The Small Business Administration estimates that 50% of small businesses fail within the first five years. Research indicates that poor planning is at the root for most of these business failures. No one likes to fail, but starting a program or business has inherent risk. In the office, we often encourage each other and clients to take risks, but to mitigate the risk by “failing early and failing cheaply.” So, how is this possible in social enterprise or a new program opportunity? To do this intentionally, we encourage the use of feasibility (or opportunity) assessments.
A feasibility assessment analyzes the viability of an opportunity – does the idea warrant further investment of time, effort, and resources? It often uses impartial market research and internal analysis to evaluate the opportunity. It also should be relatively inexpensive. If you are unsuccessful, you haven’t invested much. If you are successful, you have a solid starting point for a business plan.
Here is the six-step process we recommend:
- Select Opportunity – Decide on what opportunity(ies) you intend to evaluate. Sometimes it is helpful to evaluate more than one, so it is a relative assessment of which opportunity is the best one.
- Establish Decision Criteria – Before you move forward with any additional steps, how will you decide? What factors are important? We have included our favorite decision criteria below as a starting point.
- Conduct Research – It is important to conduct both secondary (e.g. internet) and primary (e.g. surveys) research to ensure that you are gathering the right information about the opportunity in order to make a decision.
- Assess Internal Capabilities – Review your vision/mission and your strategic plan as a guide to whether or not an opportunity is right for your organization. It might also be important to assess the external landscape to determine if you are the right organization to take on a new opportunity or whether partners might be helpful.
- Analyze And Rate Criteria – Since you have the criteria established upfront, the analysis becomes simple. You just apply what you learned in market research and internal assessment to the pre-established criteria. To make this even easier and more objective, we recommend adding a rating system on each decision criteria – A to F or 1 to 5. It allows you (and others) to assign each decision criteria a score enabling you to determine a final value for each opportunity. This process should give you an objective idea of whether or not the idea has enough viability for additional steps.
For possible decision criteria, our favorites are:
- Size: How large is the potential client/customer base?
- Outlook: How favorable are the trends in the market?
- Revenue: What are the possible sources of revenue? What are the possible costs?
- Concentration: How many other organizations are providing the same or similar product or service?
- Ease of Entry: How easy will the opportunity be to launch – for us and for others?
- Partners: Are there easier paths to work together with someone else?
- Organizational Fit
- Mission: Is this opportunity aligned with mission?
- Skills/Expertise: Do we have what we need to be successful? If not, can we acquire it?
- Resources: What resources are needed and how hard are they to get and keep?
Failure happens. But, it isn’t enough to just embrace it. The social sector needs to learn how to manage it and a feasibility assessment is a great way to fail fast and move on to the next great opportunity.