Thinking of starting a social enterprise?
Then you need a business plan that becomes a living document to demonstrate the sustainability/viability of your idea. At it’s heart, the plan will need to detail why your business is one where society profits.
It is also a sales document that explains your product or service to users and customers; your employees and volunteers, and potential investors and grant funders.
Your plan will need regular revision and to be adapted as the enterprise and circumstances change.
This plan will also provide the best guide to the most appropriate legal status for your social enterprise.
Steps to creating a business plan include:
You must research your target market to determine that there is a real need for your product or service, and that people will use it. This can also be useful in fine-tuning your ideas. There are a number of ways to research your target market, such as questionnaires and focus groups. Look at your competitors or others who may be providing a similar service and what they offer, and determine what sets you apart from them.
To begin with, it is important to answer the following questions before starting up.
- Is there a genuine market for your business idea?
- How much demand will there be for your product or service?
- What trends currently affect your market sector?
- Who will buy your product or service?
- Who will be your competitors and what are their strengths and weaknesses?
- Are there any potential business partners with whom you could collaborate ?
This checklist will help you to consider these and the other types of questions your market research should address and suggests some tasks that will get you started with your research.
Once you have your enterprise idea and know that there is a market for your intended product or service, you will need to plan how it will be delivered. This should include:
- your location;
- what, if any, premises you need;
- how many staff or volunteers;
- how will you tell people about your social enterprise;
- how will you raise finance (grants, loans, contracts and/or trade);
- your pricing structure; and
- how will you manage demand.
As the Chairman of Danone once said, “a business plan without figures is merely dreaming”, which is why cash flow and business planning go hand-in-hand. To get started with cash flow forecasting, begin by listing all the total costs (including salaries) and multiplying by 1.25 to include a profit/surplus. This will arrive at an income target which can then be broken down into the number of products or services that need to be sold. From there, you can start working out at what price you’ll need to sell to achieve the target.
The results from your research will also be incorporated in the business plan. Our advisers can give you guidance and advice throughout the planning process, but we can also provide a business plan template specifically for social enterprises and a 12 month or 3 year cash flow forecasting model. Contact us to find out more.
From researching and planning you will be able to determine how much initial start-up funding you will need and how long this will need to last until you receive any income.
Your research will have given an indication of how many people intend to use the service/product and how often. From this you can make some realistic financial assumptions.
If you receive grant funding you will be able to determine how long the funding will sustain your enterprise activities.
There are a number of ways to potentially raise finance and our advisers will be able to explain the options available, as well as guide you through financial forecasting.
You can also search for funding through Funding Central – a website that is specifically for third sector organisations looking for grants, loans and contracts and is free to register if you are a small organisation.
If it’s clear funds will be an issue, there are still ways to start-up a social enterprise on a shoestring.