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/

1. ENTR 4800: Social Entrepreneurship
Class 4: Identifying Business Potential
Monday, October 4, 2010
Instructors:
Norm Tasevski (norm@socialentrepreneurship.ca)
Karim Harji (karim@socialentrepreneurship.ca)
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2. © Norm Tasevski & Karim Harji

3. © Norm Tasevski & Karim Harji
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
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4. © Norm Tasevski & Karim Harji
Last Week – What did we learn?
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5. © Norm Tasevski & Karim Harji
Hedvig Alexander…
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6. Assessing Social Enterprise Business
Potential…
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7. © Norm Tasevski & Karim Harji
A Caveat…
When we assess
business potential, …we also care
we don’t just care about…
about…
…and…
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8. © Norm Tasevski & Karim Harji
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?
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9. © Norm Tasevski & Karim Harji
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)
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10. © Norm Tasevski & Karim Harji
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
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11. Ready?…
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12. © Norm Tasevski & Karim Harji
Remember This?
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13. © Norm Tasevski & Karim Harji
Step 1:
Identify Cost Drivers and Revenue Sources!
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14. © Norm Tasevski & Karim Harji
Value Proposition
-Procurement!
-Receiving!
-Warehousing!
-Inventory control!
-Product/service design!
-Licensing fees!
-Product/service
-Donated products/
manufacture/development! services!
-Product packaging!
-Technology support!
-etc.!
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15. © Norm Tasevski & Karim Harji
Customer Segments
-Research costs
(surveying, interviewing,
etc)!
-Payments!
-(Viral marketing of
products)!
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16. © Norm Tasevski & Karim Harji
Channels
-Warehousing!
-Product packaging (in
delivery boxes, etc)!
-Product/service delivery
(transportation, etc)!
-Co-branding!
-Rental fees!
-”Concession stand”
type contracts!
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17. © Norm Tasevski & Karim Harji
Relationships
-Hard marketing costs
(billboard advertising,
etc)!
-Soft marketing costs
(website, etc)!
-3rd Party advertisers!
-Customer service!
-Co-branding!
-Relationship -Referral fees!
management personnel!
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18. Exercise:
Identify Cost Drivers and Revenue Sources on the Revenue Side
of Jali Designs’ Business Model!
-???!
-???!
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19. © Norm Tasevski & Karim Harji
Key Resources
-Employees (management,
staff)!
-Brand!
-Other assets
(buildings, IP, software,
-Licensing fees!
etc)!
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20. © Norm Tasevski & Karim Harji
Key Activities
-Service activities!
-Sales activities!
-Client engagement
activities!
-Events !
-Fees (e.g. ticket sales
at events!
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21. © Norm Tasevski & Karim Harji
Key Partnerships
-Partnership management
costs (relationship
building, contract
management, etc)!
-Investment!
-Loans!
-Grants/donations!
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22. Exercise:
Identify Cost Drivers and Revenue Sources on the Cost Side of
Jali Designs’ Business Model!
-???!
-???!
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23. Break
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24. © Norm Tasevski & Karim Harji
Step 2:
Calculate your margin!
-???!
-???!
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25. © Norm Tasevski & Karim Harji
What Do You Need To Calculate Your
Margin?
Data!!!!
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26. © Norm Tasevski & Karim Harji
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)

27. Exercise:
Brainstorm the data points Jali Designs Requires to calculate its
margin!
-???!
-???!
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28. © Norm Tasevski & Karim Harji
What did we learn?
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29. © Norm Tasevski & Karim Harji
Next Week (after reading week)
• Guest speaker (to be confirmed)
• Deliverable: The Cost Side of your Business Model!
• Readings
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