ENTR4800 Class 4 - Assessing Business Potential for Social Enterprise

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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/entr4800

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ENTR4800 Class 4 - Assessing Business Potential for Social Enterprise

  1. 1. ENTR 4800: Intro to Social Entrepreneurship Class 4: Identifying Business Potential Monday, October 3, 2011Instructors:Norm Tasevski (norm@socialentrepreneurship.ca)Karim Harji (karim@socialentrepreneurship.ca) 1
  2. 2. © Norm Tasevski & Karim Harji
  3. 3. © Norm Tasevski & Karim HarjiAgenda•  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 3
  4. 4. © Norm Tasevski & Karim HarjiLast Week – What did we learn? 4
  5. 5. © Norm Tasevski & Karim HarjiJohn Baker 5
  6. 6. Assessing Social Enterprise BusinessPotential… 6
  7. 7. © Norm Tasevski & Karim HarjiA Caveat… When we assessbusiness potential, …we also carewe don’t just care about… about… …and… 7
  8. 8. © Norm Tasevski & Karim HarjiOur 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
  9. 9. © Norm Tasevski & Karim HarjiWhat 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
  10. 10. © Norm Tasevski & Karim HarjiWhy 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
  11. 11. Ready?… 11
  12. 12. © Norm Tasevski & Karim HarjiRemember This? 12
  13. 13. © Norm Tasevski & Karim HarjiStep 1:Identify Cost Drivers and Revenue Sources! 13
  14. 14. © Norm Tasevski & Karim HarjiValue Proposition -Procurement! -Receiving! -Warehousing! -Inventory control! -Product/service design! -Licensing fees! -Product/service -Donated products/ manufacture/development! services! -Product packaging! -Technology support! -etc.! 14
  15. 15. © Norm Tasevski & Karim HarjiCustomer Segments -Research costs (surveying, interviewing, etc)! ! -Payments! -(Viral marketing of products)! 15
  16. 16. © Norm Tasevski & Karim HarjiChannels -Warehousing! -Product packaging (in delivery boxes, etc)! -Product/service delivery (transportation, etc)! -Co-branding! ! -Rental fees! -”Concession stand” type contracts! 16
  17. 17. © Norm Tasevski & Karim HarjiRelationships -Hard marketing costs (billboard advertising, etc)! -Soft marketing costs (website, etc)! -3rd Party advertisers! -Customer service! -Co-branding! -Relationship -Referral fees! management personnel! 17
  18. 18. © Norm Tasevski & Karim HarjiKey Resources -Employees (management, staff)! -Brand! -Other assets (buildings, IP, software, -Licensing fees! etc)! ! 18
  19. 19. © Norm Tasevski & Karim HarjiKey Activities -Service activities! -Sales activities! -Client engagement activities! -Events ! -Fees (e.g. ticket sales ! at events! ! 19
  20. 20. © Norm Tasevski & Karim HarjiKey Partnerships -Partnership management costs (relationship building, contract management, etc)! -Investment! -Loans! -Grants/donations! 20
  21. 21. Break 21
  22. 22. © Norm Tasevski & Karim HarjiStep 2:Calculate your margin! -???! -???! 22
  23. 23. © Norm Tasevski & Karim HarjiWhat Do You Need To Calculate YourMargin? Data!!!! 23
  24. 24. © Norm Tasevski & Karim HarjiData Sources Call key industry players (suppliers, competitors, etc) Search databases (industry, scholastic, etc) Ask people!!! Conduct web search (friends, potential customers, etc) 24 (Google, etc)
  25. 25. © Norm Tasevski & Karim HarjiWhat did we learn? 25
  26. 26. © Norm Tasevski & Karim HarjiNext Week (after reading week)•  Deliverable: The Cost Side of your Business Model!•  Readings 26

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