A second factor that will have a serious impact on the viability of your enterprise is the question of the market for your business. Who is buying what you are selling? This might seem like a bit of a crass way to put it, but with a few thoughtful brainstorming sessions, we believe that this question might unlock another level of potential for your business to sustain in order to make the impact your team feels called to make. We want to offer a few thoughts that might help as you think this question through.
First, don’t limit yourself unnecessarily by tying your market to a specific geographic location. This is probably the most important one we could name because so much of the time and energy we spend on the impact/transformation side of things IS tied to a specific geographic location. We want to see our neighbors and friends thrive and so we have a specific place in mind when we design our social enterprise strategy. But just because our impact focus is rooted in place, doesn’t necessarily mean that our business market must follow suit. Starting a business that has a market outside your geographic community theoretically creates an unlimited income stream. So, perhaps instead of, or in addition to, asking what the market in your neighborhood is, ask yourself, what could we (the people of this community) offer, make, create etc that could be of use outside of our community as well?
I suppose this seems like common sense, you wouldn’t start a lawn care company that only mowed lawns in a particular part of town. You wouldn’t start a screen print shop that checked addresses before selling to a new customer. And that is precisely the point. Both of these business ideas have a built in natural advantage when it comes to their market because they can reach outside their community to tap a market elsewhere.
The strategic point here is that the majority of social enterprises are located in economically vulnerable communities to bring economic uplift, etc. Depending on that community, on its own, to also generate an income stream needed to sustain and grow a business would require an extraordinary amount of good fortune to success. Instead, a business that creates economic uplift by tapping into the economic potential of multiple communities is a strategic advantage that creates more potential for business success over the long haul.
Second, there will be cases where a business gets started in a particular community that exists primarily for the use and benefit of that community. This could be something like a laundromat, an enterprise that meets a need of the neighborhood. These are good options to consider as well, but it is important to remember that because the market for a business like this is going to be restrained by geography the income potential will automatically be smaller and so it is critical to think through the viability of the idea seriously.
In that regard, we recommend that you consider thinking about the different between discretionary and necessary spending. A business that depends on convincing customers to spend their discretionary money to support the business will have a serious disadvantage compared to a business that taps into the necessary spending that happens to make life happen in a neighborhood. So, it might be exciting to think about a cafe in the community (and there are plenty of reasons to still do this!) but cafes require people to spend their discretionary income. A laundromat on the other hand is a necessity in many communities. Providing this service taps into the normal everyday economic potential of the neighborhood while providing real value to the community.
Third, if your team is building a business tied to a geographic community, and especially if that business seeks to leverage people’s discretionary income rather than necessary income, it would be critical to think of ways to get that product to folks outside the community as well. Essentially, this is the same point as #1 above but we emphasize here that even if your plan is to have a cafe in a neighborhood, it is important to consider strategies that gets your product in the hands of more folks. Are there catering options, can you ship your products, can you have satellite locations (temporary even) to create new income streams? If your plan is to draw people from other parts of the city/community to your place it is important to remember the Field of Dreams adage (if you build it, they will come) is not necessarily always true.
Last, for this post, the question of your market is always tied to your intended customer. It might prove fruitful to consider business strategies that tap into business clients rather than simply targeting individual consumers. The potential for business expansion is significantly higher in cases where you are not relying on changing the spending habits of individual people. For example, if you are starting a cleaning business, why not target business contracts that create significant income right away rather than selling that service door to door in people’s homes?
Profitability is not the most important thing in a social enterprise, but it is an essential component. Thinking through your market, and potential income streams help to test your idea and hone the entire projects viability.