The Sector

How to carry out a feasibility study for a Social Enterprise

To determine if your social enterprise idea will work, you need a feasibility study. It is not a guarantee of success but you can reduce the risks you take through research and planning before you commit yourself.

Feasibility studies are just as critical for social enterprises as any other form of business. In fact, a thorough feasibility study will be very useful when looking for funding for an idea.

What is a Feasibility Study?

Every business needs a plan. A feasibility study will look at the product or services you plan to sell and will indicate whether the business will be viable or not. This study will consider the options for production or delivery, location, the market for the services, and preferences from a social, economic, and environmental perspective.

How do you do it?

A feasibility study is not as daunting as it might sound. Often most of the answers are already known and it is just a case of writing them down in a sensible order.

You can find government statistics to back up your claims, or reports from newspapers or trade bodies to show there is a market. You can also find organizations elsewhere that have tried something similar.

It is often a smart idea to undertake some new research to prove that people want what you are offering. Surveys can be either qualitative or quantitative – this means they can either ask open-ended questions to gain a general understanding of how people feel or ask multiple choice style questions to gain a factual/statistical answer.

There are two main techniques for gathering updated information:

 Questionnaires delivered door-to-door, via telephone, with focus groups, or as street surveys

 Face-to-face interviews either with individuals or focus groups

There are pros and cons to each type of method to be considered when choosing which ones to use.

The feasibility study looks at:

 Goods or services you want to deliver

 Costs to produce the goods or deliver the service

 What demand there is for the goods or service

 What’s the Unique Selling Point (USP) that will attract customers

 How you will distribute the goods or service

 What competition are you up against

 What you will charge your customers

 Whether there are enough customers that will pay for your goods or service

What to Include in your Feasibility Study

Some of the basic questions you should be asking yourself are listed below but you will no doubt come up with others as well. It doesn’t matter how simple the question may appear, you should still make a note of it and search for an answer.

1) Customers

People often assume that they know their customers but it is a wise idea to research them and not make assumptions.

 Who are my potential customers?

 Where are they?

 How many of them are there?

 How much and how often do they buy my type of goods/services?

 What is the most effective way to reach them?

 Who else is/will compete for their business?

You may be able to answer these questions yourself, but it is likely you will need to conduct a survey to prove your assumptions.

2) Goods and services

Define the product or service you are trying to produce/provide.

 How much will it cost to produce/provide my goods or services?

 Can I afford it? Are they what my customers want?

 Are they what my customers want?

 What do my products/services have that makes them different enough to give me the edge over my competitors? (This is often called the Unique Selling Point).

 How will I distribute my goods? Who will do it? How much will it cost?

3) Competitor analysis

It is helpful to know who your competitors.

 Who are they?

 Where are they?

 What do they charge?

 Is there any potential to collaborate with them?

 How will they react to the competition?

4) Income and pricing

You will need to work out what level of income you can expect from providing the goods/services. Again, the end users of your activities may not necessarily be paying customers. You will need paying customers to cover the costs of the activities you propose to deliver.

 What should I be charging my customers?

 What are my terms and conditions of sale?

 What are my competitors charging?

 Will my customers pay what I’m asking?

 Can I produce/provide as much as they want and when they want it?

 What ‘markup’ will I have? I.e. how much will I charge above the costs of production)

5) Location

The location of a social enterprise is often linked to an organization, but it is critical to think about the effect of location on the viability of the business.

 Where should I be located?

 What are the advantages/disadvantages of being in that location?

 What will I need for the premises (machinery, equipment, fixtures, fittings, etc)?

 Will I need any vehicles?

 How much will it all cost me?

 What are the costs of refurbishing a building, if necessary?

6) Suppliers

You will need to understand what goods or services you will need to purchase.

 Will I need any suppliers?

 Do I know where they are?

 Do I know how much they charge and what their payment terms are?

 Are they reliable?

 Do I know anyone who uses them?

7) Staff

You need to be clear about what people you will need to run the business.

 Will I need to employ anybody?

 Do I know what that involves?

 Do I know how much it costs?

 What skills will they need?

 Do I know anyone with the right skills?

 Where will I find the right people? Will I need to use an employment agency or advertise myself?

 What qualifications will my staff need, and what training will I need to provide for them?

8) Regulations

A license is required for many businesses. For example, you need a license to run a hotel, a guesthouse, a mobile shop, or a hairdresser. You should always check whether your business requires a license to trade.

 Do you need to comply with any regulations? For example, building regulations, health and safety regulations, gambling regulations, etc.

 Do you need any licenses?

 Will they cost me anything (in terms of time and/or money)?

 How long will it take to get the necessary licenses?

9) Patenting/copyright/trademarking

 Do you need to protect your ideas?

 How much will it cost?

10) Legal

Deciding on the constitution of your business can have a significant impact on how it is managed and its relationship to any ‘parent’ organization.

 What type of business should I be setting up (limited company, LLP, charity, co-operative)?

 What are the advantages and disadvantages of each option for me?

 What are the costs?

11) Profit

Profit is often seen as a dirty word in the voluntary / community sector, but for a social enterprise to be viable it will need to make a profit. What the company does with that profit is another issue!

The Sector
,

The MBA spawns a start-up spanning three continents

9 March 2017

MBA students set up consultancy to streamline public services

  • Aiming to save taxpayers thousands of pounds
  • The Sector involves students from five different countries
  • Company set-up over a pub meeting on Warwick Week

When Canadian Bradford Turner started moving the pepper and salt around the table at the Dirty Duck he had little idea that it would lead to a start-up operation whose founders span three continents.

Explaining to Elena Dimova the intricacies of the business idea Turner had been carrying around for nearly a decade – essentially a consultancy that would save taxpayers money – involved several napkins and the re-arranging of the condiments.

Explaining to Elena Dimova the intricacies of the business idea Turner had been carrying around for nearly a decade – essentially a consultancy that would save taxpayers money – involved several napkins and the re-arranging of the condiments.

Russian Elena, who works as a client specialists team leader in Thomson Reuters’s C&E and capital markets division, said: “Bradford was so passionate about this business idea, so I interrogated him about it over a drink and made him go through the business model properly – the salt and pepper were moved around a lot! ”

After seven years working for non-profit organisations and in the public sector, and seeing budgets slashed in Canada since the financial crisis, Bradford, a Distance learning MBA student, felt an opportunity had opened up for an organisation that specialised in delivering better public services in the most cost efficient way.

While working with NGO Save the Children, non-profit education organisation Junior Achievement Canada, and on various Canadian healthcare infrastructure projects, Bradford had seen how Government departments in Canada – so removed from the ground – had wasted their money on layers of inefficient bureaucracy when delivering social projects.

A niche opening was available for a consultancy that could provide Government departments a strategy to deliver more with less money, or as Bradford puts it “optimizing socioeconomic outcomes in government services by implementing integrated planning and client-focused service delivery models”.

Frederick Peters, a Research Fellow at Canada’s City Institute at York University, with a PhD in Political Science and a consulting focus on social infrastructure, partnered Bradford to grow the concept and look into building it into a business.

Dreaming in the Dirty Duck

“I had been looking at starting this firm for 10 years,” says 35-year-old Bradford. “I have the experience and the niche idea but I didn’t want to go into it without the 360 degree understanding of how to run a business, that’s why I decided to do an MBA before taking the plunge.”

Bradford signed up for Warwick Business School’s Distance learning MBA but he soon discovered he had everything he needed in the course to start his business straight away and The Sector Inc was born.

“It was a huge realisation,” says Bradford. “On the MBA I have met like-minded people from all over the world, all the advice I need is there from fellow students and academics. Also, the course has the flexibility to allow me to build a business from scratch and continue with my studies.”

At the first of six Warwick Weeks – where distance learning MBAs fly to the school from all over the world for a week of lectures – Turner got chatting at the Dirty Duck pub on the university campus with some of his classmates. And over a pint and the condiments he pitched his idea.

As well as Elena, Belgium-based Londoner Remon Fahim, Mark-Andre Casper, of Cologne, and Chafic Filfili, of Lebanon, were also recruited from his MBA class. Dimova is exploring opportunities in Russia, while Fahim is focusing on the UK operation.

Remon is also familiar with government cuts as a commercial manager with Serco, a FTSE 250 company that specialises in running outsourced public services from prisons to London’s Boris bikes.

“While on a drive down to London after a long weekend at Warwick, I was discussing my experiences in public services and community development with Bradford,” says Remon. “It became apparent that I could compliment Bradford’s NGO background with my private sector knowledge. I have spent seven years working with government departments and I immediately understood Bradford’s vision.”

With colleagues in Russia, Canada, Germany, the UK and Lebanon it can be a challenge having a management meeting, but modern technology certainly helps.

“It is hard sometimes finding a good time for conference calls,” says Bradford. “But we have to collaborate in teams on the MBA so you quickly get used to communicating via the internet, it has not been a problem.

“Thanks to the MBA I have got to know them and seen how clever they are by working on assignments together, it has allowed us to demonstrate our knowledge and skills. We are learning from each other and being from different countries means we have new markets to target, while leveraging our business networks.”

For now The Sector is concentrating on Canada and its first job saw them research and put together a feasibility study on a proposed community hub for the York Region in Southern Ontario.

“It took eight months and we produced a 150-page report assessing the viability of the community hub,” says Bradford. “Instead of having these social and community groups working separately we looked at how they could be integrated under one roof, the savings that would produce and if it would improve delivery.

“We provided a series of recommendations on how it would go ahead as we found it would produce efficiencies and improve services. Hopefully it will go ahead and that could become a blueprint for other cities.”

Turner and Peters are full-time on The Sector, while the rest of the team carry on with their jobs. They all bring different skills, Remon does the quantitative modelling and financial analysis; Chafic is the big data analyst; Mark-Andre looks after risk and governance thanks to his insurance background, while Elena has financial expertise.

“I am involved in investigating what markets there are in Russia for The Sector,” says Elena. “At the moment it is really tough fitting it in around a job and the MBA – I’m not getting much sleep. But this is an exciting opportunity and not something I dreamed of embarking on when I signed up for the MBA.”

See this story featured in the Financial Times.

Original Story: https://www.wbs.ac.uk/news/the-mba-spawns-a-start-up-spanning-three-continents/

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