2. Defining Your Business Model /

2.3. Validating the business concept

STANDARD:

We can show that the assumptions behind our business model are sound.

To meet the standard in full, you can show that your business idea makes sense and will make a lasting difference. You have made sure of this by doing thorough market research, by testing your idea on a small scale, or by building up a solid trading history.

How do you know that your social enterprise idea makes sense and is likely to make a lasting impact?

If you are still forming your idea or getting started as a social enterprise you may want to test whether people will buy from you. You then need to work out whether you can build a business around it that is capable of achieving social impact. There are usually three stages:

  1. Ideation. The first stage is to work up your idea in more detail, building on that eureka moment where you think you can change the world. But remember, you still need to test your idea through good market research.
  2. Prototyping and testing. A very basic service or product (sometimes called a ‘Minimum Viable Product’) can be developed quickly and provided to a selection of customers for testing. This will enable you to get feedback to verify that the problem you are tackling is real, that your proposed solution works, and is likely to make a difference. 
  3. Market validation. Finally, it can be helpful to continue to test and improve your product or service before you rush ahead to sell it on a full-scale. This enables you to demonstrate the potential impact of your work.

The Steps to Startup online launchpad program from the Social Enterprise Institute will take you through all of the foundational steps to planning and launching a successful social enterprise.

If you are involved with an established or growing social enterprise, there is no greater sign of market validation than having a customer buy from you repeatedly.

You will need repeated and growing business activity in order to maximise the positive impact of your social enterprise.