#CATJRF: Taking over the local pool? Get your business plan sorted before taking the plunge!

There’s no doubt taking on the ownership and running of a community asset is a daunting task. If you don’t think it is then you haven’t thought it through properly! On the flip side it can be hugely rewarding and if you plan it right it will be well worth the effort.

There’s no set process for taking on a community asset but one thing that you should definitely do is put together a business plan. Sounds tedious I know but the public body you are taking the asset from will want to know in some detail what your plans are – you can’t just pop in to the Council, sign a document and all of a sudden you’re in charge (or at least you shouldn’t be able to!). So hopefully you’ll see the benefit of a bit of proper planning as you read on…

There are some key things you will need to consider if you embark on the journey towards running the local swimming pool or library – I’ve set out some of the key steps of the journey below. Excuse the business jargon!

Here’s a bit more info on each of the steps:

• Define your vision – You need to be really clear in your mind why you would want to take on this asset and what you want to achieve with it. Is it at risk of closure but still in demand by the community? Is it being under used or poorly used? Is it an important local fixture that the community would support to prevent it from being knocked down etc?

• Involve your stakeholders – Who else should you involve in this project? The key thing is that this needs to be a community asset so getting support from as many people as possible is helpful. Local schools, community groups etc can all play an important role.

• Get your team together- If you start the process – do you have the time and skills to see it through? You’ll need to do a variety of things like financial planning and contract negotiation etc so why not put a team together who have the right mix of skills. In any case it’s always helpful to be able to share the responsibility and work. Also, who is going to run the asset day to day if you take it on – will you need to take on staff?

• Do your market analyses – Who will use the asset? Why is it not fulfilling its potential? Is there another similar asset nearby that people are already using which is why this one is facing closure or underused? If there is then maybe, sad as it may be, it simply isn’t needed…

• Decide your organisation structure and governance – Thinking ahead, how would you organise yourselves to take on and manage the asset? Do you need to set up a company or a co-operative society? It will probably need to transfer to some form of legal entity. Within your new organisation how will you make decisions?

• Do the numbers – The finances are critical. If you got it could you make the numbers add up? Can you generate enough revenue from the asset to sustain it? The last thing you want to do is take on a big liability which ends up just being a massive drain on your own resources and energy. Do you need any additional investment to make it usable (a refurb maybe) and where will this come from? There may be grants that can be applied for – lottery money etc.

If you can think through this list and answer most of the questions positively and you haven’t been scared off… then you are probably in a pretty good position to go for it! Good luck.

Andrew Laird is a Director of Mutual Ventures, a social enterprise which specialises in helping public sector staff and communities take on the running of public services.

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  • claudius

    jeez these asset transfer posts are dying a death. I don’t know who the target audience but it seems the average slugger reader isn’t too concerned about asset transfer.
    Regarding the above and maybe to stimulate debate about something; forget about everything in your post except finances. I look at loads of business plans. The first thing I look at are the numbers and particularly cashflow and debt. From this I go to assumptions etc. the last thing (in reality) is vision and team.

  • Mick Fealty

    Thanks for this claudius… I’ve no doubt we’ll learn from the overall experience… But this is very useful…

    Andrew?

  • Nigel McKinney

    Claudius

    Is the problem with the average slugger reader or the type and quality of information on asset transfer that Mick is putting out?

    To some extent you’re right about going to the numbers first – but it depends on what stage any proposed transfer is at. It’s likely to be the case that community and voluntary organisations looking at asset transfer/development will need development support and assistance to even get to the stage of developing and submitting a business plan. many organisations don’t have access to unrestricted resources or substantial reserves. In such cases the role of independent funders/philanthropic organisations can be critical and groups will need to clearly set out a vision, identify stakeholders and set out a process by which a comprehensive business plan will be developed in order to convince anyone to invest in their idea in the first place. Many plans will not come to fruition as the developed business plans won’t stack up for a variety of reasons. But the process of organisations actually developing plans can be a valuable learning opportunity in itself and the lessons can be applied in the development of the next and better idea.

  • Mick Fealty

    It would be good to hear from others with some experience in trying to set some community venture up…

  • The crucial question for many community organisations is whether the building runs the organisation or the organisation runs the building. In some cases, life revolves around opening the building, security, clearing blocked toilets, repairs, catering etc. You can end up with a very small number of people who are over-stretched and over-stressed.
    (Note of advice from the voice of experience: never buy toilet paper where there is a free draw advertised on the cardboard roll – people will not just tear off all the toilet paper to get at it, they will then dump the paper down the toilet and block it as well).

    Organisations have to be sure that having the building will act as a springboard to allow them to increase their activity and impact. It can and does happen – Charity Bank’s Impact Survey in 2010 showed that volunteer numbers among our clients rose 67%, after they bought, built or acquired buildings.

    Second piece of advice from the voice of experience: I love Victorian swimming baths – I learned to swim in the Iveagh Baths in Dublin, but no-one knows any more where the pipes run and if you get a leak, you are in big trouble!

  • Responding to Claudius’ comment about vision and team, while I would certainly look at the numbers first, governance and capabilities are just as important. Charity Bank and its predecessor organisation have been lending successfully to the sector for 19 years and in our experience, the most common causes of (rare) failures are issues like founder syndrome, boards made up of the great and the good who think their mere presence on the letterhead is enough, poor reporting (including financial reporting) to boards and over-dominant chief executives. Third sector organisations can be very resilient and creative and if they can’t make one business model work, they often find another that will.

  • Thanks for the comment Claudius,

    I’m sure the average Slugger reader is itching to learn more about how they can take on community assets! If not then you may have a point about the relevance of my post. We shall see. I did actually have a nice diagram that was meant to go up too which might have got you a bit more excited.

    As for only really focusing on the finances of a business plan – I think that misses the point of what community asset transfer is all about i.e. how you will use the asset. If I’m taking a business plan seriously, I don’t look at the finances until I understand what the business is trying to achieve (i.e. vision, services etc). Let’s face it, no one is going to produce a business plan that doesn’t claim the numbers add up. Unless you understand the drivers (services, team etc) how can you read and understand the numbers or make judgements on whether or not they are realistic?

    I agree with Nigel’s comment. Any investor (philanthropic or otherwise) will want to see the full plan not just the finances. In reality, philanthropists are often more interested in the vision etc as that’s what will achieve their philanthropic goals.

  • Mick Fealty

    All,

    I think the case of An Droichead illustrates the importance of proper governance (in respect of getting a clear understanding what you do and do not control) *and* getting the numbers right. Now we have the tragedy of a visionary project being cast into grave danger.

    Yet, you have to know what general purpose you want to run the building/grounds/facility for… and have a good idea that it’s not just repeating a market failure. Again, Paul Roberts makes the point that that liability transfer is not on.

    PS,

    I couldn’t fit it in Andrew…

  • claudius

    Sorry guys, maybe I’m being a bit too commercially focused. It’s just that I’ve seen too many plans that tick all the boxes regarding governance, swot, what its going to deliver and how but when I do a bit of risk analysis it falls to pieces. Mick/Andrew – is there a commercial requirement of these schemes or can commercial loss be balanced against social gain?

  • Mick Fealty

    Claudius,

    To be honest, I’m not sure. Andrew might take that one?

    I can say with some certainy that the stand off between An Droichead and the Dept of Education *is* money based. Some of the people I’ve heard speak who have experience are arguing that they will only take on an asset if there’s a viable way of making it pay its way.

    It’s quite shift away from the method used in times of abundance, when client organisations were tethered by grants alone.

  • claudius

    Also, what happens if the goes into administration?
    Who is liable?

  • Sorry for the delay in responding.

    Unless the project has a generous funder who is happy to run at a loss then the numbers do have to add up so the project is at least sustaining. Some investors may even look for a return but that’s down to the individual case. There’s no way of simply saying ‘this is running at a loss but never mind because it’s making a positive social impact.’

    However, an interesting concept to introduce here is the Social Impact bond. There are a few of these in operation that I know of. Essentially a company (private, voluntary or other) take on a contract whereby they aim to solve a particular social problem and get paid based on the savings the state makes from it. E.g. in Peterborough they have a social impact bond with an idependent org which is based around reducing reoffending (which costs the state a huge amount). They have agreed measurement metrics and if they reduce reoffending they get paid a proportion of what they have saved the taxpayer.

    No reason this concept couldn’t be introduced in conjunction with asset transfer. So an element of social good could be introduced but it has to result in real cash.