It’s an opportunity to refine and explain the concept, and to test market reaction. Consult potential customers and funders, and evaluate competitors. Do some preliminary market research, such as a focus group or survey, to gain confidence in and test the value of the concept.
The feasibility analysis is focused on understanding whether your organization could make the enterprise work. This involves considering four key criteria:
- Strategic alignment: Will the enterprise further your mission?
- Market opportunity: Will customers actually purchase your product?
- Operational capabilities: Can you make it happen?
- Financial potential: Can you achieve your sustainability or profitability goals?
Each of the feasibility study questions may require you to use a range of information sources to find answers. Potential sources of information include:
- Interviews with potential customers, social enterprise operators, suppliers, existing staff and clients, industry associations, or funders.
- Visiting similar enterprises to understand how the business works, key success factors, potential pitfalls, staffing requirements, and cost drivers.
- Industry magazines, reports, and business directories.
- Internet research to determine competitive businesses, pricing, and value propositions.
- Site visits. Consider whether the business will be located at your current site or if another location is required. If your business is retail-oriented, take a look around your neighbourhood. This will give you a sense of the potential customers and their buying patterns. Which competitors are nearby? What are they doing right or wrong?
- If you already have a relationship with the target market, the records of complaints, service requests, or anecdotal feedback from employees who deal with customers most frequently may be a goldmine of information.
- An accountant, lawyer, bank representative, or business consultant.
- Small business advisory centres.
Your feasibility study should enable you to make the important decision of whether or not to move forward with the idea. While you and others may be very excited about your idea’s potential, you should prepare yourself for being able to walk away. Keep the following in mind:
- Pursuing this idea will still require a tremendous additional investment of staff and financial resources as you’re at a very early stage in the process.
- Moving forward with this business idea will require involving a broader constituency. You’ll need to build a business reputation with existing and new clients and with funders and possible investors.
- Making the idea a reality will require convincing many other individuals and groups. And that requires that you stay true to your mission and build a credible business case at the same time.
Further details on the feasibility study steps and process are available in chapter four of the Canadian Guide to Social Enterprise, available as a free download fromwww.enterprisingnonprofits.ca.
David LePage is the program manager of Enterprising Non-Profits, enp, a unique collaboration of funders who provide support for social enterprise development. He is also a member of theSocial Enterprise Council of Canada, and the Policy Council for Canadian Community Economic Development (CCEDNet).