Given the growing interest and participation of community organizations in the social enterprise landscape, the BC Centre for Social Enterprise has assisted many to explore the feasibility of their business ideas, and to build business plans on those concepts that have the greatest merit.

Most community-based organizations do not reach the feasibility study stage, for various reasons. Some realize early that social enterprise is not for them, for reasons of capacity, or organizational fit. Others come to the table with a business idea that doesn’t require much research to prove lack of feasibility:

• There may be starkly insufficient demand for the good or service being contemplated;
• The target customer may not be able to afford to pay for the offering;
• The supply side may already be glutted; or
• The costs associated with the venture suggest that the enterprise would not be profitable (and the venture would be an unlikely candidate for ongoing subsidy).

Sometimes, organizations lose a champion of social enterprise, and find that a window of opportunity may have temporarily closed.

Still others are overwhelmed by the research process itself, and put on the brakes.

Engaging in the process is the most sound time investment that you can make.

As daunting as the commitment and learning curve seem, investing the time in being closely involved in the feasibility study / business plan creation process is the wisest outlay that an organization considering social enterprise can make.

Often, we at the Centre are contracted by time-crunched or inexperienced organizations to lead in the research and writing of feasibility studies and business plans. As much as we endeavour to include as many of our findings as possible in these written reports (which range from 50-150 pages!), we tend to come out of the process feeling like we have become the subject matter experts in the enterprise, as opposed to the community organization itself.

As thorough as our reports are, nothing can substitute for the experience of conducting the research directly. During this process, we communicate with future customers, complementary and competitive businesses, and potential suppliers. We wrangle with the implications of legal structures, and hammer out cost and sales projections.

As new and uncomfortable as some of these processes may be, the capacity to be gleaned by the organization is priceless. The experience will only serve to bolster the actual enterprise launch and operation.

Avoid shortcuts because the process is unfamiliar.

That said, organizations that make the decision to carry on with the research themselves need to avoid shortcuts that may affect the final decision about whether or not to launch.

Market research is a fantastic example – many of us feel uncomfortable approaching strangers to gauge whether there would be adequate demand for our offering. The temptation is to approach folks within our circle (colleagues, friends, family), using them as our market research ‘guinea pigs’.

Time and again, this choice leads to ‘false positive’ results… of COURSE your Mom thinks it’s a great idea! It’s also important to note that these endorsements seldom translate to actual sales once the business launches. Well, maybe except for Mom…

Other examples that may be tempting to short-cut on are marketing plans and financial projections. The tendency is to use ‘templates’ to generate these documents. As much as this approach is a time-saver, the result is a cookie cutter outcome… not one that necessarily aligns with the realities of the specific enterprise.

Coach versus consultant

Particularly if no one on your staff or Board has direct experience with feasibility research / business planning, I recommend hiring an experienced consultant to serve in a ‘coach’ role. The organization itself undertakes the research and key decision making, while the coach guides the process, reviews outputs, and engages the group in capacity building activities along the way.

It’s important to engage a consultant with experience in social enterprise development (as opposed to traditional, single (financial) bottom line business), because there are extra dynamics to consider when developing social enterprise research and plans. Be sure to request and contact references for this important role.

Who is the business plan really for?

Both for-profit businesses and enterprising non-profits tend to complete business plans because the banks require it for the consideration of financing. I wonder how few of these documents would exist were it not for the financiers’ requirement that they be submitted.

My challenge to the community-based sector is that they begin to view the primary beneficiary of thorough social enterprise feasibility studies and business plans as themselves.

That said, financiers do require a sound business plan as a prerequisite for social finance applications. They are looking for ‘good deals’, the precise meaning of which differs according to the values and priorities of their own organization.

Moving into the world of social finance requires a more in-depth proposal package than the project grant applications that the community-based sector may be accustomed to generating.

Remember that it’s in your best interest to speak to financiers in their own language.

Photo credit: http://www.flickr.com/photos/f-oxymoron/4752989199/

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