ENTR4800 Class 4 - Assessing Business Potential for Social Enterprise

ENTR 4800: Intro to Social Entrepreneurship

Class 4: Identifying Business Potential

Monday, October 3, 2011

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Instructors: Norm Tasevski ([email protected]) Karim Harji ([email protected])

© Norm Tasevski & Karim Harji


Agenda

•  StickerYou •  What did we learn – Last Week? •  Guest Speaker – John Baker •  How do we assess business potential for social

enterprise? •  What did we learn – Today? •  Next week

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Last Week – What did we learn?

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John Baker

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Assessing Social Enterprise Business Potential…

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A Caveat…

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When we assess business potential, we don’t just care

about…

…and…

…we also care about…


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?


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)


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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Remember This?

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Step 1: Identify Cost Drivers and Revenue Sources!

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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!


Customer Segments

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-Research costs (surveying, interviewing, etc)!!

-Payments!-(Viral marketing of products)!


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!


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!


Key Resources

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-Employees (management, staff)!-Brand!-Other assets (buildings, IP, software, etc)! !

-Licensing fees!


Key Activities

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-Service activities!-Sales activities!-Client engagement activities!-Events !!!

-Fees (e.g. ticket sales at events!


Key Partnerships

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-Partnership management costs (relationship building, contract management, etc)!

-Investment!-Loans!-Grants/donations!

Break

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Step 2: Calculate your margin!

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-???!-???!


What Do You Need To Calculate Your Margin?

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Data!!!!


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)


What did we learn?

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Next Week (after reading week)

•  Deliverable: The Cost Side of your Business Model!

•  Readings

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