Introduction

“Should we launch a meal preparation and delivery business?”

Whether you are starting a new social enterprise or launching a new business line, chances are you have asked yourself a version of this question. A feasibility analysis helps you decide whether or not to launch a business by performing in-depth analysis of the market, operational, and financial viability for your business ideas. Most importantly, it helps you ask the right questions in regards to each of these areas.

In doing so, you will see the limitations of phrasing the question as “Should we launch a meal preparation and delivery business?” Instead, you will know to ask a question closer to:

Is it possible to launch a new, for-profit social enterprise that:

• Supports 12+ PTE jobs on a 3-month transitional basis?
• Runs out of a new kitchen facility that is no more than 2,200 square feet?
• Supports both Meals On Wheels and corporate clients?
• Needs no more than $150K up front and is likely to break even within 36 months?

These stated objectives should be based on the venture criteria for your social enterprise. With a clear picture of what you are hoping to achieve, you can conduct a feasibility analysis to determine whether to launch a business by performing in-depth analysis of the market, operational, and financial viability for your business ideas.

 

Feasibility framework

Think of each of the four categories – market, operational, financial, and organizational – as “activities” for established social enterprises. You will want to examine all four areas thoroughly to determine the viability of your idea in each.

 

 

Key questions to answer

For each category, there are a number of questions to answer. Below are some common questions, although please note that these are not exhaustive. You will also have questions particular to your social enterprise.

Market Analysis

Dimensions to consider	Key questions to answer
Size	What is the total addressable market (TAM) for your target geography?
Growth	How fast is the industry growing?
	What drives growth?
	Are these factors changing?
Competition	Who are your main competitors?
	How much market power do they wield?
	How will you differentiate your product/service offering?
Customer segmentation	How is the market segmented?
	Which segments are most attractive?
	Which segments can you realistically target?
	What do these segments care about most?
Barriers to entry	What prevents others from entering easily?
	Once established, how will you stay entrenched?

 

Financial Analysis

Dimensions to consider	Key questions to answer
Start-up costs	How much will it cost to launch a pilot?
	How long will it be before the operation generates income?
Cash flow	What are our working capital needs in the startup phase and for ongoing operations?
Breakeven point	Given projected pricing, how many units will you need to sell to break-even?
	When do you expect this to happen?
Market penetration	Given the market size, what is a realistic penetration target?
	Is this a big enough slice to achieve organizational objectives?
Forecasting	What sources will you use to compile forecasts?
	What do our forecasts imply about our ability to achieve organizational objectives?
Statements/DBLs	Will your SE have separate financial statements from the parent agency?
	Do DBLs accurately isolate business from social costs?
	Are financial statements regularly used in decision-making processes?

 

Operations Analysis

Dimensions to consider	Key questions to answer
Facilities and equipment	What type of facility do you need at startup?
	Will that change once the business reaches steady-state?
Procurement and sourcing	What material does your business depend on?
	How are you reducing supplier risk and optimizing price?
IT/data systems	What data do you need to track in order to judge organizational goals?
	Is there any duplication of functionality?
Sales and distribution	How do acquire new customers?
	How do you retain them?
	How do you monitor sales flow?
Pricing	Are you competing in a cost or quality-driven business?
	Do your prices reflect your costs of production?
	Are you at/above/below market rates?
Legal structure	What are your key legal priorities (e.g., liability, administrative ease, etc.)?
	Do you have flexibility?
Other	What operational processes are unique to your business?
	What systems do you have in place to address these specific needs?

 

Organizational Analysis

Dimensions to consider	Key questions to answer
Staffing	What are the most critical roles to fill for your business?
	Are the right people in those positions?
	What staff capabilities lend or detract from competitive advantage?
Recruiting and hiring	From where will employees be sourced?
	Does this account for your organization’s long-term hiring needs and objectives?
Training and skill development	How highly skilled are typical entry-level workers in your industry?
	How much training is required after hire?
	Will training translate after SE work experience?
Exit pathways	Are there progression opportunities within the SE?
	Where will alumni be placed?
	Are employees interested in these pathways? Are employers?
Employee support and client services	What services address the specific needs of the target population you serve?
	How do employees access these?
	How do they support broader outcome objectives?
	How do they integrate with the business?
Other program design	How will you assess job readiness?
	How will you provide performance feedback?
	How will you supervise employees?
	How many supervisors do you need?

 

Next Steps

Once you have closely examined the market, operational, financial, and organizational implications of your idea, you can decide whether or not to launch the business as originally planned, or whether you need to refine your idea further. If you choose to move forward with your idea, you can now begin the business planning stage in order to determine how to best launch, develop, and manage the business enterprise.