Social Enterprise Feasibility Analysis

Feasibility Analysis -Is a practical measure of whether or not a social enterprise is doable (viable, implementable, and generates impact). Feasibility studies are precursors to business plans and much less detailed, however, they vet your idea and answer essential questions that inform your decision to go forth and venture! Feasibility is also an important exercise in developing the business concept; 99% of social enterprise concepts change in the course of feasibility.

Instructions:

Your job is to design a realistic and doable social enterprise. This is not a business plan, rather it is a “feasibility study,” which includes a comprehensive description of your social enterprise concept, business model, market environment, revenue model, etc. Your social enterprise must be contextualized in a real location, driven by real markets, real financial needs, and address real social problems, for which you can find factual information and data (assumptions should be tested and substantiated with research and data). Social enterprises that do not demonstrate that they are rooted firmly in reality will be marked down.

The questions below serve as guidelines for your final project. You are not required to answer every question, however, your paper and presentation should address the key questions and themesand reflected in the evaluation criteria(below in bold) and make a case for your social enterprise. The guidelines are intended to inform your thinking about structure and what information you should include in your final paper and presentation.

Social enterprises are complex and in undertaking a project like this one, it is important to capture the hybrid world in which the social enterprise lives. You will need to be vigilant about capturing both commercial and social aspects of the social enterprise in its design. Be mindful of the two-fold nature of your enterprise as you address each section of the pre-feasibility analysis—i.e. customers, markets, industries, competition, business model, opportunities and constraints, etc.

Social enterprise designs will be evaluated according to the following criteria:

Technical Points

  • Addresses compelling / real market failure or social problem
  • Clear strategy for mitigating market failure or social problem (Theory of change)
  • Social enterprise is sound and feasible
  • Market potential
  • Viability of design
  • Potential to create social value and impact

Critical risks and what you plan to do about them

Practical Points

  • Realist / believable
  • Appropriate size/scoped
  • Ability to answer questions (presentation)
  • Presentation quality

Presentation - Each group will have 15 minutes to present and 15minutes to respond to questions.

Good luck!

Pre-Feasibility Guidelines

  1. Background
  2. What is the mission and objectives of the social enterprise?
  3. Who are your clients? Describe.
  4. Who are your stakeholders? Describe.
  1. Market Failure/Social Need or Problem addressed by Social Enterprise
  2. What is the social problem/need or market failure that you will address with a social enterprise?
  3. What is the change you are seeking to create?
  4. How do you propose to achieve this change using social enterprise?

2.3.Social Enterprise Design Criteria

2.1.3.1.Social Criteria:

2.1.1.3.1.1.What specific characteristics/needs of your clients must you consider in the design of your social enterprise? (i.e. flexible work, low skill jobs, skills training/advancement opportunity, labor intensive/non labor intensive)

2.1.2.3.1.2.What specific characteristics/needs of the community and/or the environment must you consider in your design?

2.2.3.2.Business criteria

2.2.1.3.2.1.What is the timeline for implementing your social enterprise?

2.2.2.3.2.2.What are your breakeven requirements?

2.2.3.3.2.3.What are the financial criteria: startup costs, operational subsidies or profit that must be thrown off to parent organization?

2.2.4.3.2.4.What market criteria are needed to increase your chances of enterprise success?

2.3.3.3.Institutional criteria

2.3.1.3.3.1.What criteria must you consider regarding the needs of your stakeholders (public, donors, board, staff, etc.)?

2.4.3.4.What have you identified as “deal breakers” for your social enterprise? Those tradeoffs or compromises that you are not willing to make in the design of your social enterprise?

  1. Social Enterprise Concept
  2. Business description - basic social enterprise concept; include the following in your description:
  3. How will your social enterprise achieve social change and help to solve or mitigate the social problem/need or market failure that you have identified? (This should articulate the enterprise’s general strategy.)
  4. Products and services
  5. What products or services will your social enterprise offer?
  6. What are the benefits of your products/services to your customers?
  7. Target Market
  8. Who are your customers? (Describe: demographic, geographic, psychographic characteristics)
  9. Are your clients or donors customers?
  10. Who is paying, using, influencing, etc (customer levels)?
  11. What are their wants/needs that can be filled by your business?
  12. Are they willing and able to pay for this?
  13. How are your customers segmented (by product/service: primary, secondary, tertiary, etc.)

4.5.Social Enterprise Strategy

4.1.5.1.What is the theory of change? (How the enterprise will achieve its intended social impact objectives) Theory of Change: states strategy; embodies mission and values; articulates intermediate and ultimate results.

4.2.5.2.Sustainability strategy – how will you ensure that your social enterprise will be sustainable?

4.3.5.3.What is your resource strategy? How will you use/employ the five capitals?

4.4.5.4.Social impact strategy? How will your organization achieve its social impact?

4.5.5.5.What operational trade-offs/risks must be managed as a result of your strategies?

5.6.Social and Financial Impact

5.1.6.1.What are the social impact objectives the social enterprise? (state specific/measurable objectives)

5.2.6.2.What are the financial objectives? (state specific/measurable objectives)

5.3.6.3.What are the community impact goals for the social enterprise? (state specific/measurable objectives)

5.4.6.4.What are the environmental impact goals for the social enterprise? (state specific/measurable objectives)

  1. Market Analysis

Note: in preparing the market information section you will need to analyze social markets as well as commercial markets. The degree in which social markets are relevant in the market analysis depends on the level of integration between social programs and business activities in the operating model.

6.1.7.1.What are the market trends and opportunities?

6.1.1.7.1.1.What is the size of the market (number of customers)?

6.1.2.7.1.2.Is the market growing? Shrinking? Is it large enough to support your social enterprise?

6.2.7.2.What changes may occur in the profile of your target customer?

6.2.1.7.2.1.Will these changes impact when or how customers will use the product or their ability to pay for it?

6.3.7.3.What changes do you predict in the strategic environment (legal, economic, regulatory, etc.) that could impact this business? Explain.

6.4.7.4.Are there particular market niches that this enterprise could develop?

  1. Industry Analysis

Note: in preparing the industry analysis section you will need to understand and analyze the social industry in which your enterprise operates as well as commercial one. (i.e. if your enterprise employs homeless men in a janitorial work, you must understand both the homeless social services industry and the janitorial industry).

7.1.8.1.How is this industry controlled and/or regulated?

7.2.8.2.What are the dynamics or characteristics of the industry?

7.3.8.3.What are the typical financial benchmarks for businesses in this industry?

7.4.8.4.What are the social benchmarks for success in this industry?

7.5.8.5.Is this enterprise/social sector subject to legal or industry regulations, licensing, standard, accreditation, certification, etc.?

7.6.8.6.Who are the significant other players (other than competition) and how do they influence this industry?

7.7.8.7.What are the dynamics of the industry—buyers, suppliers, new entrants, competitors?

7.8.8.8.How easy is it for new social enterprise to start in this industry?

7.8.1.8.8.1.What are the barriers?

7.9.8.9.Are there any relationships with key stakeholder groups that businesses in this industry must establish (i.e. unions, government, etc.)?

  1. Competition
  2. Who are the key direct competitors (providing similar services or products)?
  3. Are there many competitors providing this product or service to the same market? Are they increasing or decreasing in number?
  4. How do competitors’ sizes/resources available compare to those of your proposed business?
  5. What advantages do you have over your competitors?
  6. Are there indirect competitors offering similar or substitute products, or that could easily become direct competitors?
  1. The Social Enterprise Business Model
  2. Describe the basic operational model of your social enterprise.
  3. What is the value proposition?
  4. How is value delivered? What is the structure of the value chain?
  5. How can we deliver value at appropriate cost?
  6. Special needs or considerations to deliver products and services client/customer segments?
  7. What are the organization strongest capabilities and strategic assets?
  8. Who are the partners/alliances? How are these relationships structured?
  9. How much will it cost? How will costs be broken down?
  10. Benefits/returns to stakeholders? How quantified?
  11. How do we cover our costs/meet financial objectives to do this business?
  12. Who are the strategic partners and how will you work with them?
  1. Operational Requirements
  2. What are the day-to-day operating requirements of this enterprise?
  3. Are there technology/systems, production methods, special equipment or facilities, or technical requirements associated with this enterprise?
  4. Can required technology, equipment etc. be obtained at reasonable cost?
  5. What, if any, liability issues are associated with this enterprise?
  6. What are the facilities requirements for this social enterprise? Can it be purchased at a reasonable cost?
  1. Management Requirements
  2. What would the management structure of the business be?
  3. What skills/experience / credentials do you need on management team?
  4. Will you be required to purchase or hire outside expertise?
  5. Is there a sufficient pool of available people who have the necessary management skills and experience (will recruiting appropriate management be difficult)?
  6. Can people with the required skills, experience and expertise be obtained at reasonable cost?
  7. What are the staffing requirements for running this business (number of staff need, functions, skill level, qualifications, etc.)
  1. Financial requirements
  2. How much startup capital do you need?
  3. Do you have capital reserves you can use for startup or capital investment?
  4. What is your estimated break-even revenue for this enterprise (use specific break-even formula to derive this answer)? How long would it take you to reach this level of revenue? How long will we have to cover monthly losses, and what will our total investment in covering losses be?
  5. Is the cost of goods used in production high? What are gross margins in this industry?
  6. Does the enterprise involve any unusual overhead costs?
  7. Does the organization have access to adequate capital to cover the enterprise’s financial requirements (start up, working capital, new equipment, salaries, etc.)?
  8. Do you have access to addition outside financing for the venture?
  9. Is it possible to obtain low interest loans or program related investments for your enterprise?
  10. Are there other organizations you could cooperate with to share the financial
    risk of the enterprise?
  11. What are the financial benefits and tradeoffs of this enterprise on the parent organization?
  1. Critical Risks and Opportunities
  2. Are there any unusual risks associated with this enterprise?
  3. What are the opportunities that this enterprise would leverage?
  4. Are there any organizational issues that running this enterprise could raise?
  5. List the “red flags” in this enterprise (business and social): threats or weaknesses that could limit your success in starting or maintaining it?
  6. What are the strengths that are particular to this enterprise?

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Social Enterprise Design Final Project Guidelines