trading activity with a tangible product however a service provision is also a trading activity.

Do use business tools to make informed decisions. Business tools like Twine help you understand your customer better. Twine provides an interactive, quick and easy platform to survey your customer through text messages and apps. This generates valuable data about your customer so that you can tailor your business activity accordingly – thereby maximizing income. You can sign up for a free trial to see if it works for you. This tool applies for businesses in the early stage of development as well as established businesses.

Do consider community shares. Community shares provide businesses with a competitive advantage as the customer is at the heart of the business as a ‘member’ and there is an alignment with the customers’ needs and values. Legal structures that can benefit from community shares include coops and community benefit societies. Community shares could be a good way to raise funding and get local buy-in and ongoing support for your community business. Check out the Community Shares Starter Fund for match-funding up to £6,000.

Don’t rely on a café to make a profit. Those interested in setting up a community cafe need to be aware that it is challenging to run a financially viable café unless integrated with wider activities of the organisation. Check out this success guide to cafes.

Do work with the Local Authority to access data. Very often Local Authorities do not know the maintenance costs of buildings and extracting this data can be extremely time consuming and painstaking. A way around this maybe to have a Non-Disclosure Agreement (NDA) in place to work around compliance and data protection issues. This helps to foster a trusting and collaborative relationship with your partners.

Do connect with other community businesses. You can do this by joining the Community Business Network on Facebook and visiting community businesses near you.

Do get support and advice – through the Bright Ideas Fund, which reopens for applications on 26 June, you can access one-to-one business advice, up to £15,000 start-up funding and opportunities to visit existing community businesses.


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