Before starting to write your business plan, we recommend you complete a feasibility study (required for applicants to TEF's Business Plan Competition).This is focused on understanding whether the organization could make the enterprise work, which involves considering five key areas:
- Strategic Alignment – Will the enterprise further your mission?
- Market Opportunity – Will customers purchase your product or service?
- Operational Capabilities – Can you make it happen?
- Financial Potential – Can you achieve your profitability goals?
- Social Feasibility - Will you meet your social goals?
This page is adapted from the Canadian Social Enterprise Guide, 2nd Edition, 2010 published by Enterprising Non-profits.
Assess the fit of the business with your organization. In this section,
- Describe how this product or service is appropriate to your organisation.
- Explain how it fits with your organization’s values/ vision/ mission/ strengths/ skills/ resources.
- Analyse how difficult it will be to promote, produce, or deliver.
- Determine what organizational structure would be best to move your enterprise forward.
- Assess what skills will be needed on your board of directors and at the staff level.
- Identify the skills needed to manage your enterprise.
Assess whether anyone will buy your product or service, and under what circumstances. In this section:
- Describe your customer(s). What are their demographic characteristics?
- Explain what your customer(s) will be buying (the product or service and its key elements).
- Explain the customer need that your product or service will address.
- Describe how, when, and where they will buy it.
- Describe which customer/ market segments you will target (e.g. single women between 24 and 45).
- Assess the size of the market (i.e. how many potential customers). How many customers can you expect per year?
- Determine how often customers will buy from you. What is the average value of each purchase?
- Explain whether it is a mature or immature market. What is the growth potential?
- Identify and describe the market trends.
- Provide evidence that the market has demonstrated support for your product.
- Explain which market niche your product would fill. Describe how you would differentiate yourself in the market from your competitors. (Remember that customers will ultimately base their purchasing decision on quality, price, and experience, and not on charitable grounds. If you’re counting on goodwill to sell your product or service, you’re planning a fundraiser, not a business!)
- Describe and evaluate your competitors. What are their strengths and weaknesses?
- Explain how your product or service differs from what is already offered (e.g. price, quality, service).
- Describe your competitive advantage.
- Explain the competitive forces in your market. (What is the bargaining power of buyers and suppliers? What is the threat of new competition? What is the competitive rivalry like in the market? What are the substitute products or services?)
- Assess whether there is room for another provider in the market.
Formal market research is a critical part of the business feasibility assessment. Click here for information and tools.
Assess whether your organization has the skills, resources and tools to run this enterprise. In this section:
- Determine how long it will take to produce or procure the product.
- Identify and describe the suppliers you will use. How much will they charge and how will you pay?
- Describe the sales process i.e. from purchase of inputs into making the product or service to selling to the customer and paying suppliers. How you would actually make this happen?
- Explain what would have to change to facilitate success.
- Assess whether you will need a new facility.
- Assess what additional management/staff are required. What will be the cost? Do they require training?
- Describe how you would inform your market of your presence.
- Explain your plans for distributing your product or service.
- Describe your external partners.
- Assess the product testing that will be required.
- Ascertain the legal requirements necessary to operate a business like yours (e.g. licences, permits, certifications, etc)
- Describe your major next steps to move the enterprise forward. What are the general milestones? When will these occur?
- Determine what could go wrong.
- Assess the impact if it did go wrong.
- Describe what you can do to prevent it.
- Analyse at what points you could cut your losses if things don’t go as planned.
Assess the potential of your business idea to generate significant sales revenue, and achieve business breakeven (we call this “100% business cost recovery” ) after three years. In this section:
- Estimate the dollar value of your sales in the first three years.
- Determine your possible start-up costs, including: technology, staff, materials, equipment, marketing, and planning.
- Calculate what your operating costs will be.
- Determine the approximate price you will charge. How will you determine the price?
- Estimate the potential net profit on a sale.
- Assess anticipated cash flow issues, including seasonal demand or high initial costs.
- Calculate the amount of working capital required.
- Assess what your sales assumptions are in the first few years. Actual sales? Growth?
- Evaluate how long it will be until the enterprise breaks even.
- Determine the key drivers of profitability. Can the enterprise operate at this level? What are the risks?
- Identify and describe potential sources of financial and human support for the different stages of the enterprise’s development?
Assess whether your enterprise is likely to succeed in making the social change you are aiming for.
For TEF-eligible enterprises, determine whether participants will build sustainable livelihoods, and in particular (i) earn additional income as a direct result of working in the enterprise, and (ii) connect to permanent employment opportunities. In this section:
- Determine whether the target population has the skills to do the jobs.
- Assess whether the jobs will meet their needs.
- Determine whether the jobs they do will result in a permanent connection to the labour market for the target population.
- Assess whether the business will be able to accommodate the barriers faced by the target population.
- Determine what skills the target population will need to learn on the job. How will they learn them?
- Calculate how many employees the business will need.
- Calculate how much the employees will earn. What will their benefits be?
- Assess the working conditions of the target population (i.e. hours per week, travel time, physical requirements, exposure to alcohol, equipment they will use, levels of stress).
Download our Feasibility Study Template (mandatory for applicants to TEF's Business Plan Competition)