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© 2005 Virtue Ventures LLC. Licensed under a Creative Commons Attribution-Share Alike 3.0 License

Feasibility Analysis For Social Enterprise

© 2005 Virtue Ventures LLC. Licensed under a Creative Commons Attribution-Share Alike 3.0 License 2

Social Enterprise Timeline

Business PlanFeasibility Implementation

Conduct feasibility analysis of 1-3

business ventures

Pick one social enterprise and write a detailed business plan and

implementation plan

Begin implementation by hiring staff, developing marketing materials, and commencing

operationsGo / No go

decisionGo / No go

decision

2-4 months 3-6 months 3-9 months


What is Feasibility Analysis?

3

Feasibility analysis is assessment of the market opportunity, profitability, and fit with organization for a potential business venture.


Tests these kinds of questions… In-depth screening to determine viability of business

concept: Matches objectives, criteria, values, culture, image? How easy is it to implement? Feasible with given HR capacity (or can be obtained at

reasonable cost)? Feasible with given financial resources (or has access to

required resources)? Compatible with risk profile? Existence of sufficient market size and demand to support

business objectives? Meets revenue requirements? Opportunity for growth and expansion?


Feasibility Purpose

Feasibility analysis informs a Go/No Go decision on a venture opportunity using

market research and internal assessments.


Feasibility Analysis Process Process is dynamic and iterative rather than Process is dynamic and iterative rather than

linear:linear: Define Social Enterprise TeamDefine Social Enterprise Team Define and redefine business idea / conceptDefine and redefine business idea / concept Set Goals for Market ResearchSet Goals for Market Research Define Your CustomersDefine Your Customers Define Your MarketDefine Your Market Define Your CompetitionDefine Your Competition Define Business Model (Operations Structure)Define Business Model (Operations Structure) Assess social impactAssess social impact Conduct Viability/ProfitabilityConduct Viability/Profitability Assess Organizational CapacityAssess Organizational Capacity Assess RisksAssess Risks Assess OpportunitiesAssess Opportunities


Market Research (1) The goal of market research is to clarify potential

business opportunities and to validate or disprove initial assumptions regarding potential business opportunities.

Market research is quantitative and qualitative information about the internal and/or external environment of a potential enterprise.


Market Research (2) Quantitative information includes statistical data,

financial statements, industry projections, etc.

Qualitative information includes interviews, anecdotal evidence, etc.

The external environment includes market size, competitors, target customers, etc.

The internal environment includes organizational capacity, staff buy-in, risk assessments, etc.


Defining Research NeedsMarket research can become an endless process.. The Social Enterprise Team will need to prioritize which areas and questions it will focus on during the feasibility analysis.

The team must also decide on the best type of research method to use:

Primary (first hand) information – in person interviews, secret shopping

Secondary – printed materials, internet, reports, statistics, data.


The Social Enterprise TeamThe Social Enterprise Team

Before a NGO selects a business it should develop a team of people conduct market research & feasibility analyses of best opportunities, including:

A Team Leader (project champion/senior manager) . 2-3 staff members (or volunteers) to conduct research.

People with functional skills:FinancialMarketingProgram/social impact

And:Committed board membersIndustry experts or consultants


Define Idea/Concept Develop a brief description of the

business idea to clarify the concept

Be aware that opportunities can change during the feasibility process.

Continually re-evaluate your opportunities using the market information you gather


Current Knowledge Assessment Assess how much you already know about your

business idea before starting assessment. Answer as many questions in as much detail as

possible in the feasibility studyOR

Fill out “Quick Market Test” tool and score Identify the information gaps

Be specific about where you need additional information and where you have NO information.


Set Goals for Market Research The Social Enterprise Team will need to define

and prioritize the research needs for each venture.

List the 3-6 most important questions to research as you assess the feasibility of your chosen opportunity. Include any “deal-breakers” for the organization.

Be specific about market research (primary or secondary) you chose, some information is more important for the type of venture than others.


Define Your Customers Obtain detailed information on your target customer(s). Remember that you can have several customer levels:

Final Customer (user) Influencers Purchaser Decision-maker

Be specific about every customer segment and develop a separate profile for each.


Understand Your Market Obtain detailed information on the specific

market you will target.

Learn about the dynamics of the industry that you plan to work in.

Tailor your market research to the level of your business opportunity and budget.


Define Your Competition Obtain detailed information on top

competitors.

Know your competitors’ strengths & weaknesses in relation to your own.

What is their market position compared to yours?


Define Business Model Obtain detailed information on how businesses and

the industry are structured.

Business models are often similar across markets. Calling a business in another area can help you learn about this aspect of a business.

Include special design considerations to accommodate needs of clients, to achieve higher social impact or social objectives.


Assess Social Impact Evaluate whether the enterprise meets the organization’s

social objectives, social purpose and criteria.

Assess how the social enterprise will help to accomplish the organization’s mission

Determine social impact created by the enterprise

Assess whether social enterprise design maximizes opportunities to create social impact

Identify how social impact will be quantified and measured; and how the organization will be accountable for results.


Assess Organizational Capacity.

Determine the skills and expertise needed for the enterprise

Assess the physical requirements (space and equipment)

Be realistic about your organization when evaluating a business opportunity.


Estimate Viability/Profitability Estimate ventures income potential by

projecting revenues and expenses.

Clarify assumptions used to develop your financial projections.

Develop worst-case, best-case, and expected-case scenarios can help inform future decision-making processes.

Break-even analysis


Assess Risks Determine the potential organizational risks of

enterprise—i.e. reputation, financial loss, weaken or comprise mission

Determine the potential risks of type of business—i.e. business cycle or barriers

Develop simple contingency plan to address risks

Interview key stakeholders to determine the risks specific to the venture opportunity.


Step 10: Assess OpportunitiesOpportunity 2

Market profitability

Market size

Overall attractiveness to organization

Market factors

Favorable competitive factors

Ease of entry (based on investment required)

Opportunity 3Opportunity 1

Fit with org. skills/expertise

Internal factors

Fit with org.’s equipment/ facilities

Ease of implementation

Fit with org.’s other assets

Market growth

Likely competitive advantage

Rank each category:•High•Medium•Low

Add

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Develop a Work PlanThe work plan is for the Venture Team to track their progress and to hold

individuals accountable throughout the feasibility research process.

• Goal of the Research – What is the purpose of the feasibility research process?

• Research Questions – What feasibility questions are you looking to answer through the research process?

• Research Methodology – What primary and secondary sources will you research to to get answers to the research questions?

• Research Responsibility – Who will be responsible for each research assignment?

• Research Deadlines - What is the deadline for each research assignment?

Things to Include in the Work Plan


Sample Work Plan Catering BusinessGoal: To determine if a catering business represents a sustainable venture for the organization.

Research Question 1: How do customers choose their caterer?

Research Question 2: How big is the local catering market?

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