Here are some useful links to sites which give information about starting up in business:
SEAS-Online has a number of links to social business planning sites.
Start a Business info from the BBC
Lots of links to other sites from the Channel 4 Being in Business site
The Risking it All site on Channel4.com
Here's a pdf of my presentation from the first session - with a list of common reasons why businesses fail. We talked about this to remind you that whatever business you're in - social or otherwise - statistically there's a good chance that you'll go out of business one day. There's no foolproof way of making sure that doesn't happen to you - but we think that good planning is one way of giving you the best chance of success.
I've just come across this guide from Forth Sector - it was mentioned in this month's Social Enterprise magazine. I haven't had a proper look at it yet but it's aimed at social enterprises and looks pretty comprehensive, so it's worth a look.
We can't overstate the importance of market research - particularly for a social enterprise. The reason it's so important can be summarised as follows: there may be a social need, but is there market demand?
What do we mean by this? Identifying a social need is a vital first step for a social enterprise - after all without a social need, it wouldn't be a social enterprise would it?
But the second question is just as important - how will you make money meeting that social need? Will the people who buy your product or service pay for it - or will another organisation (eg a regeneration initiative or a Local Authority) pay you to meet a need on their behalf?
It's far too easy to forget about the second question - but if you're going to make it in social enterprise - you have to start answering that question - now!
The market research section is on page 3 of the social business plan template - we suggest that you have a look at what we've written - and have a read through the notes from Wednesday's session with Affinity.
To get you started, have a look at the suggestions on the next blog entry - getting started on your market research. You could also have a look at this post on my other blog about why you need to remember that you are not your customer.
If you're ready to do your market research, but aren't sure where to begin, here's a suggestion on how to break your market research down into manageable chunks:
Decide what market you are in
Find out as much as you can about this market
Find out as much as you can about your customers
Find out as much as you can about your competitors
Try to estimate the size of the market - and how much of it you can realistically take
In the market research section of the blog, there's be an entry on each of these topics, starting with what market am I in?
You could also download this one page plan for DIY market research - which outlines the key stages for doing market research.
The first thing to ask is - what market am I in? To do this, ask yourself a simple question:
What does the customer need?
So, for example, if you were going to set yourself up as an aromatherapist, you may think that you're in the aromatherapy market. But is this necessarily the case? Does the customer need aromatherapy, or do they actually need something more general - eg healthcare, complementary therapy, stress relief? In this case it may be more useful to think of yourself in a wider market - such as the complementary therapy market.
Once you've identified what market you're in, you can begin to find out more about it - in the next blog entry.
Once you've decided what market you're in, you can find out about this market. Think big, then narrow it down. So to start with, try to find out if anyone has written any reports about your market. High profile market research reports include Mintel and Keynote. We find it useful to go to their websites, search for the appropriate reports, then go to the Business Library on the third floor of Leeds Central Library to ask to read the report. These reports cost thousands of pounds to buy, so your library can save you a fortune!
Then, think creatively about where else you'll find out about your market. Who else will be finding out about the market? Is there a journal for your chosen field? Or would a government department have carried out some research? You'll need to think like a detective - and persevere.
Next - you need to find out more about your customers.
Once you've read up on your market, start to focus on your customers. Again, is there research out there which will tell you about your customers - such as Mintel? Or is information from the Local Authority or from Government useful - the Leeds Statistics site has plenty of useful info, and the Neighbourhood Statistics site has census data and other useful information on it.
The Up My Street site can give useful neighbourhood based information too - including ACORN neigbhourhood profiles.
You may well have to do some primary research yourself. In essence, it's quite simple - think about what you want to find out - and then start asking questions! It probably won't feel that simple in practice, but remember not to over-complicate things. If you want to do field research - including questionnaires - have a look at some useful tips on the Business Link website. This tutorial from statpac is also pretty useful.
And to help you to design and analyse online questionnaires, you may want to use the excellent, free-to-use Survey Monkey.
Once you've found out about your customers, you may want split them into groups, based on any common characteristics. This is called a market segmentation - and there's more information about it on the Business Link website.
In a lot of cases, you can get ideas on how to segment your customers from market research reports. For example, when we helped someone write a plan for a gardening service, we based our segmentation on the one in Mintel's report on the gardening market:
Green thumbers
Gardening groaners
Instagardeners
Late bloomers
The idea is that you can alter your marketing mix for each of these groups - we'll talk about marketing mix later.
Now, you need to find out more about your competitors.
Then, think about your competitors. This is where it pays to think clearly about what market you're in - because you may have more competitors than you think. So, to take our earlier example, our aromatherapist isn't just in competition with other aromatherapists. They'll be competing with other providers of healthcare/stress-relief - eg other complementary therapists, health-food stores (with their stress-relieving teas) and perhaps even gyms and GPs. To identify your competitors, try to think like a customer - when a customer is in the market for my service, who else may think of buying from? And don't forget to ask your customers who else they buy from - they're the best people to help you to identify your competitors!
Once you've identified your competitors, do some analysis. It really depends on you how much detail you go into, but the questions on the Business Link site offer a good starting point:
What do they offer?
How do they price their products?
Who are their customers?
What their competitive advantages and disadvantages?
What might their reaction be to you entering the market?
Competition is a fact of life - what differs is how people manage it. In a niche market, competitors can be very useful - sometimes you can find ways to work together to increase the size of the market - so you each get a piece of a bigger pie.
My favourite business book - Marketing Judo - has a refreshing approach to dealing with competition. We have signed copies of the book to buy if you'd like one.
Now, it's worth trying to estimate the size of your market - to give you an idea of how big your business could be.
So you've identified a social need, and worked out that there may be some market demand for your service or product. But how big is that demand - and will it be big enough to keep you in business?
As with much of the social business planning process, there'll be an element of inspired guesswork in deciding how big your market is. But try to come up with as accurate a figure as you can. For example, here's how we might estimate the size of the market for a new organic veg delivery scheme in Leeds.
Having done our research, we reckon that 5000 people in Leeds are in the market for a monthly organic veg box delivery. If each of those people was to order a monthly £10 box, the market would be worth £600,000 (£10 x 12 months x 5000 people). We estimate that 20% of these people would choose us, therefore our market share could eventually be worth £120,000 (20% of £600,000). In fact, given that research suggests that the market for organic veg is growing by 30% a year, then our 20% share of the Leeds market could eventually be worth a lot more than £120,000.
This is a very rough example, based on fictitious figures - but hopefully you'll get the idea.
So what are you going to do now?
Recent Comments