ENTR 4800: Social Entrepreneurship

     Class 4: Identifying Business Potential

          Monday, October 4, 2010



   ...
Agenda

•  StickerYou
•  What did we learn – Last Week?
•  “Live” Case – Hedvig Alexander (Founder, Jali
   Designs)
   – ...
Last Week – What did we learn?




                                 4
Hedvig Alexander…




                    5
Assessing Social Enterprise Business
Potential…




                                       6
A Caveat…


 When we assess
business potential,   …we also care
we don’t just care      about…
     about…




           ...
Our Strategy…



1.  Assuming the perfect scenario, does our business
    model generate money?

If yes…

2.  Does the mod...
What is a “Perfect” Scenario?


  –  Porter’s 5 Forces line up perfectly (i.e. low to no entry
     barriers)



  –  You ...
Why Use a “Perfect” Scenario?
Most Importantly:
   –  If you can’t make money even with the most ideal
      conditions…

...
Ready?…




          11
Remember This?




                 12
Step 1:
Identify Cost Drivers and Revenue Sources!




                                             13
Value Proposition


 -Procurement!
 -Receiving!
 -Warehousing!
 -Inventory control!
 -Product/service design!
            ...
Customer Segments


 -Research costs
 (surveying, interviewing,
 etc)!

                             -Payments!
          ...
Channels


 -Warehousing!
 -Product packaging (in
 delivery boxes, etc)!
 -Product/service delivery
 (transportation, etc)...
Relationships


 -Hard marketing costs
 (billboard advertising,
 etc)!
 -Soft marketing costs
 (website, etc)!
           ...
Exercise:
Identify Cost Drivers and Revenue Sources on the Revenue Side
of Jali Designs’ Business Model!




  -???!




 ...
Key Resources


 -Employees (management,
 staff)!
 -Brand!
 -Other assets
 (buildings, IP, software,
                     ...
Key Activities


 -Service activities!
 -Sales activities!
 -Client engagement
 activities!
 -Events !
                   ...
Key Partnerships


 -Partnership management
 costs (relationship
 building, contract
 management, etc)!
                  ...
Exercise:
Identify Cost Drivers and Revenue Sources on the Cost Side of
Jali Designs’ Business Model!




  -???!




    ...
Break




        23
Step 2:
Calculate your margin!



  -???!
                         -???!




                                 24
What Do You Need To Calculate Your
Margin?




  Data!!!!
                                     25
Data Sources




    Call key industry players
                                          Search databases
      (suppliers...
Exercise:
Brainstorm the data points Jali Designs Requires to calculate its
margin!




   -???!




    -???!




       ...
What did we learn?




                     28
Next Week (after reading week)

•  Guest speaker (to be confirmed)

•  Deliverable: The Cost Side of your Business Model!
...
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ENTR4800 Class 4: Identifying Business Potential

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Class 4: Identifying Business Potential

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/entr4800/

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ENTR4800 Class 4: Identifying Business Potential

  1. 1. ENTR 4800: Social Entrepreneurship Class 4: Identifying Business Potential Monday, October 4, 2010 1
  2. 2. Agenda •  StickerYou •  What did we learn – Last Week? •  “Live” Case – Hedvig Alexander (Founder, Jali Designs) –  How do we assess business potential for social enterprise? –  Assess Jali’s Business Potential •  What did we learn – Today? •  Next week 3
  3. 3. Last Week – What did we learn? 4
  4. 4. Hedvig Alexander… 5
  5. 5. Assessing Social Enterprise Business Potential… 6
  6. 6. A Caveat… When we assess business potential, …we also care we don’t just care about… about… …and… 7
  7. 7. Our Strategy… 1.  Assuming the perfect scenario, does our business model generate money? If yes… 2.  Does the model still make money once real world conditions are factored in? 8
  8. 8. What is a “Perfect” Scenario? –  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) 9
  9. 9. Why Use a “Perfect” Scenario? Most Importantly: –  If you can’t make money even with the most ideal conditions… …STOP! (…and rethink your business model) 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 10
  10. 10. Ready?… 11
  11. 11. Remember This? 12
  12. 12. Step 1: Identify Cost Drivers and Revenue Sources! 13
  13. 13. Value Proposition -Procurement! -Receiving! -Warehousing! -Inventory control! -Product/service design! -Licensing fees! -Product/service -Donated products/ manufacture/development! services! -Product packaging! -Technology support! -etc.! 14
  14. 14. Customer Segments -Research costs (surveying, interviewing, etc)! -Payments! -(Viral marketing of products)! 15
  15. 15. Channels -Warehousing! -Product packaging (in delivery boxes, etc)! -Product/service delivery (transportation, etc)! -Co-branding! -Rental fees! -”Concession stand” type contracts! 16
  16. 16. Relationships -Hard marketing costs (billboard advertising, etc)! -Soft marketing costs (website, etc)! -3rd Party advertisers! -Customer service! -Co-branding! -Relationship -Referral fees! management personnel! 17
  17. 17. Exercise: Identify Cost Drivers and Revenue Sources on the Revenue Side of Jali Designs’ Business Model! -???! -???! 18 18
  18. 18. Key Resources -Employees (management, staff)! -Brand! -Other assets (buildings, IP, software, -Licensing fees! etc)! 19
  19. 19. Key Activities -Service activities! -Sales activities! -Client engagement activities! -Events ! -Fees (e.g. ticket sales at events! 20
  20. 20. Key Partnerships -Partnership management costs (relationship building, contract management, etc)! -Investment! -Loans! -Grants/donations! 21
  21. 21. Exercise: Identify Cost Drivers and Revenue Sources on the Cost Side of Jali Designs’ Business Model! -???! -???! 22 22
  22. 22. Break 23
  23. 23. Step 2: Calculate your margin! -???! -???! 24
  24. 24. What Do You Need To Calculate Your Margin? Data!!!! 25
  25. 25. Data Sources Call key industry players Search databases (suppliers, competitors, etc) (industry, scholastic, etc) Ask people!!! Conduct web search (friends, potential customers, etc) 26 (Google, etc)
  26. 26. Exercise: Brainstorm the data points Jali Designs Requires to calculate its margin! -???! -???! 27
  27. 27. What did we learn? 28
  28. 28. Next Week (after reading week) •  Guest speaker (to be confirmed) •  Deliverable: The Cost Side of your Business Model! •  Readings 29

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