A B U S I N E S S P L A N N I N G G U I D E TO D E V E LO P I N G A S O C I A L E N T E R P R I S E : T E S T I N G YO U R I D E A
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Using the research methods above, consider your position in relation to the
following:
The Market Ask yourself, how will you reach your customers? How much will they
be willing to pay for your goods or services? How much will it cost to market to them?
You will need to prove that a market exists for your business idea. Start with an
estimate of the likely demand for your product or service. Identify any competitors
and, if possible, try to find out about buying patterns for the specific product or
service you have in mind.
Competition is a double-edged sword. A competitive marketplace indicates that
demand exists for your product or service but it also means you will have to try
harder and be better in order to take business away from your competitors. A direct
competitor is someone who is selling the same product or service as you. Indirect
competition refers to all of the other ways in which customers might choose to spend
their money. Try to identify your competitors.
Operations What resources would you require to run the business? Consider
overheads areas such as staffing, skills, training the workforce, marketing costs,
equipment, etc. as well as the cost of any raw materials.
Finance How will you fund development? How will you pay for the day to day
running of the social enterprise? It may be that you require a mix of funding. If you do
require some non-commercial income to cover the costs of the social enterprise
where will this come from? Will you access development finance? How much do you
need? How much will it cost to borrow? It might be useful to talk to a bank at this
stage to see if they would consider providing loan
finance for your venture.
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How do you test whether you have a good idea?
You will need to determine whether or not there is a market for your social enterprise. You may
be able to identify a need but it will only be a market if someone is willing to pay you for your
product or service.
Who are your customers?
Why will they buy goods or services from you rather than your competitors?
How much will they be prepared to pay?
These questions might be difficult to answer but if there is no market for your idea then there
is no point proceeding. Although this may seem harsh, stage 4 is designed to help you to
answer these questions. It should give you the confidence necessary to invest time, energy and
resources into fully exploring your idea with a view to development.
A well thought out business idea should identify a market for any proposed product or service.
A well thought out social enterprise needs to be similarly matched to the market but will also
need to ensure that this is appropriate to the organisation's stated
social purpose.
A `quick and dirty' piece of scoping should give
you more of an idea about the potential market
and will help you to decide whether you should
take your idea forward.
Basic Research
In order to examine the implications of these knowledge gaps, you will probably need to
undertake some basic research to ensure that any assumptions that you might make are
sound. Your research will also highlight any potential issues with respect to your idea. It will
also help you to focus on your target customer and be more specific about the type of product
or service that you might offer.
Market research can be broadly divided into two categories primary and secondary:
Primary research
Asking competitors or small groups of
potential customers
Watching what the competition is
doing or what potential customers do
Testing the product. This probably
leads to the best data
Secondary research
Information from trade journals
Information from government reports
Information taken from competitors'
promotional literature and price lists
Publications and other media aimed
at your target market. The internet can
be a useful source
Information from `surveys' or
questionnaires
As you are just starting out, your resources will probably be fairly limited; therefore your initial
research will probably have to be quick and cheap. That's ok. This is just the first step in
researching your idea and the process of market research should be a continuous one through
the lifespan of your business.