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Theory: How do social entrepreneurs assess the business potential of their ideas?Practice: What are the challenges associated with collecting and synthesizing market research data, and applying this data to making business decisions?http://www.socialentrepreneurship.ca/indev308
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INDEV 308: Intro to Social Entrepreneurship
Class 4: Identifying Business Potential
Monday, May 30, 2011
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Instructors: Norm Tasevski ([email protected]) Karim Harji ([email protected])
© Norm Tasevski & Karim Harji
© Norm Tasevski & Karim Harji
Agenda
• StickerYou • What did we learn – Last Week? • Guest Speaker – Serge LeVert-Chaisson • How do we assess business potential for social
enterprise? • What did we learn – Today? • Next week
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© Norm Tasevski & Karim Harji
Last Week – What did we learn?
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© Norm Tasevski & Karim Harji
Serge LeVert Chiasson
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Assessing Social Enterprise Business Potential…
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© Norm Tasevski & Karim Harji
A Caveat…
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When we assess business potential, we don’t just care
about…
…and…
…we also care about…
© Norm Tasevski & Karim Harji
Our Strategy…
1. Assuming the perfect scenario, does our business model generate money?
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If yes…
2. Does the model still make money once real world conditions are factored in?
© Norm Tasevski & Karim Harji
What is a “Perfect” Scenario?
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– Porter’s 5 Forces line up perfectly (i.e. low to no entry
barriers)
– You operate absolutely efficiently (e.g. resources used to their maximum capacity)
– The business runs flawlessly (i.e. no mistakes are made anywhere along the value chain)
© Norm Tasevski & Karim Harji
Why Use a “Perfect” Scenario?
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Most Importantly: – If you can’t make money even with the most ideal
conditions…
Also: – The perfect scenario is often the easiest to build a financial
model from – It provides a baseline – All other scenarios can be
measured against this ideal case
…STOP! (…and rethink your business model)
Ready?…
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© Norm Tasevski & Karim Harji
Remember This?
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© Norm Tasevski & Karim Harji
Step 1: Identify Cost Drivers and Revenue Sources !
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© Norm Tasevski & Karim Harji
Value Proposition
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-Procurement!-Receiving!-Warehousing!-Inventory control!-Product/service design!-Product/service manufacture/development!-Product packaging!-Technology support!-etc.!
-Licensing fees!-Donated products/services!
© Norm Tasevski & Karim Harji
Customer Segments
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-Research costs (surveying, interviewing, etc)!!
-Payments!-(Viral marketing of products)!
© Norm Tasevski & Karim Harji
Channels
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-Warehousing!-Product packaging (in delivery boxes, etc)!-Product/service delivery (transportation, etc)!! -Co-branding!
-Rental fees!-”Concession stand” type contracts!
© Norm Tasevski & Karim Harji
Relationships
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-Hard marketing costs (billboard advertising, etc)!-Soft marketing costs (website, etc)!-Customer service !-Relationship management personnel!
-3rd Party advertisers !-Co-branding!-Referral fees!
© Norm Tasevski & Karim Harji
Key Resources
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-Employees (management, staff)!-Brand!-Other assets (buildings, IP, software, etc)! !
-Licensing fees!
© Norm Tasevski & Karim Harji
Key Activities
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-Service activities!-Sales activities!-Client engagement activities!-Events !!!
-Fees (e.g. ticket sales at events!
© Norm Tasevski & Karim Harji
Key Partnerships
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-Partnership management costs (relationship building, contract management, etc) !
-Investment!-Loans!-Grants/donations!
Break
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© Norm Tasevski & Karim Harji
Step 2: Calculate your margin !
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-???!-???!
© Norm Tasevski & Karim Harji
What Do You Need To Calculate Your Margin?
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Data!!!!
© Norm Tasevski & Karim Harji
Data Sources
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Call key industry players (suppliers, competitors, etc)
Search databases (industry, scholastic, etc)
Conduct web search (Google, etc)
Ask people!!! (friends, potential customers, etc)
© Norm Tasevski & Karim Harji
What did we learn?
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© Norm Tasevski & Karim Harji
Next Week (after reading week)
• Deliverable: The Cost Side of your Business Model!
• Readings
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