Anda di halaman 1dari 123

International

Labour
Organization

GENERATE
YOUR SOCIAL
BUSINESS IDEA
(GYSBI)

LEARNERS’
GUIDE
Copyright © International Labour Organization 2011

First published 2011

Publications of the International Labour Office enjoy copyright under Protocol 2 of the Universal Copyright Convention.
Nevertheless, short excerpts from them may be reproduced without authorization, on condition that the source
is indicated. For rights of reproduction or translation, application should be made to ILO Publications (Rights and
Permissions), International Labour Office, CH-1211 Geneva 22, Switzerland, or by email: pubdroit@ilo.org. The International
Labour Office welcomes such applications.

Libraries, institutions and other users registered with reproduction rights organizations may make copies in accordance
with the licences issued to them for this purpose. Visit www.ifrro.org to find the reproduction rights organization in your
country.

Generate Your Social Business Idea. Learners’ Guide


ISBN
978-92-2-124811-8 (print)
978-92-2-124812-5 (web pdf )

ILO Cataloguing in Publication Data

The designations employed in ILO publications, which are in conformity with United Nations practice, and the presentation
of material therein do not imply the expression of any opinion whatsoever on the part of the International Labour Office
concerning the legal status of any country, area or territory or of its authorities, or concerning the delimitation of its
frontiers.
The responsibility for opinions expressed in signed articles, studies and other contributions rests solely with their authors,
and publication does not constitute an endorsement by the International Labour Office of the opinions expressed in
them.
Reference to names of firms and commercial products and processes does not imply their endorsement by the
International Labour Office, and any failure to mention a particular firm, commercial product or process is not a sign of
disapproval.
ILO publications and electronic products can be obtained through major booksellers or ILO local offices in many
countries, or direct from ILO Publications, International Labour Office, CH-1211 Geneva 22, Switzerland. Catalogues or
lists of new publications are available free of charge from the above address, or by email: pubvente@ilo.org
Visit our web site: www.ilo.org/publns

Printed in South Africa


International
Labour
Organization

GENERATE
YOUR SOCIAL
BUSINESS IDEA
(GYSBI)

LEARNERS’
GUIDE

i
ii
ABOUT
GENERATE
YOUR SOCIAL
BUSINESS IDEA
Generate Your Social Business Idea (GYSBI) is part of the International Labour Organization’s Social Business Development
Services Resource Pack. This is a system of interrelated training packages and other resources for social entrepreneurs with
limited or no previous exposure to management training. The training products in the package include Introduction to Social
Enterprise (ISE), Generate Your Social Business Idea (GYSBI) and Generate Your Social Business Plan (GYSBP).

The GYSBI programme is for people who have no concrete business idea and want to start a social business. However, to develop
a business plan for the social business it is necessary to have a clear idea of the business they propose to start and how it will
address social needs in their community. This GYSBI Learners’ Guide will help social entrepreneurs to generate and analyse social
business ideas, and to select the most appropriate one which can be used as a basis for a business plan.

The GYSBI Learners’ Guide will take you through the process of generating and choosing the most appropriate social enterprise
idea for starting your own business by helping you to:

• Understand concepts such as social enterprise, social entrepreneur and the social economy;
• Understand what makes a successful social business idea;
• Assess your skills, experiences and personal characteristics as a social entrepreneur;
• Identify many potential social business ideas;
• Analyse these business ideas and
• Select the most suitable business business idea

The material in this guide has been developed by Real Development for the ILO. It has been developed in and is intended for use
in South Africa, although much of the content will also be relevant elsewhere.

Accompanying this GYSBI Learners’ Guide is a Trainers’ Guide and a slide presentation that trainers can use to deliver the material,
adapting it as necessary for their audiences. There is also a set of 25 case studies of social enterprises in South Africa on which
trainers and learners can draw if necessary.

iii
iv
CONTENTS
MODULE 1: INTRODUCING SOCIAL ENTERPRISE 1
Section 1.1 Definition and concepts 1
Section 1.2 Benefits of social enterprises 4
Section 1.3 What is a social business idea? 4
Section 1.4 Finding good social business ideas 9

MODULE 2: ARE YOU A SOCIAL ENTREPRENEUR? 13


Section 2.1 Characteristics of social enterprises and social entrepreneurs 13
Section 2.2 Are you the right kind of person to be a social entrepreneur? 14

MODULE 3: IDENTIFYING SOCIAL PROBLEMS IN YOUR COMMUNITY 23


Section 3.1 How do social problems lead to social enterprises? 23
Section 3.2 How do personal experiences lead to social enterprises? 24
Section 3.3 Conducting a situation analysis 25
Section 3.4 Defining community needs and problems 28

MODULE 4: FINDING GOOD SOCIAL BUSINESS IDEAS 29


Section 4.1 Where do social business ideas come from? 29
Section 4.2 Turning social needs into social enterprises 31
Section 4.3 Defining your target group 31
Section 4.4 Generating your own social business ideas 32
Section 4.5 Writing up a social business idea 43

MODULE 5: ANALYSING AND SELECTING SOCIAL BUSINESS IDEAS 47


Section 5.1 Screen your Ideas List 47
Section 5.2 Conduct a feasibility study 54
Section 5.3 Have you selected the best social business idea? 57

MODULE 6: WRITING UP YOUR SOCIAL BUSINESS IDEA 59


Section 6.1 Are you unsure about your selection? 59

MODULE 7: FACT SHEETS 61


Section 7.1 Frequently asked questions (FAQ’s) 61
Section 7.2 Glossary 63
Section 7.3 Sources of information and support focusing on social enterprises 64
Section 7.4 Other sources of information 64

ANNEXURE 1: PUBLIC BENEFIT ACTIVITIES 67


ANNEXURE 2: SITUATION ANALYSIS 71
ANNEXURE 3: TECHNIQUES TO IDENTIFY SOCIAL BUSINESS IDEAS 77
ANNEXURE 4: IDEAS LIST 79
ANNEXURE 5: BUSINESS IDEA INFORMATION FORM 81
ANNEXURE 6: FIELD RESEARCH 83
ANNEXURE 7: SWOT ANALYSIS 91
ANNEXURE 8: FEASIBILITY STUDY QUESTIONS 95
ANNEXURE 9: WRITING UP YOUR SOCIAL BUSINESS IDEA 109

v
vi
MODULE 1
INTRODUCING SOCIAL ENTERPRISE
Section 1.1 Definitions and Concepts

a. The Emergence of Social Enterprise as a Concept

There is increasing interest in social enterprise around the world. We will learn later that there is no single agreed definition of
social enterprise, but put simply, a social enterprise is an organization that is run like a business but that has a social purpose.

Examples of such social enterprises have existed for a long time, but the phrase only really started being used in the 1970s. Since
then, the concept has gained popularity. Three of the factors that have encouraged this are:

• Pressure on non-profit organizations to find new income streams to maintain and expand their programmes in response to
the decline in traditional sources of revenue such as charitable contributions and government grants.
• The recognition that business approaches can be applied to tackle social problems in a sustainable way. This has led to the
emergence of new forms of social purpose business.
• The outsourcing of the delivery of some public services by governments.

Conventional Social Conventional


Non-Profit enterprises businesses
Organisations

Social enterprises occupy the middle ground between conventional Non-Profit Organisations (NPOs) and conventional
businesses, and may be legally registered as either. They may take for-profit or non-profit legal forms; what matters most is how
any profit generated is used, and who benefits from it.

Social enterprises differ from conventional enterprises in that social impact is considered as more important than maximising
profits. They are unlike conventional NPOs as they earn a substantial proportion of their income rather than being dependent
on grants.

Many social enterprises rely on a mix of grant funding and earned income, particularly in the first few years of existence or in the
transition from grant-dependency to becoming financially sustainable.

While social enterprises are part of the social economy sector (including cooperatives, mutual benefit societies, associations and
foundations), they do not necessarily follow the principles of democratic governance or collective ownership as closely as some
of these other social economy organizations. However, there is increasing recognition of social enterprises as one among many
forms of social economy enterprises.

The recent global economic crisis has led to increased interest in alternative business models seeking to combine social and
financial goals. This is also true in South Africa. The New Growth Path announced by the Economic Development Department
in October 2010 identifies the social economy as part of the economy that has the potential to create many decent jobs. The
Honourable Minister of Economic Development, Ebrahim Patel has stated that “the social economy is a frequently under-
recognised, under-appreciated and under-marketed part of the modern economy”. 1

In South Africa, where social enterprises do not as yet enjoy significant policy recognition or support, they could represent new
growth opportunities offering a politically attractive win-win solution including new job creation and improved service delivery.
They have the potential to tackle many of the social problems faced in South Africa today, especially poverty alleviation and
job creation, but also other social and environmental challenges. Social enterprise has the potential to build human dignity and
self-worth, thereby addressing many of the ills created by South African history.

1
Despite interest in the social economy and social enterprises (especially from academics), there is
no common conceptual agreement and understanding of these concepts. Defining them is further
complicated by inherent diversity and the difference between theory and practice. As a result,
various concepts are often used interchangeably, e.g. social entrepreneurship, social entrepreneurs,
social enterprises, social businesses and social economy.

However, it is important that we create a common understanding of concepts. Typically social


entrepreneurship refers to a general process or overall culture, whereas social enterprises and social
business refer to the organizations that arise from this culture and that put it into practice. The term
social entrepreneur refers to the founder/leader of the initiative or sometimes to those people who
are the driving force behind social innovation. The social economy is the part of the economy that
includes social enterprises and other forms of economic organisations that have a social purpose
and that focus particularly on collective ownership, economic justice and democratic participation.

We will go into more detail by considering definitions in the remainder of this Module.

b. What is the social economy?

The term ‘social economy’ was first coined in the 19th century to describe an economy which
contributes to improved quality of life for all people in the community rather than only a privileged
few. It is built on economic justice and democratic participation.

The social economy is often defined in terms of the legal status of the enterprises and organisations
that exist within it, such as cooperatives and mutual societies (such as stokvels). However, it is also
often characterised by some common principles, especially:

• Placing more value on people and work than on money;


• Independent management;
• Democratic decision making processes;
• Collective ownership.

In recent years the social economy concept has been broadened


to include diverse forms of social enterprises and social
entrepreneurship. In 2009, delegates from across Africa defined
the social economy as “a concept designating enterprises and
organizations, in particular cooperatives, mutual benefit societies,
associations, foundations and social enterprises, which have the
specific feature of producing goods, services and knowledge
while pursuing both economic and social aims and fostering
solidarity”. 2

c. What is a social entrepreneur?

Finding a single clear definition of a social entrepreneur is far more


difficult than seems likely. A variety of definitions exist. In 2009
the Schwab Foundation defined a social entrepreneur as some-
one who “builds strong and sustainable organisations, which are
either set up as not-for-profits or companies”. 3

According to Ashoka, social entrepreneurs “are individuals with


innovative solutions to society’s most pressing social problems.
They are ambitious and persistent, tackling major social issues
and offering new ideas for wide-scale change”. 4

2
In 2001, the Director-General of the International Labour Organization (ILO) noted that social entrepreneurs shared the vision,
creativity and determination of business entrepreneurs to create new products and services and even entirely new industries,
and that social entrepreneurs use these qualities to create sustainable market-based solutions to social problems. 5

While business and social entrepreneurs share the same drive to create viable and sustainable businesses, the social entrepreneur
uses his/her business to find solutions to problems in communities. Thus, social entrepreneurs focus on creating social value in
addition to economic value.

Social entrepreneurs are change agents and the driving force behind sustainable social innovation, transforming fields such
as education, health, environment and enterprise development. It is important to understand that despite this focus, social
entrepreneurs differ from social activists and advocates. They use entrepreneurial skills and business methods to build concrete
and sustainable for-profit or not-for-profit organisations which become the vehicles to achieve their social objectives.

d. What is a social enterprise, or social business?

Some people use ‘social business’ to refer particularly to for-profit social enterprises, to distinguish them from ‘enterprising non-
profits’. However, in this guide, we use ‘social enterprise’ and ‘social business’ interchangeably.

While it is difficult to find a single definition for social enterprise, many of the definitions and descriptions commonly used speak
the same language:

• The Social Enterprise Coalition in the United Kingdom views social enterprises as “businesses trading for social and
environmental purposes”6
• Kim Alter, founder and managing director of Virtue Ventures (an international consulting firm specialising in social
entrepreneurship) defined social enterprises in her paper The Four Lenses Strategic Framework as “any business venture
created for a social purpose – mitigating/reducing a social problem or a market failure – and to generate social value while
operating with the financial discipline, innovation and determination of a private sector business.” 7
• In 1999 the Organisation for Economic Cooperation and Development (OECD) defines social enterprises as “…any private
activity conducted in the public interest, organised with an entrepreneurial strategy but whose main purpose is not the
maximisation of profit but the attainment of certain economic and social goals.” 8
• The Government of the United Kingdom believes a social enterprise to be “…a business with primarily social objectives
whose surpluses are principally reinvested for that purpose in the business or in the community, rather than being driven
by the need to maximise profit for shareholders and owners.”9

• In marketing a Social Business Plan Competition on the Cape Flats in 2009, The Business Place defined social businesses as
follows: “A social business uses business methods to address social problems. A social business should have a solution to

3
a problem in your community. Also, this solution must have a way of making money. Some of
the areas in which there are opportunities for social business are recycling, waste management,
housing, community services, food security, crime prevention, education/skills development,
health care, childcare, employment opportunities for disadvantaged groups, arts and culture,
care for elderly, leisure and recreation, and environmental protection.” 10

These definitions pinpoint two distinct characteristics of social enterprises:


• Delivery of social value as the principal aim as opposed to maximising profit for the owners/
shareholders.
• The production of goods or the provision of services on an ongoing basis with a view to gener-
ating an income that covers costs and potentially allows for a surplus.

Social enterprises are also sometimes defined in terms of the origin of income, which may be a
mixture of:

• Grants and donations (including subsidies, donor funding, charitable donations and grants);
and
• Income generated through trading.

Section 1.2 Benefits of social enterprises


Social enterprises exist to fulfil a social purpose, rather
Financial than solely to make a profit. They need to generate
aims revenue to sustain themselves. This enables them to
achieve their social and/or environmental aims. Earning
income is not seen as an end in itself, but simply as a
means to an end. This means that a social enterprise
must manage the so-called “triple bottom line”.

Despite the challenges presented by managing this


triple bottom line, the ability to change your own world
can be very rewarding. In addition, you should have the
opportunity to employ local people, perhaps creating
jobs for people who would ordinarily find it difficult
Environmental Social (if not impossible) to find work. The opportunities for
aims aims developing new skills can be even more significant than
simply finding employment.

Different types of people can benefit from a social


enterprise, including people who have been unemployed
for a long time, people with disabilities, ex-offenders,
ethnic minorities, women and young people.

Section 1.3 What is a social business


idea?
A business idea is a short and precise description of the
basic operations of an intended business. A good busi-
ness starts with a good business idea. Before you can
start a good business you need to have a clear idea of the
sort of business you want to run.

This is also true of a social enterprise. The first step is to


define the social conditions or problems that you want
to address through your business. Very often the social
issue will suggest the business idea. For example, if you
want to create jobs in your community as a means to
reduce poverty, the focus of your business will be labour
intensive. However, if you want to improve the state
of the environment you might want to start a garbage
collection service.
4
Always remember that a social enterprise will usually have to compete with purely commercial businesses. This means that
social enterprises will face the same challenges and risks as more traditional businesses. If you want to succeed as a social
enterprise your business must be as good as (or even better than) traditional businesses with a pure profit aim.

Social enterprises must focus on their central purpose:

• Which social issue the business will address, who it will benefit and how it will do that.

However, social enterprises are still businesses. A successful business meets the needs of its customers, giving them what they
need or want. Your business idea will tell you:

• What product or service your social business will sell.


• Who your social business will sell to and what needs it will fulfil.
• How your social business is going to sell its products or services.

a. Which social issue will your business address?


A social enterprise (by its very definition) aims to address a social issue. Thus, you need to know which social problem your
business will tackle. ‘Social problem’ is a generic term describing a range of conditions and behaviours evident in a society which
is deemed unacceptable by a substantial proportion of the members of the society. It is a symptom of uncertainty in a society
and will not change without specific action being taken.

In complex, modern society, people from different social groupings experience and define social problems differently and
experience common problems in different ways. Social problems can be viewed subjectively (from one’s own perspective) and
not only objectively. For these reasons the range of social problems is almost infinite. However, typically social problems fall into
broad categories. The South African Revenue Service (SARS) has defined various activities as Public Benefit Activities (PBAs): 11

• Welfare and humanitarian activities;


• Health care;
• Land and housing;
• Education and development;
• Religion, belief and philosophy;
• Cultural activities;
• Conservation, environment and animal welfare;
• Research and consumer rights;
• Sport;
• Providing of funds, assets or other resources; and
• General activities.

However, this list is not complete. You could think of social causes and activities that social enterprises could undertake that
are not on this list, so only use it as a starting point. Just as social problems differ, the proposed solutions also vary due (at least
partly) to the different interests and values of the parties involved. As a social entrepreneur you will not only need to define the
social problem you want to address, but also how you will do so.

It is important to remember that social problems:

• result from how society operates;


• are not caused by ‘bad’ people;
• are not abnormal;
• require change to solve;
• are seen differently by different people;
• are defined differently at different times;
• involve values as well as facts;
• sometimes cannot be solved despite our best efforts;
• are often interrelated; and
• even if solved can sometimes cause new social problems.

5
ACTIVITY ONE:

Review the SARS list of public benefit activities above and make a list of the social problems and
issues evident in your community.

From your list, identify the three most critical social challenges, and think about any organisations
or businesses that have emerged in your community to address these social challenges.

Notes:

Social problems and issues in my community:

The three most critical social challenges in my community are:

1.

2.

3.

6
b. What products or services will your business sell?

What type of product or service will your business sell? Your business idea should be based on
products you know about or services you are good at. They must be products or services that
people are willing to pay for. Analysing various business ideas will help you focus on the best type
of business for you.

A product is an object that


people (customers) pay for.
It may be something you
make yourself or it may be
something that you buy to
re-sell. Tools, baked goods,
clothes and retail goods are
all products.

A service is something
you do for people which
they pay for, for example,
shining shoes, delivering
goods for other businesses,
hairdressing, keeping money
safe in a bank and repairing
items.

c. Who will your business sell to and what need will it fulfil?

Social entrepreneurs must consider

• potential customers (just like conventional businesses), as well as


• potential beneficiaries (just like traditional non-profit organisations).

These two groups are not mutually exclusive as some customers might very well be beneficiaries of
the social enterprise and vice versa.

Who will buy your products or services? Customers are an essential part of every business. It
is important to clearly understand who your customers will be. Will you sell to a specific type of
customer or to everybody in a specific area? It is not enough to know that there are customers who
are able and willing to pay for your products and services. You also need to know that there are
enough of these customers or the business will not make a profit.

Attracting customers is critical for all businesses, including social enterprises. Your social business
can achieve this by providing products or services offering good value for money in an innovative
way. For example, customers may be more willing to buy from you than from a competitor because
they feel they are contributing to the welfare of other people in their local community. Similarly,
customers may prefer buying from a social enterprise if they know that profits are channelled back
into community development or another social/environmental issue.

The main beneficiaries of social enterprises are those who are socially excluded such as the poor,
unemployed people, people with disabilities, the elderly, children and the youth. Your specific social
enterprise will determine exactly who the beneficiaries will be.

7
As well as providing benefits to the community at large, social entrepreneurs are also employers.
This creates opportunities for them to pass on knowledge, skills and attitudes to their employees,
thereby nurturing their abilities and creating new opportunities. Some of these employees may
even emulate the social entrepreneur and establish their own social enterprises which could further
benefit the community. If you make particular efforts to employ disadvantaged individuals they may
also be considered as beneficiaries of the social enterprise.

ACTIVITY TWO:

Review the three critical social challenges in your community that you identified in the previous
activity.

Consider the social enterprises that you could start to address these problems. Who would the
beneficiaries of each of the social enterprises be?

Notes:

Social problem 1:
Potential social enterprise: Potential beneficiaries

Social problem 2:

Potential social enterprise: Potential beneficiaries

Social problem 3:
Potential social enterprise: Potential beneficiaries

d. How will your business sell its products or services?

How are you going to sell your products or services? This is easy to answer if you plan to open
a shop. However, if you plan to manufacture products or provide a service you can sell in many
different ways. For example:

• You can sell your products directly to your customers by ensuring that they visit your place of
business (e.g. your workshop).
• You can sell your products to retail shops who will sell your products to their customers.
• You can sell products via the internet or other forms of mail-order.

8
Section 1.4 Finding good social business ideas
a. How are social business ideas developed?

Business ideas are identified through positive, creative thinking. They can be inspired by local resources, local needs, local
activities, interests and hobbies.

Many good business ideas are developed from perceived business opportunities. Business opportunities are gaps between
what people want to buy and what the existing businesses offer. Business gaps can be filled by entrepreneurs like you with the
necessary skills and resources.

To be successful, social entrepreneurs must balance the needs of customers with their own skills and experience, but also with
the social and environmental needs they have identified. Remember that these factors change all the time. If you can balance
what your customers want, what you can provide with the right costs and prices you will make a profit. If you fail to pay
attention to any of these, your business will not be successful. This also means that the social issues you have identified will not
receive the attention you believe they deserve.

CASE STUDY: FINDING GOOD SOCIAL BUSINESS IDEAS12

A non-profit organisation in the disability sector in the Free State found that its traditional funding base was slowly
eroding. New ways had to be found to earn income to sustain existing programmes and services to people with
disabilities. At a meeting, one of the employees of the NPO, Tertius Meyer, found a senior social worker from Groenpunt
Prison sitting next to him. They were soon chatting like old friends. Tertius learnt about Groenpunt Prison located near
Sasolburg (an industrial town). The prison wanted to provide support to inmates that would help them to generate an
income once they were released. Very soon, areas of potential cooperation were being discussed.

On her return to work, the social worker spoke to prisoners who had created an action committee to identify training
opportunities. This led to a meeting between the committee and the NPO.

It was agreed that Elvis Mhlahlo and Bongani Ntshingila, two trainers employed by the NPO, would provide training as
part of the income generation project of Groenpunt Prison. The training would include entrepreneurial and technical
training in candle and soap manufacturing as potential business opportunities. Both Elvis and Bongani had practical
experience in these fields, having established businesses based on these business ideas. It was further agreed that
potential existed for other types of technical training based on needs and availability.

Several factors made this initiative feasible as a social business idea:

• The training programme would only be made available to inmates serving the last year of their sentence.
• If inmates could be skilled to identify, analyse and select business ideas, develop business plans and source business
finance prior to release, they would be able to start up a small business soon after release.

Funding had been sourced from commercial financial institutions and other small business development agencies as
start-up funding for potential businesses.

The following agreements were reached between the NPO and the Groenpunt Prison:

• Inmates themselves will pay for business management training at a rate of R80 per person per day and other
logistical costs will be carried by the prison authorities.
• Each training programme will be conducted over ten days.
• The training programme will be repeated twice annually.

9
EXERCISE
1. What do you think is the social problem that this business idea will address?

2. Analyse the business idea in terms of the following requirements of a social enterprise.

Delivery of social value:

Generating income through trading:

3. Do you think this is a good social business idea? Give reasons for your answer.

4. What advice would you give the NPO about this social business idea?

10
b. What makes a good social business idea?

A good social business idea is one that is based on:

A good social business idea is based on the needs identified in the community that you want to address. Thus you will need to
describe these needs clearly.

All good businesses begin with a good idea that has been well thought out. This manual will help you to think up good social
business ideas, analyse them and select the one that suits you and your circumstances best to enable you to achieve your
objectives.

11
c. An overview of the process to find a good social business idea

A social enterprise starts long before you open the doors of your business, source the required
funding or even write your business plan.

Social entrepreneurs typically share a number of traits.


Step 1: Module 2 will help you to decide whether you have
Assessment of social what it takes to set up and run a social enterprise.
entrepreneurial
characteristics

A social enterprise starts with identifying social


Step 2: problems and challenges in your community that need
attention. Module 3 will focus on methods, techniques
Awareness of a social/ and tools to help you to identify social issues in your
environmental problem own community.

It is then up to you to identify potential business ideas


Step 3: to address the social problems and challenges you
Identifying a range of identified in the first step. Module 4 will show you how
social business ideas to find suitable social business ideas.

You will find that you have more ideas than you can
Step 4: use. Module 5 will help you to assess the social business
Assessing the feasibility ideas you have developed and determine the feasibility
of social business ideas of the most promising ideas.

Various factors will influence your decision when you


Step 5: select the social business idea that suits you best. You
Selecting the best should now be in a position to choose.
social business idea

12
MODULE 2
ARE YOU A SOCIAL ENTREPRENEUR?

Section 2.1 Characteristics of social enterprises and social entrepreneurs


In Module 1 you were introduced to some of the key concepts and definitions in the world of social enterprises. We will now
consider whether starting a social enterprise is the right choice for you.

a. What are the characteristics of social enterprises?

We should start out by reminding ourselves of the two defining characteristics of social enterprise:

1. Delivery of social value as the principal aim as opposed to maximising profit for the owners/shareholders.
2. The production of goods or the provision of services on an ongoing basis with a view to generating an income that
covers costs and potentially allows for a surplus.

These characteristics are often accompanied by the following further descriptors, which apply to most social enterprises:

3. The social enterprise clearly states its social purpose.


4. The business is independent. This distinguishes social businesses from the public
sector and projects within larger organisations.
5. The business earns most of its income from trading. This distinguishes a social
business from a conventional non-profit organization that relies on grants.
6. A significant proportion of any profit made by the business is used in line with
its social purpose. Social enterprises are driven by social objectives rather than
maximising profit for private gain. This distinguishes social enterprises from
conventional businesses, even those with some corporate social investment (CSI)
activities.
7. There is a commitment that if the social business is dissolved, all remaining assets
are used in line with its social purpose.
8. Social enterprises measure and can demonstrate their social impact.

With these characteristics in mind, you should consider whether running a social business feels right for you. This is a personal
decision and you should not feel ashamed if the answer is no. Many people feel more comfortable working in the public
sector, for a conventional charity, or for a conventional profit-maximising business.

Assuming the answer is yes, let’s see if you have what it takes to be a social entrepreneur.

b. What are the characteristics of social entrepreneurs?

Social entrepreneurs are characterised by a number of traits:

• A need for achievement;


• A need for autonomy;
• A creative tendency;
• The ability to take calculated risks; and
• A strong social purpose.

13
Section 2.2. Are you the right kind of person to be a social
entrepreneur?
a. Self-assessment

There is no set formula that says whether you will succeed as a social entrepreneur. However, the
following social entrepreneurial assessment may help you in your personal evaluation process. This
will make it clearer if you have what it takes to be a social entrepreneur. Remember that this is simply
a tool and that you should keep the results in perspective.13

ACTIVITY THREE:

For each question below, choose whether you agree or disagree by ticking the block in the
appropriate column. You must answer all questions in this assessment.

Agree Disagree
1. I don’t mind doing routine work if the pay is good

2. When I set my own targets, I set fairly challenging ones

3. I do not like to do things that are unconventional

4. I can make a difference in my community

5. I rarely daydream about the future

6. I usually defend my point of view if someone disagrees with


me

7. Nothing we do, can help make our society a better place to live

8. Sometimes people tell me that my ideas are unusual

9. I would rather use my last R10 to play the Lotto than to bet it on
me winning a game of cards

10. I like challenges that really stretch my abilities rather than the
things I can do easily

11. I would prefer to have a reasonable income in a job that I


was sure of keeping rather than have a job I might lose if I didn’t
perform well

12. I like to do things in my own way without worrying about what


other people think

13. Nothing we do will change the problems in our community

14. I like to find out about things even if it means handling some
problems while doing so

15. If I am having problems with a task I leave it and move on to


something else

16. In business it is not always just about making money but also
about making a difference in your community

14
Agree Disagree
17. I do not like sudden changes in my life

18. I will take risks if the chances of success are 50/50

19. I think more of the present and past than of the future

20. If I had a good idea to make some money, I would be willing to


borrow some money to help me to do it

21. When I am in a group I am happy to let someone else take the


lead

22. I believe that there is some good in all people

23. I do not like guessing

24. It is better to do a job well than to try and please someone

25. I am not aware of the top three social problems in my


community

26. People generally think I ask too many questions

27. I would not undertake a task if it means there is a chance of


failure

28. I get annoyed if people are not punctual

29. I prefer to have all the facts before I make a decision

30. I seldom need or ask for help when I attempt a task

31. I don’t care much to protect the environment

32. I prefer to have generalist skills than to be a specialist in one


skill/area

33. I prefer to work with someone I like with fewer skills, than
someone I do not like with good skills

34. I can make my business succeed without anyone’s help

35. I prefer doing things the usual/conventional way than to try


new ways

36. I prefer to weigh up the pros and cons quickly when making an
important decision than to take a long time thinking about it

37. I would rather work on a task in a team than all alone

38. I prefer to take a risk only once I know it would leave me better
off

39. I do what is expected of me and follow instructions

40. I tend to put others first

41. I like to have my life organised, running smoothly and according


to plan

15
Agree Disagree
42. I think more about success than the possibility of failing

43. Other people tend to say that I am a selfish person

44. I can multi-task

45. I do not like to ask favours of others

46. My day starts early, I stay up late to complete tasks

47. What we are used to is usually better than what is unfamiliar

48. People think I am stubborn and hard-headed

49. When people suffer it is because they deserve it, I can do


nothing to help them

50. I have many ideas and cannot select one

51. It is easy for me to switch off and relax

52. I agree that an injury to one is an injury to all

53. I find it hard to adapt to change and prefer to keep to routine

54. I enjoy new risky projects

b. Calculating your score

You are now ready to calculate your social entrepreneur assessment score. You might find it useful
to have your trainer’s help with this scoring process. It’s not as complicated as it seems at first!

Starting with box 1 in the top left hand corner of your answer sheet below, work your way down
from Question 1 to Question 54 and circle only A for Agree or D for Disagree based on your answers
above. After circling your answers, give yourself one point for every D (Disagree) and zero points for
every A (Agree) that you have circled in the grey shaded boxes. Similarly give yourself one point for
every A (Agree) and zero points for every D (Disagree) that you have circled in the unshaded boxes
below.

16
Score

1 10 19 28 37 46
Row 1 A A A A A A
D D D D D D

2 11 20 29 38 47
Row 2 A A A A A A
D D D D D D

3 12 21 30 39 48
Row 3 A A A A A A
D D D D D D

4 13 22 31 40 49
Row 4 A A A A A A
D D D D D D

5 14 23 32 41 50
Row 5 A A A A A A
D D D D D D

6 15 24 33 42 51
Row 6 A A A A A A
D D D D D D

7 16 25 34 43 52
Row 7 A A A A A A
D D D D D D

8 17 26 35 44 53
Row 8 A A A A A A
D D D D D D

9 18 27 36 45 54
Row 9 A A A A A A
D D D D D D

Add your scores across for each row in the last column and copy the scores in the boxes below:

17
Row 1 Row 2 Row 3

Row 4 Row 5 Row 6

Row 7 Row 8 Row 9

Complete the following table to calculate your total score. Follow the instructions in the middle
column to calculate your score for each section. Add up the score for each section to calculate your
total score.

Section 1: Achievements Total of Row 1 + Row 6

Section 2: Autonomy Total of Row 3 only

Section 3: Creativity Total of Row 5 + Row 8

Section 4: Taking risks Total of Row 2 + Row 9

Section 5: Social purpose Total of Row 4 + Row 7

Total score

c. Interpreting your score

Section 1 - Need for Achievement


The maximum score is 12 and the average score is 6.

Your score: ____________

If you score well in this section you may possess most of the following qualities: Forward looking,
self confident, results orientated, restless and energetic, optimistic, task orientated and dedicated
to task completion.

Section 2 - Need for Autonomy


The maximum score is 6 and the average score is 3.

Your score: ____________

If you score high in this section you most likely enjoy doing unconventional things, prefer working
alone, need to express yourself, like to make up your own mind, do not bow to influence and are
self-determined.

Section 3 - Creative Tendency

18
The maximum score is 12 and the average score is 6.

Your score: ____________

If you score high in this section you are imaginative and versatile, tend to daydream, play around
with ideas, enjoy new challenges and changes.

Section 4 - Taking Calculated Risks


The maximum score is 12 and the average score is 6.

Your score: ____________

A high score indicates that you do not act on incomplete information, but that you set challenging
but attainable goals, have a good sense of your own capabilities, are neither over- nor under-
ambitious, evaluate benefit against cost before acting.

Section 5 - Social Purpose


The maximum score is 12 and the average score is 6.

Your score: ____________

A high score indicates that you know how to spot a social challenge, show considerable empathy
for the challenges in your community, take control of finding solutions to social challenges, equate
success with making a difference and not only making a profit.

Now add up all the scores above and complete the last section:

Your total score: ____________

The total possible score is 54 and the average is 27.

Interpreting your score:

If you did not score more than the average for Section 5, but scored highly in all the other sections,
then you are probably a conventional entrepreneur and should consider the ILO Generate Your
Business Idea training programme.

If you have scored less than 27 in total you lack entrepreneurial characteristics and should rather
pursue alternative career choices.

If you have scored between 27 and 36 in total you should check which sections you have scored
the lowest on and attempt to develop yourself in these areas before taking a re-assessment.

If you have scored between 36 and 54 you have the characteristics of a social entrepreneur!

d. Do you have what it takes to be a social entrepreneur?

The motivation for starting a social enterprise differs from person to person. For some people this motivation can be found
in their personal desire to help other people; for others it is a social need and for yet others it is driven by something that has
happened in their lives. It is important that you understand your own motivation for wanting to start a social enterprise.

19
ACTIVITY FOUR:

It requires motivation and commitment to be a successful social entrepreneur making a real


difference in your community. Do you think you have what it takes?

Review your suitability as a social entrepreneur by completing the questionnaire below.

1. Why do you want to start a social enterprise? List your reasons in order of importance.

2. What are the advantages of starting a social enterprise?

3. What are the disadvantages of starting a social enterprise?

4. What barriers are you likely to face in establishing a social enterprise?

5. How will it affect you and your family if you start a social enterprise?

20
Review your answers to these questions and consider whether you have what it takes to start a social enterprise.
Many social entrepreneurs do not have enough skills, all the characteristics or are not in the right situation when they start
to plan a new social enterprise. However, skills can be learned, characteristics developed and situations improved. You can
strengthen your skills and characteristics as a social entrepreneur by:

• Seeking help from others. Talk to your friends, family, trainers and other social entrepreneurs.
• Observing successful social entrepreneurs. Think about what they do and see how it helps to achieve success.
• Attending training to strengthen areas where you are weak.
• Reading books to improve your knowledge and skills.

The following activity will help you to make a list of the things you will need to work on before starting your own social enterprise
and draft an action plan to do so.

ACTIVITY FIVE:

List the skills and characteristics you consider as weak areas needing improvement. Think about
how you are going to strengthen each factor and write it down. Be very specific in your planning.

Draft an action plan for personal development using the form

MY PERSONAL DEVELOPMENT ACTION PLAN


I need to strengthen myself in the What I will do to strengthen myself in I will do this by the following date
following aspect this aspect

21
22
MODULE 3
IDENTIFYING SOCIAL PROBLEMS IN
YOUR COMMUNITY
Section 3.1 How do social problems lead to social enterprises?
All social enterprises are a response to social problems or needs. These needs can refer to the existence of conditions that
prevent development or well-being, e.g. the need for a crèche, or lack of adequate health care services in a community.

The process of turning a social need or problem into a social enterprise starts with identifying the specific need or problem. Some
social enterprises are preventative in nature, ie. preventing the development of a social problem that would otherwise occur
in the future. For example, the establishment of a reading centre will improve literacy rates which will in turn make community
members more employable and thus prevent unemployment and poverty.

The process of establishing a social enterprise is not always the same:

• An existing commercial business may choose to transform into a social enterprise based on needs that become evident in
the community. The transformation into a social enterprise is not the same as becoming involved in a community through
donations. Such donations usually form part of the corporate social investment (CSI) programme of a business and do not
affect the operations of the business or its profit-maximising nature. In contrast, the primary focus of social enterprises is
addressing community needs rather than maximising profits.
• An existing community-based or non-profit organisation may become a social enterprise by increasing the proportion of its
income that it earns. For example, protective/sheltered workshops for people with disabilities can be transformed into fully
sustainable social businesses. A social enterprise is characterised by its ability to earn income from trading and operational
activities.
• You may identify a specific community need or problem which leads to the establishment of a new business as a social
enterprise.

Regardless of these factors, the first step for the establishment of any social enterprise is being aware of a specific problem
requiring attention. It is often because social entrepreneurs are in touch with their communities that they are able to identify
social/environmental issues as a first step.

In Module 1 you were introduced to the public benefit activities approved by SARS. Read through the complete list in the box
below to help you identify areas to investigate further in your own community.

Welfare and humanitarian services including children, elderly people, physically or mentally abused
and traumatised persons, disaster relief, poverty relief, people in conflict with the law, drug abuse,
conflict resolution, human rights, safety of the general public, family stability, legal services, asylum
seekers and refugees, community development and media freedom.

Health care including HIV/AIDS, terminally ill people and their families, blood transfusion, organ
donation, primary health care, sex education and family planning.

Land and housing including low-cost housing, residential care, community facilities (e.g. clinics,
crèches, community centres, sport facilities), land access and the protection of the land rights of
poor people.

Education and development at all levels from early childhood development to higher education,
as well as adult education and training, skills development for unemployed people, persons with
disabilities, bridging courses, capacity building, physical resources and facilities, career guidance,
hostel accommodation, outreach programmes, scholarships and bursaries.

23
The promotion of religion and beliefs, as well as philosophical activities.

Cultural activities such as the arts, culture or customs, preservation of historical or cultural items,
youth leadership or developmental programmes.

Conservation, Environment and Animal Welfare such as environmental protection, prevention


of cruelty to animals, education and training programmes, greening, clean-up or sustainable
development projects.

Research in a variety of fields (including agricultural, economic, educational, industrial, medical,


political, social, scientific and technological research) and the protection of Consumer Rights.

The administration, development, co-ordination or promotion of non-professional sport or


recreation.

Providing of Funds, Assets or Other Resources to any approved public benefit organisation.

General activities such as support services to public benefit organisations and the hosting of
international events.

Section 3.2 How do personal experiences lead to social


enterprises?

Many people who become involved in community activities or try to improve the world they live
in feel compelled to do so because of their own experiences. Many non-profit organisations have
their origin in the personal trauma and hardship of the founding members. This is also true of social
entrepreneurs who focus their careers on changing circumstances that they are familiar with.

For example, a person who lost a close friend due to a drug overdose might be keen to start a
social business that prevents or treats drug abuse. A woman who escaped an abusive relationship
might well start a shelter for abused women or a training centre to skill women and increase their
employability.

CASE STUDY: SHONAQUIP15

Shelley McDonald was born in 1981 and diagnosed with cerebral palsy. Finding appropriate
assistive devices proved to be more difficult than the McDonald family initially realised.

The family chose to take a positive view despite the difficulties and challenges they were
facing. According to Shelley’s mother, Shona they “decided to turn the negative diagnosis
and accompanying negative advice and depressing prognosis into positive decisions, useful
resources, personal development and parental empowerment.”

The McDonalds refused to accept the inadequate assistive devices available in South Africa in
the 1980s and Shona decided to apply her personal experience of Shelley’s needs to designing
a suitable device. Before her third birthday Shelley was able to test her first motorised
wheelchair, designed and built by her mother.

Shona soon found that Shelley’s need for specialised equipment was not limited to their
family. Many people with disabilities needed similar equipment. In 1992 Shonaquip was born
as a small close corporation. It sold custom-made buggies and support devices to parents of
children with disabilities and operated out of the McDonald’s garage and employed only two
staff members.

However, the business grew into a reputable social enterprise employing over 40 technicians,
seamstresses and therapists (many of whom are wheelchair users). Today the head office in

24
Cape Town supports branches in Gauteng, the Eastern Cape and Limpopo. The close corporation has been replaced by a
(Pty) Ltd company and a charitable foundation.
The personal experience of one woman and her family has positively affected the lives of hundreds of people with
disabilities in South Africa through the provision of assistive devices and support. Shona has won many awards for her
pioneering work.

ACTIVITY SIX:
The example of Shona McDonald is certainly inspiring, showing that hardship can not only be
overcome, but even create new opportunities for growth and development.

Think about your own experiences and try to find one or more that could lead to a social business
idea.

Section 3.3 Conducting a situation analysis16


Usually the degree of motivation of the social entrepreneur to become involved in community needs or problems is very strong
once he/she becomes aware of the situation. However, it is necessary to understand the situation properly to ensure that a
suitable and appropriate solution is found. This is called a situation analysis.

A situation analysis can be used either to identify a need or problem or to get more detailed information about a problem
that you have already identified and want to do something about. The level of detail that you should go into for your situation
analysis will vary.

Even if you live in the specific community it is still important to conduct a situation analysis as you might not be familiar with all
the characteristics of the community (such as traffic density in the streets, the availability of public transport and the number of
parks) or trends regarding community members (such as whether children often play in the streets or whether elderly people
have to walk uphill when going shopping). Obviously, if you do not live in the area, the situation analysis would enable you to
get to know the community and its needs better. Remember that initial observations made and opinions formed are likely to be
subjective and influenced by your own values and perceptions.

A situation analysis is an assessment of the situation in a community. As such, it requires the collection of information and an
assessment of the community to form an overall picture.

There are many reasons why it is important to collect information. It will:

• limit the influence of your own opinions and help you to make better decisions;
• provide direction on what needs to be done, how it must be done and what the consequences and results may be;
• clarify the existing problems and needs in the community;
• create a better understanding of how the community experiences these problems and needs;
• define the degree of motivation, the skills and resources to tackle social issues;
• provide a focal point for interacting with the community; and
• establish a baseline for evaluating the impact of your social enterprise at a later stage.

When conducting a situation analysis you should focus on the present situation and circumstances in the community rather
than what you would like it to be. The ultimate aim of your assessment will be the development of a community profile giving
you a complete picture of who and what the community consists of. This will give you a starting point when identifying potential
social business ideas.

Answer the following questions when collecting information to avoid wasting time or gathering more information than you will
need:

• Is the information necessary?


• What will this information be used for?

Before you start collecting information, determine the boundaries of the area you will be serving. The boundary might be
geographic (ie. a specific location) or people-centred (ie. a specific group of people such as women, children or deaf people).

There are many different methods of collecting information in a community, ranging from formal to informal. You will be able to

25
carry out some of the methods by yourself such as reading about the specific community. However,
most methods require the involvement of the community. This will provide you with an opportunity
to get to know the community better, and it will also allow the community to become involved with
your social enterprise right from the start.

You can find information in many ways:

• Analyse census data (the information regularly gathered by the government about the country).
You can visit the website of Statistics South Africa (www.statssa.gov.za) or contact the Head
Office on (012) 310-8911.
• Make contact with organisations serving the specific community you are interested in and ask
these organisations to provide you with information or refer you to other organisations that
could be useful.
• Approach the local library for information.
• Move informally around the community. You can go from door to door or talk with people on
the streets.
• Have conversations with community leaders (e.g. teachers, ministers of religion, council
members and business people). These are people who are in a position to know and understand
the needs of the community.
• Conduct a mass meeting with the community to question them about their needs in the
community context.

For the meaningful gathering of information you must understand what should be collected. You
might find it useful to collect information about the history, environment, inhabitants, organisations,
communication, power and leadership, existing opportunities and deficiencies/problems in the
community. Activity Seven will help you to think about these categories.

ACTIVITY SEVEN:
Identify sources of information under each of the following categories. (Note that while it is
possible to categorise the information, you will find that many categories overlap. This often makes
it difficult to record the information in specific categories. It is helpful to refer from one category to
another. This is called cross-referencing).

1. Identify sources where you can find information for each of the
following categories:
History of the
community

Environment

Inhabitants

Organisations

Communication

Power and leadership

Opportunities existing
in the community

Deficiencies and problems


n the community

26
2. Conduct a situation analysis in your community by completing the form provided in
Annexure 2 at the end of this guide.
Knowing what information to gather and how to do it does not, however, guarantee the usefulness of the information. You will
need to interpret the information:

• Study the information to determine if it is valid, reliable and relevant.


• Analyse the information to determine the trends and relationships.

ACTIVITY EIGHT:
Interpret the information you gathered during the situation analysis.

Return to Module 1 and review Activity One. In this Activity you identified the most critical social
challenges in your community.

Compare the social challenges you identified with your situation analysis (community profile) to
determine whether your original selection fits the information you gathered. Are these, in fact, the
most critical social challenges?

List the most critical social issues that you identified in your community
in Module 1.
1.

2.

3.

Does your community profile support your selection? Give reasons for
your answer.

If not, use your situation analysis to identify the most critical social needs
and problems in your community.
1.

2.

3.

27
Section 3.4 Defining community needs and problems
After gathering and assessing information about the community you will be aware of those factors
identified as concerns, needs and problems. However, the nature and extent of these have not yet
been determined. You now need to define the social problems clearly.

Once a problem or need has been defined you will be able to identify the causes. This will reveal the
real problem (rather than the symptoms) enabling you to identify a business idea to address these
social problems.

For example, if children are playing aimlessly in the streets it is an important issue which requires
attention. However, to identify the extent of the problem it is necessary to determine why they
are playing in the streets. Reasons for this problem will identify the real need, such as a need for
constructive leisure time activities, after-school care facilities or a recreational centre. In this way, the
problem identified initially can be defined and converted into concrete needs which can be met.

ACTIVITY NINE:
Review the most critical social problems identified through your situation analysis. Consider each
of these problems in turn and determine their cause(s). This will identify the real problems rather
than the symptoms.

Problems identified Cause(s)


1.

2.

3.

28
MODULE 4
FINDING GOOD SOCIAL BUSINESS IDEAS17
Maybe you already have a business idea that responds to the social problem you identified in the last section. This is a good sign
because it shows that you have already embarked on your journey to start a business – you have already started the ‘thinking’
work. However, there is a risk that you could hold on too tightly to your first idea which might not be your final idea that you use
to start a social enterprise.

In your search for good social business ideas it is best to try to keep an open mind. Your first goal is to think of as many ideas as
possible and to make a list of all the business opportunities you can think of.

Section 4.1 Where do social business ideas come from?


Business ideas are everywhere, but they need to match what customers want and can pay for. A good business idea is based
on the needs of customers. However, social business ideas must also offer a feasible solution to the problem identified in the
community.

CASE STUDY: MRS NCUBE FINDS A GOOD SOCIAL BUSINESS IDEA

Mrs Ncube wanted to go into business to increase her family’s income. Her husband had a successful hardware supplies
shop and he offered to be her financial partner, providing start up funds but leaving her free to run the business.

Mrs Ncube enjoyed making baskets and wall hangings which many of her friends admired. At first she thought about
opening a household furnishing shop where she could sell these products. However, after talking to a number of local
shopkeepers, she found out that there would be too few customers in her area for such a business to be profitable.

Then Mrs Ncube thought about making clothes, but she found that there were many tailors in her area. This meant that
there would be too much competition to guarantee her a good profit.

A friend who worked at the local funeral service business told


her that there was a big demand for flowers for funerals. Even
though Mrs Ncube had never grown flowers and had a very
small garden she decided to get more information about this
opportunity.

While she was looking for a good idea for her business, Mrs
Ncube tried to find a place for her son in a local nursery school.
She knew that when she started her business she would have
no time to look after him at home and that it would be a good
idea to start his education early. However, she found that all
the nearby nursery schools were full and most had waiting
list. Many of the women she met complained that there were
not enough nursery schools in the area.

Mrs Ncube realised that there was a need for another nursery
school and decided to start one herself. Mrs Ncube had no
experience running a nursery school, but she could see that
there was a gap which was a good business opportunity. At
the same time she would be meeting a social need in her
community by offering additional educational resources to
children with working mothers.

29
She visited some of the nursery schools and talked
to the people who ran them. She also talked to
friends and neighbours with small children to find
out what they wanted from a nursery school, and
what customers would be willing and able to pay
for the service. This is called market research.

With some personal finance from her husband,


Mrs Ncube rented a building and hired a qualified
teacher to help her.

Although she did not have any training herself


in this field, Mrs Ncube used her strengths and
assets. She used her network of other young
mothers to investigate the size and nature of the
demand for a school. She used her husband’s
existing business to acquire financing and she used her own experience as a customer. Today
her nursery school is a profitable business and has a long waiting list, and Mrs Ncube feels
good that she is providing a useful service to the community.

Exercise:
1. What did Mrs Ncube do to:

Find the gap in the market?

Assess the market?

Identify a social need in her community?

Get information and skills?

Get finance?

Use her own experience?

30
Business ideas are identified through positive, creative thinking, as
well as listening carefully to what community members say about
their needs.

Remember, you should make the most of what is already there.


Some social enterprises are established specifically to address a
social need, but many others evolve from existing businesses or
non-profit organisations. You might find them willing to partner
with you or you could help them to transform themselves into
social enterprises. In particular, you might learn from other social
enterprises in the community, and they might even be willing to
help you to set up your own social business.

Section 4.2 Turning social needs into social enterprises


In Module 3 you identified and defined the major social needs and problems in your community. However, simply knowing
about these needs does not provide answers or solutions. You will have to turn social needs into social enterprises to enable you
to effectively provide real solutions.

Not all social needs will have a viable social business solution. As well as identifying needs, you also need to take account of:

• Available skills and resources;


• What existing businesses and other organizations are offering; and
• Customers’ willingness and ability to pay you.

To think about the social needs and problems you identified and whether these could be turned into social business opportunities,
you might find it useful to apply any of the following techniques:

• Mind mapping is an approach used to solve problems, make decisions and define concepts such as the vision for a social
enterprise.
• Visualisation is an approach similar to brainstorming, but uses cards pinned on posters or other surfaces rather than lists.
• The Logical Framework Analysis (LFA) was actually developed as a project planning and management tool because it is
used for designing, planning and evaluating a project or business. However, it can also be used to identify business ideas
and develop an outline to establish a social enterprise.

You will find more detailed descriptions of these techniques in Annexure 3 at the end of this Guide.

Section 4.3 Defining your target group18


You have already gathered some information about the population in your community in the situation analysis (see Module 3).
However, the general population is not necessarily the target group for your social enterprise.

The target group usually refers to the beneficiaries of your social business. In many cases, the beneficiaries will also be the
customers, but this is not always the case. If necessary, refresh your understanding of the difference between customers and
beneficiaries by referring to Module 1.

You will need to define the following characteristics of the target group:

• Gender;
• Age group;
• Specific characteristics (e.g. disability, etc);
• Geographic location (including a description of the area);
• Education levels (including literacy and numeracy);
• Current activities (e.g. unemployment rates, etc);
• Skill levels (i.e. what are the members of the target group able to do);
• Impact of the social/environmental problem (i.e. how the problem you have
identified influences the lives of the members of the target group).

31
Use the information gathered in the situation analysis to review the obvious needs of your
community, but also the hidden needs. Remember to focus only on your target group and not the
entire population in your area. Both the obvious and hidden needs of your community will suggest
potential social enterprises.

Section 4.4 Generating your own social business ideas


Social business ideas can be generated through:

• Using your personal experiences;


• Visits to your local community;
• Investigating your environment; and
• Brainstorming.

Select the technique that suits you best and use this to generate ideas for your business. You might
even want to use more than one technique.

You will need to start an ideas list for your social enterprise. Find out how to develop and use this
tool by reading more about it in Annexure 4 at the end of this Guide. The following sections will help
you to develop ideas.

a. Using your experiences to generate ideas for your social enterprise

A good place to start developing business ideas is with


yourself. What has been your experience as a community
member and as a consumer? Have you ever suffered from
a lack of service provision? Like Shona McDonald, has
your personal experience made you realise that certain
products are not available? Add these ideas to your Ideas
List.

Listen carefully to what other people say about their


experiences. Remember that because they are potential
customers their opinions are important to your social
enterprise. Also ask your family and friends about their
experiences and add all these ideas to your list.

Expand your social knowledge by talking to people you


don’t usually talk to. For example, if you are a young
person talk to older people. Go to different restaurants or
attend a different church. Ask people about:

• Poor service they have experienced.


• Difficulties they might have encountered in
getting things done.
• Problems they have experienced in finding the
products or services that they want.

Make notes of your own experiences as a customer or


with businesses and what you hear of other people’s
experiences as customers.

32
ACTIVITY TEN:

Record your own experiences, as well as the experiences of other people that you talk to. Use this
information to identify social business ideas that would provide customers with the products or
services they need and want, while at the same time addressing social and/or environmental needs
in your community.

Experience Business ideas


.

Add any new business ideas or possible business opportunities that you think you could make a
success of to your ideas list.

b. Visits to your local business area to generate ideas

Another way of discovering good business ideas is to look around your local area. Find out what type of businesses are already
operating in your area and see if you can identify any gaps in the market.

This is an activity that will be much easier to do with a partner or friend. If you live in a village or small town, cover the whole
town. If you live in a city, visit the industrial area, market area and shopping centres close to your community.

33
ACTIVITY ELEVEN:

Follow the steps below to collect information about existing businesses and potential new
businesses in your local area or the place where you want to start your social enterprise.

1. Walk around your area and write down the different types of businesses (retailers, manufacturers,
wholesalers and service providers) and how many there are of each different type. Write down the
information on the form below.

Current businesses
Retailers Manufacturers Wholesalers Service
and small providers
farmers

34
2. Study the list and try to find answers to the following questions:

• Are there many businesses that are the same or similar? Are there some businesses that are unlike any others? Why do you
think this is the case?

• What does your list tell you about your local market and the way people spend money in your area? Write down at least five
observations about your local market.

3. Is there room for more businesses? Do you think there is a business opportunity for you? Write down some businesses that
do not occur in your area.

Possible businesses
Manufacturers and
Retailers Wholesalers Service providers
small farmers

4. Put your list away for a day or two and then review it. Do a brainstorming session to identify other possible businesses that
are not on the list. What other businesses do people in your area need? Write any possible business ideas on your ideas list.

35
Let us see how this technique is applied practically by considering the following case study:

CASE STUDY: MRS MANDAZA VISITS HER LOCAL BUSINESS AREA

Mrs Mandaza is trying to think up a good business idea. She collects information about the
small town where she lives and wants to start her business. Mrs Mandaza visits the local
industrial areas, market place and shopping centres.

She also talks to the small enterprise support organisations and checks the phone book
for additional businesses being advertised. Then she prepares a list of all the businesses in
Mbanatown.

36
Business in my area: Mbanatown

Retailers Manufacturers and Wholesalers Service providers


small farmers
15 kiosks 1 beer bottlers 1 feed, fertilizer and farm goods 2 doctors/clinic

27 or more fruit and 1 soda bottlers 1 plastic sheeting, ropes and 1 bank
vegetable roadside vendors sacks
11 furniture and wood 8 vehicle repair
8 used clothing roadside fittings makers 1 grains, maize, barley, wheat
vendors 3 electrical and radio repair
9 metal fabricators 1 timber
23 or more small item 1 building and office cleaning
roadside dealers 6 tailors 1 iron sheet, hardware, cement service
2 security firms
4 furniture shops 7 craftspeople (baskets,
drums, curios) 1 equipment maintenance firm
3 petrol stations
1 weaver 8 nursery schools
2 grocery stores
3 mat and wall hanging 5 transportation companies
1 fruit and vegetable shop makers
1 message service
1 clothing and shoe shop 2 soft furnishings makers
23 bars or shebeens
4 hardware and farm supply 2 cement block makers
stores 9 roadside restaurants
9 brickmakers
2 electrical goods and 5 permanent restaurants
supplies stores 4 sign makers
3 bicycle repair services
3 farm supply stores 25 charcoal makers/vendors
7 knife sharpeners
2 farm machinery stores 16 poultry-egg farmers
2 hotels
1 stationery store 18 small dairy product
farmers 1 engineering firm
1 pharmacy
30 vegetable farmers 6 building contractors
2 bakeries
5 plumbers
3 dry goods stores (mixed
retail) 3 electrical servicing agencies

1 school uniform shop 1 water engineering firm

8 butcheries 1 accounting agency

1 printer

Mrs Mandaza makes the following general observations about Mbanatown:

• People do not have a lot of cash at a time – they use kiosks and there are no luxury or leisure shops.
• Farming is the main economic activity in the area.
• Many people visit the town; there are a lot of hotels and bars.
• The number of young people seems to be rising. There are many nursery schools.
• This is probably a growing town; there are a number of building contractors and supplies for construction.

37
Ms Mandaza then makes a list of businesses that do not operate in Mbanatown and which might be
a good business opportunities:

Possible businesses in Mbanatown


Retailers Manufacturers Wholesalers Service
and small providers
farmers
children’s toy & knitwear maker None advertising agency
clothing stores children’s toy maker dry cleaners
household goods shop tile making catering service
(bed sheets, kitchen ceramic making beauty salon
goods) jewellery making funeral home
craft & curio store card making cinema
second-hand clothes carpet making employment
shop leather goods agency
bookstore take-away fast food optician
jewellery shop candle makers garbage collection
knitwear store private tutoring
hunting & fishing store maternity home
sport store services for the
music store elderly
solar energy lighting services for AIDS
patients
interior decorating
architect
bridal and fancy
dress rental shop

From this list Ms Mandaza selects a few to add to her own ideas list. She chooses businesses which she
can picture herself doing and that people in her town might need. These include:

• a catering service delivering lunches to offices


• a funeral service provider
• a tile-making business
• a candle-making business
• an agency for home-based care of AIDS patients
• a second-hand clothes shop
• a garbage collection service
• a cinema.

Although this might seem like a lot of work, you can follow Mrs Mandaza’s example to help you find
business opportunities that can accommodate your social enterprise. In this way you will be able to
ensure the success of your business and be able to generate profit that can be used to address the
social needs and problems in your community.

c. Investigating your environment to generate ideas

You can use your creativity to find more business ideas in your area. Look at the list of business in
your area again. If your list covered a large enough section of your local market, you are probably
beginning to see what industries or services your local economy depends on.

Mrs Mandaza’s town is a farming centre which depends on agriculture. It provides services to many
surrounding small villages. Maybe your town depends on mining, fishing, industry or tourism.
Maybe there are a number of educational or other public institutions that employ many people in
your area.
38
Consider all the resources and institutions in your area by thinking about:

Resources from nature: What is available in your area in abundance that could
be made into useful products without harming the environment? Natural
resources include materials from the soil, agriculture, forests, minerals, water,
etc. For example, if there is good clay soil in your area you can make bricks,
cups or tiles while reeds can be used for thatching roofs.

People’s abilities and skills: Do people in your target group have special skills
that can be turned into a social enterprise? Examples include carvers, weavers
or carpenters, but also extend to recent graduates looking for jobs or people
offering care services to the elderly.

Institutions: Are there schools, hospitals/clinics or other government services


in your area? You might be able to start a business that would serve their needs,
such as providing services (e.g. cleaning services, maintenance and repairs)
or selling products (e.g. stationery, furniture, cleaning material or food).
Remember that an institution could be a big customer. Visit these institutions
to find out where they buy their products and services and whether there is
anything they would be willing to buy from your business.

CASE STUDY: VISITING LOCAL INSTITUTIONS FOR BUSINESS IDEAS

A group of young people participated in a cleaning and hygiene learnership through the Services SETA for a year in Cape
Town. As part of their training, they gained practical workplace experience at a company providing cleaning services. They
believed that they would be employed by this company when they completed their qualification. Unfortunately, the company
experienced financial difficulties and was not able to appoint them. On their return to the small town in the Eastern Cape where
they grew up they found that, despite their new qualifications, they could not find work.

One of them started visiting government offices and found that they could create their own business and provide cleaning
services. Once the business was established, it soon became obvious that their services were in demand. The business grew
from strength to strength, not only providing them with jobs, but also with the opportunity to be entrepreneurs in their own
right.

“Import” substitution: Can you think of anything that is “imported”


that might be made locally? If you live in a small town or rural village,
some products or services might not be produced in your local area.
This means that these products or services would be expensive
because these must be transported over long distances. If you are able
to provide this service or product, you could very well have a viable
business idea. For example, if there is no bakery in your town, bread
will have to be transported from a larger town or city. The bread will be
expensive because the cost of transport will be included in the price. If
you can start a bakery, you will be able to compete successfully because
your costs will be lower.

Industries: Are there factories in your area? What kind of support


services or products would they need? There may be also aspects of
their business they would be happy to hire another business to do
(called sub-contracting). For example, a building construction firm may
sub-contract the painting work on new houses they are building. Go
and talk to people who work there.

Waste products: Usually there is something left from anything we


make or do that we throw away. This may come from many sources
such as agricultural processing, animal products, household waste, cars
and other machines or from industries. Households throw away food
that could be used to make compost or animal feeds. They throw away
paper, glass and aluminum that can be recycled. Even plastics can be

39
recycled. Take a walk through your town. You might find interesting things being made from what
others thought was garbage.

Many industries discard useful materials. A clothing company might throw out small pieces of cloth
that could be used to make something else. Plastics factories usually have materials left over that
might be used for insulation, stuffing for pillows, or a new kind of fuel.

Are there possibilities in your area to


recycle something that is in abundance?
Is there a way of using resources more
efficiently? You could offer a service to
help individuals or institutions dispose
of their waste, or make something new
out of it. For example, empty plastic
bottles can be turned into containers
for growing seedlings.

Publications: Printed material may help you find ideas for your social enterprise. Visit your local
library and ask to see their periodicals (magazines and trade journals) to find ideas. There may be
products pictured that are not available in your area. They can also give you other ideas. Newspapers
are also full of ideas and often describe businesses or products that you could replicate in your
area. Classified advertisements may also give you ideas, as can articles about trends and different
businesses in other places.

40
Trade fairs and exhibitions: Organizations hold trade fairs and product exhibitions which are meant to give people business
ideas. Be sure to attend any you can!

ACTIVITY TWELVE:

Take time to look carefully around your own environment and make notes about business ideas for
each of the following:

Resources from nature Business ideas

People’s abilities and skills Business ideas

Institutions Business ideas

Industries Business ideas

“Import” substitution Business ideas

Waste products Business ideas

Publications Business ideas

41
Trade fairs and exhibitions Business ideas

When you have spent some time analyzing your local area try visiting another place, or just walk
through a different part of town. A change of scenery and new experiences can give you new
ideas. Look for different natural resources and institutions.

Look through the business ideas that you generated with this activity and transfer any suitable
new business ideas to your ideas list.

d. Brainstorming to generate ideas

This method is used to produce ideas, explanations and interpretations. The objective of brain-
storming is to stimulate people into finding different ways to address a specific problem. It is
particularly appropriate in identifying possibilities for change. Follow these steps:

• Pose a problem or question which can be tackled in a number of different ways. For example,
“How can we solve the housing problem in our community?”
• Ask people to think of different ways to solve the problem or provide an answer to the
question.
• Write down all the solutions or answers provided. Remember that the focus should be on
generating ideas and not on discussing the feasibility or value of the ideas. Focus your attention
on getting as many ideas as possible.
• Discuss the merits and demerits of each solution to identify to most suitable one.

Brainstorming is not only a good method to identify ideas, but also allows people to learn by building
on their own experiences.

This technique works best when you brainstorm with another person or a group of people, but you
can also try it on your own. Many large companies use this method to come up with new product
ideas.

CASE STUDY: MR MOTSI BRAINSTORMS TO FIND BUSINESS IDEAS

Mr Motsi is eager to start his own social enterprise to create jobs for people in his community.
He had this idea when he found out how many people had lost their jobs when the furniture
factory moved to a large city. However, he was not sure which type of business to start.

To help him to find a feasible business idea he asked his sister and two friends to brainstorm
with him to find a business idea. Because he has worked as a carpenter in the furniture factory
for a long time they started with the word “wood”.

At first the ideas for businesses related to “wood” came slowly. But soon they
had many possibilities like the manufacturing of school desks, tables, benches
and other products, selling firewood and making paper.

42
ACTIVITY THIRTEEN:

Do some brainstorming yourself.

Start with a word relating to a social problem that you identified previously (for example “pollution”)
and write down all the ideas that pop into your mind on a sheet of paper. Continue until you can’t
think of any more.

Now go back and check the words you have written down for business ideas. Are there any ideas for
a business that you can imagine doing? Even if you can’t find ideas you like, the exercise is useful for
helping you to open your mind to a new way of thinking.

Now pick another word and write down all the products related to that word on a new piece of
paper.

Remember: Like any other skill you will get better at brainstorming if you practice.

Tip!
Remember that a successful business is always based on a good business idea. The same is true of
a social enterprise. It is worth taking the time and making the effort to really work hard to identify
ideas that are suitable and appropriate for you and the social or environmental issues you want to
address through the business.

Section 4.5 Writing up a social business idea


A good social business idea is one that is based on:

• Evidence that the business will address a social or environmental issue that you have identified in your community;
• A product or service that customers want;
• A product or service that you can sell at a price customers can afford and which will give you a profit;
• The knowledge and skills you have or can get; and
• The resources and money you are able to invest.

All good social enterprises begin with a good idea that has been well thought out. In the previous section you learnt about some
of the tools you can use to identify and generate a viable social business idea. Before you can analyse your ideas to select the
best one, you need to write up your social business idea(s). Understanding more about successful social businesses could help
you to learn from their successes and mistakes, and will help you to practice writing up a social business idea.

43
CASE STUDY: LEARNING FROM AN EXISTING SOCIAL BUSINESS

Mrs Tshabalala had been thinking about starting her own business for some time. She was
also very concerned about the many young children who were left alone at home or in the
care of an older brother or sister when their parents went to work. Opening a nursery school
might solve her own need to start a business and solve a social problem in her community.
Mrs Tshabalala decided to get more information about this idea and visited Mrs Ncube at
Early Bird Nursery School. She writes down the information she gathers on a Business Ideas
Information Form:

BUSINESS IDEAS INFORMATION FORM

1. Name of business: Early Bird Nursery School


2. Products or services sold: Pre-school education
3. Main customers: Parents in the local area
4. Social/environmental need addressed: Early childhood education
5. When and why did the owner decide to start this business? Mrs Ncube started her business in
1997 when she needed to earn extra income. She was looking for a place at a nursery school for
her own child and could not find one nearby.
6. Why did the owner think it was a good idea to start that kind of business? Mrs Ncube found
out that all the local schools were full, that there were a lot of other parents looking for places
at nursery schools, that parents were willing to pay well for a good nursery school, that there
would always be lots of children needing pre-schooling.
7. How did the owner find out what local people wanted? Mrs Ncube visited all the local nursery
schools. She talked to local parents, friends and neighbours.
8. What strengths or assets (e.g. previous experience, training, family background, contacts,
hobbies) did the owner use to start this business? Mrs Ncube came from a big family and
she knew a lot about looking after children. She used her friends and neighbours’ advice, her
husband’s financial assistance. She though about what she wanted as a parent and used this to
organize the school and its programmes.
9. What problems did the owner face in setting up the business? Mrs Ncube herself had no training
as a nursery school teacher but she overcame this problem by employing qualified staff.
10. Has the business product/service changed over time? The Early Bird Nursery School has got
bigger. Mrs Ncube started small with just one class (15 children), herself and one teacher. The
next year she had two classes (30 children, two teachers, an administrator/secretary and herself.
Now Mrs Ncube has five classes (75 children), six teachers, an administrator/secretary, a nurse/
cook and herself.

Notes:

• Sometimes what you enjoy doing will not make a financially viable business idea. Mrs Ncube
would not have been able to make a profit from selling her baskets and wall hangings.
• The first idea is not always the best one. It is important to get factual information about the
market for the idea. Mrs Ncube found out about the market for her baskets before she started
the business.
• If you find a good idea but have no suitable training you can employ qualified staff.
• It may be necessary to have financial help before you can start a business.
• This business idea was successful because it was based on seeing a business opportunity and on
knowing what the market wanted.

44
ACTIVITY FOURTEEN:

Find out about some successful social business ideas yourself.

Think of three social enterprises in your local area that you think are successful. Try to select
businesses that are at least three years old. Write down in the space below the name of each
business, the products/services they sell and the social or environmental problem they address.


Name of business Product/services Social problem

Visit each business and talk to the owners. Determine whether they agree with you that their social enterprises are successful.
Ask them how they decided on that business. Did they see a need in the market that was not being met? Did they have some
experience, contacts or skill to build upon? Did they know someone else in the business? Was this the first business they ever
worked in? Write in the space below any other questions you want to ask the owners.

After your visit complete a Business Ideas Analysis Form for each business, putting in as many details as possible. You will find a
copy of this form in Annexure 5 at the end of the Guide. Think about all the factors that have made the business idea a good one
and why it has become a successful social enterprise. Find answers to the following questions and write down the information
on the Form under “Notes”:

• What lessons can you draw from the experiences of the social entrepreneurs?
• What mistakes do you think the social entrepreneur made?
• How can you avoid the same mistakes?
• What do you think made this social enterprise successful?

When you have completed the activity you will have a better understanding of some of the things that make a good social
business idea. You will also be more aware of the problems people have when they try to find a good social business idea. You
are now ready to start writing up the social business ideas you identified in Module 3.

Good and bad choices are not always immediately obvious when selecting an idea for your social enterprise. In Module 5 we will
provide advice on how to evaluate and analyse your ideas for a social enterprise to help you to make good choices.

45
46
MODULE 5
ANALYSING AND SELECTING SOCIAL
BUSINESS IDEAS
Section 5.1 Screen your Ideas List
By now you probably have quite a few possible ideas for your own social business. You might even have as many as ten or
twenty. Your next task is to review this list critically to bring it down to between three and six ideas. These will be the ideas
most suitable for your social enterprise. You can select the most suitable ideas from your ideas list by thinking carefully about
each idea. There is probably still a lot you don’t know about the business on the list but the questions below will help you to
choose.

Work through your ideas list and make notes about each business idea by answering the following questions:

Which?
• Which social need or problem will your business address?
• Which people or group(s) of people will benefit from your social enterprise?
• Which causes have you identified for the social issues you want to address?
• Which need do you want to satisfy for your customers?
• Which needs will your products or services satisfy for your customers?

What?
• What product or service do your customers want?
• What quality do your customers want?
• What information do you know about the products or services for this business?
• What will be the impact of your business on the social or environmental problem you identified?

Who?
• Who will be your customers for this particular business? Will there be enough?
• Who are your competitors?
• Who will be the target group that will benefit from your social enterprise?

How?
• How will you be able to supply the products and services that your customers want?
• How much do you know about the quality of products and services that customers want?
• How does running this sort of business suit your personal characteristics and abilities?
• How do you know that there is a need for this business in your area?
• How do you imagine yourself running this business in ten years’ time?
• How will your business address the social or environmental problems you identified?
• How will you know that your social enterprise is successful?

Other important areas to consider


• Where can you get advice and information about this business?
• Will this be the only business of its kind in your area?
• If there are other similar businesses, how will you be able to compete successfully?
• Why do you think this business will be viable?
• Does this business need equipment, premises or qualified staff?
• Do you think you will be able to obtain the necessary resources for the business?
• Where will you get the resources you need to start the business?
• Are there organisations or government departments that can help you to address the social and environmental problems
you have identified?
• Are there other social enterprises that you can network with?

47
CASE STUDY: MRS MANDAZA SCREENS HER IDEAS LIST

After brainstorming and collecting information about businesses in her area, Mrs Mandaza
came up with 18 business ideas. Some of these ideas did not address social needs in her
community and others no longer appealed to her. Mrs Mandaza only chose those business
ideas which she preferred and that also addressed the social needs she had identified in her
community.

While it is important for a business to make money and be profitable, it is equally important
for a social enterprise to deliver a real benefit to the community.

This is how Mrs Mandaza screened her business ideas:

IDEAS LIST FOR MY OWN BUSINESS

Idea Description

A catering service People receiving treatment for HIV/AIDS must take their
medication on a full stomach. I can provide subsidised meals
for them by earning an income to pay for this by delivering
healthy lunches to office workers. People in offices need fresh
food delivered to them at the right time. No one else does this
in town. There will be lots of customers. I can find out what
they want and how much they will pay and make a good profit.
I know about and enjoy cooking. Not much money is needed
to start. It will probably be tiring with so much delivering to
do, but I would enjoy meeting so many people.

Candle making Some areas in my community still have no electricity and must
rely on candles as a source of light. I know how to make them
because I did it once at school and enjoyed making candles.
But candles are inexpensive in the shops. It might be difficult
to make them cheaper and profit would be low. Some people
also use paraffin if they don’t have electricity.

A funeral service provider The high incidence of diseases such as HIV/AIDS means that
funerals happen in our community almost every day and
people need assistance. I have experience of funerals, but not
the technical side. I would have to employ people. There would
be lots of customers. There are other businesses in town but
I could provide a very good service. I might find it upsetting
going to funerals all the time.

A tile-making business Because of funding made available by the government for


housing, a lot of people are building houses and need tiles.
There is no other business like this in town. There is local clay
easily and cheaply available. I don’t know about making tiles,
but they are beautiful and I would enjoy learning. I could
employ qualified staff. But I am not sure how many customers
there will be or if I could make as good quality as tiles from the
city. Equipment would be expensive.

48
Second-hand clothes There are lots of customers who want nice clothes but can’t afford new ones. There are no
shop other second-hand clothes shops and I could make mine fashionable and cheap. I once
worked in a clothing shop and have a good eye for what is fashionable, and know how to
recognize good quality clothes. I would really enjoy running a shop, meeting people, and
dealing with fashions. In 10 years time I could have opened more shops in other towns. I
need to find out how much it costs to rent a shop. I think I could make a good profit.

Agency for home-based There is a great need for home-based care because of the large number of people affected
care of AIDS patients by HIV/AIDS in my community. There is no business like this in town. The community really
needs this service – a lot of people have to work and have no time to look after their sick
relatives. I have often looked after sick people. My sister is a nurse and she has lots of
information. Customers might not have enough money but I could get onto a medical aid
scheme. Many women in the area could be employed to provide this service. I like to help
other people.

Cinema There is a need for entertainment, but no cinema in the township. I enjoy going to the
movies, but have no experience, and it would be very expensive to start. There would be
lots of customers but it is a luxury which many can’t afford. However, I can use the income
from the cinema to show documentary and other educational films to learners after school
to widen their horizons. I could also start a film-making club to introduce young people to
a career in film and television. The finances needed to start are probably too much and I
should locate the cinema in the township to make it accessible.

Garbage collection Many people complain they don’t know where to take their garbage anymore and the
municipal workers never collect. Perhaps the municipality would give me a contract.
A friend used to work in the city garbage collection so he could advise me and perhaps
become a partner. There would be lots of customers and I think this would be easy to run.
However, very expensive vehicles would be needed, as well as drivers and quite a lot of
staff. This could create employment for the many unemployed people in my community. To
employ even more people I could add recycling to the services and earn money to sustain
the business on the one hand while cleaning up the community on the other.

Ms Mandaza carefully reviews the ideas by talking to a variety of people (field research) and doing a SWOT analysis.
You can learn how to use these techniques by reading the relevant section in the annexures at the end of this Guide.

She chooses three ideas to analyze further:


• Catering business
• Second-hand clothes
• Agency for home-based care of AIDS patients

49
ACTIVITY FIFTEEN:

In Module 4 you learnt how to identify social and environmental needs in your own community
by conducting a situation analysis. You will now have to analyse your proposed social enterprise
in terms of these needs. Define how your proposed business will address these needs and what
the benefits will be for your community. Use the following form to record your information:

What is the social/ How does your social What are the benefits
environmental need enterprise address your community will
you identified? this need? get from your social
enterprise?

50
ACTIVITY SIXTEEN:

Follow the steps below to screen your own business ideas list:
Step 1: Review your ideas list and cross out any ideas that do not address the social needs and
problems you identified in the situation analysis.
Step 2: Review your ideas list and cross out any ideas that no longer appeal to you.
Step 3: Slowly review the remaining ideas. Ask the questions listed above to screen each idea. Use
the space below to note down anything that is positive or negative about starting that business.
Add more pages if you need more space to comment.

IDEAS LIST FOR MY OWN BUSINESS

Idea Description

51
1. Think carefully about the notes you made and decide which business ideas seem most suitable
for you.
2. Choose the best or most likely three ideas which you would like to analyse further. Write them
down in the space provided in your order of preference (i.e. number one would be the most
likely idea and number three the least likely):

Idea number 1:

Idea number 2:

Idea number 3:

Remember that you can always come back and do this again if you find problems with the three
ideas you have chosen.

Now that you have reduced your business ideas to the three that you think are most suitable, you
need to study these three ideas in more depth to determine their feasibility. This means getting
more information about the market for those ideas.

In many places the local economy is not strong enough to support new businesses. However, even
in such areas, a social enterprise wanting to simply break even (i.e. not making money, but not
losing money either) there may still be opportunities. If you intend employing local people to fight
unemployment and poverty there may still be enough business to make it worth your while.

Alternatively, you might want to explore selling your products or services in wealthier areas where
you could earn enough income to make a profit. You could then use this profit to support social or
environmental problems in your own community.

You will need to answer a number of questions to test the feasibility of your social business ideas:

• Will your business idea effectively address the social need or problem you identified?
• Will you be able to generate enough income?
• Do people in the target market need or want your product or service? The target market is the
area where you want to sell and the people to whom you want to sell.
• Are there enough customers?
• Do people have the necessary skills and abilities?
• Will you be able to find the necessary resources?

Focus on your first choice, but remember that you have two other possibilities that you can come
back to if the first idea does not seem feasible.

Sometimes it is fairly obvious whether the social enterprise can be started and operated profitably.
However, a new product or idea may need testing in the market to see if it will work. You might even
need to make a few products for testing.

52
CASE STUDY: A MARKET FOR REED BASKETS?20

A group of unemployed people, who knew how to make reed


baskets, decided to sell baskets in the market to make some
money. There were plenty of reeds to be found near their village
and a friend let them use an empty room at her house to work in.
They borrowed some money to buy knives to cut the reeds and
arranged to hire a taxi once a week to transport their baskets to
the market in the next village.

However, every time they took their baskets to the market, they
sold only one or two. Everyone seemed to be buying the cheap
plastic containers also being sold in the market. They knew that
their product was of good quality and if they lowered their prices
they wouldn’t even make enough money to pay the taxi driver.

1. Why do you think these people had a problem selling their


baskets?

2. What could they have done to avoid this problem?

This case study clearly illustrates the need to find out whether people will buy from your business before starting the
business. If they had known about their competition (the people selling the plastic containers) they could have decided
to make something else that would sell.

Remember that your goal is to consider factors that will help you accept or reject a business idea.

53
Section 5.2 Conduct a feasibility study21
A feasibility study will provide you with an overview of the most important issues related to your
proposed social enterprise. You will be able to identify those issues that would prevent your social
enterprise from being successful. In short, a feasibility study determines whether:

• your business idea makes sense; and


• if it is likely to succeed.

You will need to collect a lot of information through field research while conducting your feasibility
study. You can read more about field research in the annexures at the end of this training manual.

However, you will be able to use a lot of this information when you develop your business plan. For
example, you will need to analyse the market in much detail to determine the feasibility of your
business idea, but you will be able to use this information in the marketing plan (which is a key
element of your business plan).

Developing a business plan requires a significant investment in terms of time, money and effort. As
such, you will want to make sure that the business idea you selected has a good chance to succeed
before making that investment.

A feasibility study considers three major areas:

• Market issues;
• Organisational and operational issues; and
• Financial issues.

Because a feasibility study is an initial review of these issues it should not include in-depth long-term
financial projections, but rather a basic analysis to see how much income will be necessary to cover
operating costs. This is called break-even analysis.

A feasibility study is a way of finding out about ten different aspects of the proposed business idea:

1. Demand/competition: Will people in your community rather buy your products or services
than those of your competitors?
2. Skills training: Can the people you propose to employ learn how to make your product or
provide your service?
3. Materials: Can you obtain the raw materials, tools and equipment you need?
4. Workplace: Can you find suitable premises to work in?
5. Selling place: Can you find a suitable selling place?
6. Transport: Can you transport raw materials to your factory and finished products to your selling
point?
7. General and financial management: Can you manage your social enterprise?
8. Pricing: Can you sell your product or service at a profitable price?
9. Production: Can you produce enough in good time?
10. Financing: Do you know where you can obtain financing to start up your social enterprise?

We will help you to answer these questions by reviewing each question in turn. You can use the
forms provided in the annexures at the end of this training manual to fill in the information for each
feasibility question.

Feasibility Question 1: Demand/competition

If you want people to buy a product or service, you will have to ensure that it is different from what
they are already buying. If your product does not differ enough from existing products people will
not have any reason to start buying it. Your product or service will be different if it is:

• Cheaper; or
• Of higher quality; or
• Available more regularly; or
• Available in different quantities; or

54
• Sold in a more accessible location; or
• A totally new idea.

To find out if your product or service will differ enough from those
available in the market you will need to gather information about
your competitors. You should try to visit at least five potential
competitors selling a product or service similar to yours in the
same area. Try to visit some small and some larger businesses.

How many other people or shops are selling the same product or
service that you want to sell? This information will tell you how
competitive the market is that you want to enter.

After completing as much information as you can, think about


what you want to sell. How will it differ from what your competitors
are selling?

• Will it be sold at a location where more customers will want


to visit?
• Will it be of a higher quality?
• Will it be cheaper?
• Will it be available in different quantities or designs?
• Will it be available more regularly?

If you plan to sell a product or service that nobody else is selling, make sure that there is sufficient demand for it. Find out where
people are currently buying this product or service and why you think people will buy from you.

Feasibility Question 2: Skills training

Skills development is an important issue for businesses, and the same applies to social enterprises. Although many potential
social entrepreneurs consider skills development to be the responsibility of the government and big businesses, even the
smallest social enterprise can benefit from skills development. Skills development will:

• Help to develop the skills of workers so that they can improve their quality of life by getting well-paid and rewarding
employment;
• Improve productivity to help social enterprises to make more money;
• Promote the establishment of new businesses (self-employment); and
• Help people who find it difficult to find work to get jobs.

One of the factors that determine the success of a business is the quality of its products or services. Good quality can only be
achieved through the training of people working in the business so that they are able to provide the quality that customers
want.

You should now try to answer Feasibility Question 2. This will help you to identify the skills needed for the social enterprise you
intend to start. It will also help you to decide how to increase the skills and knowledge of the people in your community through
training.

Feasibility Question 3: Materials, tools and equipment

You have to be sure that you are able to obtain the materials, tools and equipment you will need. Find out where you will be
able to buy these and at what prices.

Remember that importing materials, tools and equipment is not only expensive, but time consuming. Consider what you will
do if any equipment or machinery break down and you need to have it repaired. It is better to buy from suppliers located close
to your business.

Feasibility Question 4: Workplace

Identify what you will need in terms of a workplace, as well as the amount of space you will need. Once you have established
this, visit possible workplaces meeting your requirements.

55
Feasibility Question 5: Selling place

You may want to sell your product only in your local area or in a wider area. This will determine where
your selling space should be located. Here are some places where you could sell your products or
services:

• In your local market area;


• On a busy road where many people pass by;
• In a store where the owner agrees to rent space to you;
• Directly to a shop which will pay you first and then sell the products to its customers;
• To a dealer or wholesaler who will pay you first and then sell the products to other stores or
people;
• In your own shop.

Feasibility Question 6: Transport

Transport plays an important part in any business, including a social enterprise. Review the places
you identified to buy your raw materials and other supplies. Remember that you will need to
transport these raw materials and supplies to your working place. You may also need to transport
finished products to your selling place. If you intend selling a service you may need transport to
get to your customers.

Feasibility Question 7: General and financial management

Keeping financial records and using these records


to make business decisions can be difficult. You will
need to find a financial specialist (e.g. a bookkeeper
or accountant) to help you. This person will:

• Verify your financial records monthly;


• Meet with you monthly to advise you on the
financial situation of the business;
• Arrange for an audit your financial records
annually (often a legal requirement).

Feasibility Question 8: Pricing

The money that you get from selling your product


or service must pay for all your production expenses
and salaries/wages. Together these items are called
your recurrent expenses. Your sales must at least
equal your recurrent expenses or your business
will make a loss and fail. If sales are more than or
equal to your recurrent expenses your business can
succeed and you will make a potential profit. If you
make a loss, you can solve the problem by:

• Producing more;
• Reducing the number of workers (provided that you can maintain the required production);
• Studying the expenses to see if you can reduce some of them; and
• Review your pricing structure.

If none of these solutions give you a profit, you should consider another business idea.

56
Feasibility Question 9: Production

Refer back to Feasibility Question 8 to help you to answer this question. You will find out how much you need to produce on
average every working day, as well as whether you will have enough raw material on hand.

Feasibility Question 10: Financing

There are several sources of capital or start-up financing available. You will need to know how much money you will need to start
your social enterprise and where you will get this money.

After considering each of the above areas, you will be able to answer the ten feasibility questions. Don’t worry now if you don’t
feel you have all the information you need to answer some of the questions.

Feasibility questions Yes/No

1. Will people in your community rather buy your products or service than
those of your competitors?
2. Can the people you propose to employ learn how to make your product or
provide your service?
3. Can you obtain the raw materials, tools and equipment you need?

4. Can you find suitable premises to work in?

5. Can you find a suitable selling place?

6. Can you transport raw materials to your factory and finished products to
your selling points?
7. Can you manage your social enterprise?

8. Can you sell your product or service at a profitable price?

9. Can you produce enough in good time?

10. Do you know where you can obtain financing to start up your social
enterprise?

Section 5.3 Have you selected the best social business idea?
The analysis of the business ideas you selected should provide you with the information needed to select the best idea. Re-
view your feasibility study to determine whether this is the social enterprise you should start.

• If you are not able to answer “yes” to all ten feasibility questions, you should reconsider your selection.
• Go back to the other two ideas you selected and conduct a feasibility study on the second idea.
• If you are still not able to answer “yes” to all ten feasibility questions, conduct a feasibility study on your third idea.

Once you are able to answer “yes” to all ten feasibility questions, you may have found a suitable social business idea for you in
your specific community. In module 6 you will write up the social business idea you have selected.

57
58
MODULE 6
WRITING UP YOUR SOCIAL BUSINESS IDEA
Congratulations! You have completed the first step in preparing to start your social enterprise by selecting the best idea. You
now need to write up a summary of your idea.

Use the template provided in Annexure 9 at the end of this Guide to summarise your social business idea. When this is complete,
you can go on to the next step in starting your own social enterprise – preparing a business plan for your proposed social
enterprise.

Section 6.1 Are you unsure about your selection?


If you find that you are not sure which business idea is the most suitable for you, you need to do some more work. Assess what
makes you unsure:

• Is it the choice between the three last business ideas? If this is what you are unsure about, perhaps you need to talk to some
key informants in those business areas and get more advice and information before making your choice.

• Is it that you are not sure that you are really suited to start such a social enterprise? If this is making you worry, review the
assessment in Section 2. Perhaps you are more suited to be employed than to run your own business. Many successful and
satisfied people are employed. Maybe you need to start a purely for-profit business rather than a social enterprise. Choose
the best option for you.

• Is it that you are simply not happy with the three business ideas you selected? If you believe you really want to start your
own social enterprise and that you are the right type of person to do so, but have not yet found the right business idea, take
a break and then (in a week or more) start looking for other business ideas by going back through this training manual.

• It often takes some more time, more work and more information before you find the most suitable business idea. As you
work towards this goal you will be increasing your knowledge, experience and skills. All of this will increase your ability to
become a successful social entrepreneur.

59
60
MODULE 7
FACT SHEETS
Section 7.1 Frequently Asked Questions (FAQs)

1. What are social enterprises?

Social enterprises are businesses that have a social purpose. They use business principles and methods to achieve social change.
Social enterprises are not grant-dependent charities, but are revenue-generating businesses. For some examples of successful
social enterprises in South Africa, take a look at some of the 25 case studies that are available alongside this Guide.

2. Why start a social enterprise?

Most social entrepreneurs start a social enterprise because they feel strongly about a particular social issue and they want to do
something about it in a practical and sustainable way. Social enterprises tackle social issues in various ways, including:

• To provide skills training and/or employment opportunities to the needy and disadvantaged (i.e. those who have higher
than usual barriers to employment, such as people with disabilities or ex-offenders) as a means to (re-)integrate them into
society and encourage them to be self-reliant.
• To provide subsidised services to needy and/or disadvantaged beneficiaries, ensuring that the people who could not usually
afford certain services have access to such services to improve their quality of life.
• To serve society’s needs or address certain social issues in other ways. These issues can include social cohesion and
community building.

3. Are all social enterprises small businesses?

Social enterprise refers to any type of business with a social mission. It can be large or small.

4. Can the owners and members of the social enterprise take profits out if the business is doing well?

To be considered a social enterprise, most of its profits should be used to tackle the social purpose. This could mean reinvesting
in the business to help it to grow, or spending the proceeds on activities that fulfil the social purpose. Many social businesses use
all of the profits in this way, but some allow for a portion of the profits to be shared among the owners and shareholders. Using
profits for the social purpose is intended to:

• Demonstrate that the enterprise exists for a social purpose, rather than solely to provide private benefit to its owners or
members;
• Encourage sustainability of the enterprise and the opportunities for its employees; and
• Ensure that the bulk of the income received (whether donor or self generated) ends up beneficiating the target
communities.

5. What happens to the profits?

Most of the surplus or profit should go towards building the reserves of the social enterprise, building organisational capabilities,
or expanding operations and providing increased social value. In some cases, a limited share of the profits is distributed to
investors.

6. Can I invest in a Social Enterprise?

There are attempts to encourage more investment in social enterprises. There is even a discussion about establishing a Social
Stock Exchange in South Africa. Of course, you are free to invest in a social enterprise, as long as the social enterprise is willing to
accept the investment. But you need to consider what return you expect from that investment. Most investors require a return
on their investment in the longer term as well as seeing social impact. Whether a social enterprise can distribute part of its profits
to investors depends on its legal form and the business model chosen.

61
7. I have set up a social enterprise, but my revenue is not able to cover costs.
Can I get funding from other sources to make up the difference?
Social enterprises should ensure that they are financially sustainable in the long-term. To ensure
sufficient funding to cover start-up and operating costs, social enterprises should explore different
funding options appropriate to their stage of business development. These can include earned-
income, government start-up grants, donor funding and private investments, depending on the
legal form of your social business.

8. Can I finance my social enterprise through grant funding only?

Financial support from donors or grants should be specific and short-term, designed to catalyse and
enable the start-up of the business, but it should not be the main source of continuous funding for
social enterprises. It is suggested that more than 50% of your income should come from income
generation e.g. services rendered or products sold. To be sustainable in the long term, the social
enterprise must have a sustainable business model to provide their customers with value for money
products and services beyond the stage when donor funding is reduced or phased out. If you prefer
to set up a non-profit organization that is totally dependent on donor or grant funding, that’s fine,
but it wouldn’t be considered a social enterprise.

9. What is the best legal structure for a social enterprise?


It depends on the circumstances, the people involved and what they want to achieve. You should be
clear about your business and social objectives before you start to think about legal structures. Many
times social enterprises lose out on valuable incentives or give themselves unnecessary difficulties
just because they register under the wrong legal structure. Social enterprises use a wide variety of
legal forms including: private companies; Section 21 companies; voluntary associations; trusts; close
corporations; and cooperatives. See the Guide to Legal Forms for Social Enterprise in South Africa for
more information on legal structures.

10. How long does it usually take for a social enterprise to reach financial
sustainability?
Social enterprises often take longer than conventional businesses to reach breakeven (where in-
come is sufficient to cover costs). This can take a number of years. Setting up a social enterprise is
often harder than setting up a normal business, particularly if its business model includes providing
services at subsidised rates to its target group. Some emerging social enterprises seek grants in their
early stages to enable them to reach this point.

11. Can I earn a good income as a social entrepreneur?

The simple answer is yes. There is no reason that people who set up or manage social enterprises
can’t earn a reasonable income, as long as this does not conflict with the social purpose of the enter-
prise. Staff employed by successful social enterprises can earn salaries that are comparable with the
rest of the private or non-profit sector. Paying decent salaries to managers and staff is necessary to
ensure that they remain committed and able to work for the social enterprise, and hence to ensure
its sustainability. However, the social entrepreneur may need to look at how he or she earns income
differently. While some conventional entrepreneurs do not factor in a salary for themselves in their
business plan, seeing profit as their income, social entrepreneurs should build their personal income
into the business plan as salaries or directors’ fees, before profit is calculated. This is because a social
enterprise generally reinvests or distributes most of its profits in line with its social purpose, rather
than paying it to its owners or staff.

62
Section 7.2 Glossary

Brainstorming A method used to produce ideas, explanations and interpretations.

Business idea A short and precise description of the basic operations of an intended business.

A method providing an overview of the most important issues related to a proposed (social)
Feasibility study
enterprise measuring the likelihood of the success of a potential business.

Ideas list A description of a variety of potential business ideas.

A project planning and management tool used for designing, planning and evaluating a project or
Logical Framework
business. It can also be used to identify business ideas and develop an outline to establish a social
Analysis (LFA)
enterprise.

Businesses who use raw materials (e.g. leather, wood, cloth or metal) to make new and different
Manufacturers
products out of those materials (e.g. furniture and shoe manufacturers, tailors and dressmakers).

Mind mapping An approach used to solve problems, make decisions and define concepts such as the vision for a
social enterprise.

An object that people (customers) pay for, including self-manufactured items and items bought for
Product
re-selling (e.g. tools, baked goods, clothes and retail goods).

Businesses who buy ready made goods from wholesalers or manufacturers to resell at a profit (e.g.
Retailers
grocery stores, hardware stores, clothing boutiques, spaza shops and stationery shops).

Something done for people which they pay for (e.g. shining shoes, delivering goods for other
Service
businesses, hairdressing, keeping money safe in a bank and repairing items).

Businesses who sell a particular service (e.g. transporters, hairdressers, bankers, laundries, cleaning
Service providers
services and building contractors).
A process to investigate and understand community needs and problems to ensure that a suitable
Situation analysis and appropriate solution is found. It requires the collection of information and an assessment of
the community to form an overall picture of it.
An economy which contributes to improved quality of life for all people built on economic justice
and democratic participation. It is characterised by placing more value on people and work
Social economy
than on money, independent management and democratic decision making processes. The
concept has broadened in recent years to include diverse forms of social enterprises and social
entrepreneurship.
A business or other organization characterised by:
• the delivery of social value as the principal aim as opposed to maximising profit for the
Social enterprise owners/shareholders; and
• the ongoing production of goods or the provision of services to generate an income that
covers costs and potentially allows for a surplus.
Social entrepreneurs share the vision, creativity and determination of business entrepreneurs
to create new products and services, and even new industries, but use these qualities to create
Social entrepreneur
sustainable market-based solutions to social problems. They focus on creating social value in
addition to economic value to ensure sustainability.

Social problems A generic term describing a range of conditions and behaviours evident in a society which is
deemed unacceptable by some members of the society. Different people view social problems in
different ways.

The people exposed to a social or environmental problem or experiencing specific needs. For a
Target group
social enterprise the target group includes customers and beneficiaries.

An approach similar to brainstorming, but using cards pinned on posters or other surfaces rather
Visualisation
than lists.

Wholesalers Larger dealers who buy from manufacturers in large quantities which they package and resell to
retailers.

63
Section 7.3 Sources of information and support focusing on social
enterprises

African Social Entrepreneurs Network (ASEN) www.asenetwork.org

UnLtd South Africa www.unltdsouthafrica.org

Ashoka www.southernafrica.ashoka.org

The Schwab Foundation for Social


www.schwabfound.org
Entrepreneurship

GIBS Network for Social Entrepreneurs www.gibs.co.za

http://www.uj.ac.za/EN/Faculties/
University of Johannesburg Centre for Social
management/departments/CSE/Pages/home.
Entrepreneurship and Social Economy
aspx

Heart Global www.heartglobal.org

Section 7.4 Other sources of information

The Small Enterprise Development Agency (SEDA) www.seda.org.za

The National Youth Development Agency (NYDA) www.youthportal.org.za

The Business Place www.thebusinessplace.co.za

www.smallbusiness.co.za
Real Development

The South African Institute for Entrepreneurship www.entrepreneurship.co.za

Real Enterprise Development Initiative (RED Door) www.capegateway.gov.za

Learn to Earn www.learntoearn.co.za

64
Endnotes

1
Address by Ebrahim Patel, Minister of Economic Development, South Africa to the Regional Conference on the Social Economy, Johannesburg,
19 October 2009.
2
Included in the Plan of Action of a Regional Conference on the Social Economy: Africa’s response to the Global Crisis, Johannesburg, 19-21
October 2009.
3
Sourced from www.schwabfound.org/sf/SocialEntrepreneurs/index, 28 May 2010.
4
Sourced from www.ashoka.org/social_entrepreneur, 28 May 2010.
5
Reducing the decent work deficit – a global challenge. Report of the Director General to the 89th session of the International Labour
Conference held in Geneva in June 2001.
6
Sourced from www.socialenterprise.org.uk, 31 May 2010.
7
Sourced from www.4lenses.org, 29 May 2010.
8
Sourced from www.ecademy.com, 28 May 2010.
9
Department of Trade and Industry (2004). Social Enterprises a strategy for success
10
Extracted from a flyer for the Social Business Plan Competition on the Cape Flats (2009).
11
The full list of Public Benefit Activities (extracted from www.sars.gov.za) is included as Annexure 1 in this publication.
12
This case study was developed by Marina Clarke during a site visit at the Free State Branch of Epilepsy South Africa in May 2010.
13
Adapted from the General Enterprising Tendency Assessment found at www.get2test.net, a research tool developed and tested by Dr Sally
Caird together with Mr Cliff Johnson at Durham University Business School, 1988.
14
Extracted from www.sars.gov.za. The full list of Public Benefit Activities can be found as Annexure 1 in this publication.
15
This case study was compiled using information drawn from the company’s website www.shonaquip.co.za.
16
Information on the situation analysis was based on the Standard Operations Procedures of Epilepsy South Africa.
17
This module is based on an adaptation of the Generate Your Business Idea, a training program developed by the International Labour
Organisation (2006).
18
This section is based on Income Generation and Job Creation, a training programme developed by Marina Clarke for Epilepsy South Africa.
19
The module is based on Generate your Business Idea, a training programme developed by the International Labour Organisation (2006).
20
This case study was drawn from Income Generation and Job Creation, a training programme developed by Marina Clarke for Epilepsy South
Africa.
21
This section is based on Income Generation and Job Creation, a training programme developed by Marina Clarke for Epilepsy South Africa,
as well as Generate Your Business Idea, a training programme developed by the International Labour Organisation (2006).
22
Extracted from www.sars.gov.za.
23
Based on standard operating procedures in use by the National Office of Epilepsy South Africa.
24
This annexure is based on Logical Framework Analysis – A tool for project design, planning and evaluation by Arne Nylund and the LFA Manual
published by the Secretariat of the African Decade of Persons with Disabilities (www.africandecade.org/trainingmaterials/lfa-manual).
25
Drawn from Generate Your Business Idea, a training programme developed by the International Labour Organisation (2006).
26
Drawn from Generate Your Business Idea, a training programme developed by the International Labour Organisation (2006).
27
Drawn from Generate Your Business Idea, a training programme developed by the International Labour Organisation (2006).
28
Drawn from Income Generation and Job Creation, a training programme developed by Marina Clarke for Epilepsy South Africa.
29
Drawn from Generate Your Business Idea, a training programme developed by the International Labour Organisation (2006).
30
Drawn from Income Generation and Job Creation, a training programme developed by Marina Clarke for Epilepsy South Africa.
31
Drawn from Generate Your Business Idea, a training programme developed by the International Labour Organisation (2006).

65
66
ANNEXURE 1
PUBLIC BENEFIT ACTIVITIES (PBAs)
PUBLIC BENEFIT ACTIVITIES (EXTRACT FROM SARS WEBSITE)
Part I

1. Welfare and Humanitarian

(a) The care or counselling of, or the provision of education programmes relating to, abandoned, abused, neglected,
orphaned or homeless children.
(b) The care or counselling of poor and needy persons where more than 90 per cent of those persons to whom the care or
counselling are provided are over the age of 60.
(c) The care or counselling of, or the provision of education programmes relating to, physically or mentally abused and
traumatized persons.
(d) The provision of disaster relief.
(e) The rescue or care of persons in distress.
(f ) The provision of poverty relief.
(g) Rehabilitative care or counselling or education of prisoners, former prisoners and convicted offenders and persons
awaiting trial.
(h) The rehabilitation, care or counselling of persons addicted to a dependence-forming substance or the provision of
preventative and education programmes regarding addiction to dependence-forming substances.
(i) Conflict resolution, the promotion of reconciliation, mutual respect and tolerance between the various peoples of South
Africa.
(j) The promotion or advocacy of human rights and democracy.
(k) The protection of the safety of the general public.
(l) The promotion or protection of family stability.
(m) The provision of legal services for poor and needy persons.
(n) The provision of facilities for the protection and care of children under school-going age of poor and needy parents.
(o) The promotion or protection of the rights and interests of, and the care of asylum seekers and refugees.
(p) Community development for poor and needy persons and anti-poverty initiatives, including—

(i) the promotion of community-based projects relating to self-help, empowerment, capacity building, skills
development or antipoverty;
(ii) the provision of training, support or assistance to community based projects contemplated in item (i); or
(iii) the provision of training, support or assistance to emerging micro enterprises to improve capacity to start and
manage businesses, which may include the granting of loans on such conditions as may be prescribed by the Minister
by way of regulation.

2. Health Care

(a) The provision of health care services to poor and needy persons.
(b) The care or counselling of terminally ill persons or persons with a severe physical or mental disability, and the counselling
of their families in this regard.
(c) The prevention of HIV infection, the provision of preventative and education programmes relating to HIV/AIDS.
(d) The care, counselling or treatment of persons afflicted with HIV/AIDS, including the care or counselling of their families
and dependants in this regard.
(e) The provision of blood transfusion, organ donor or similar services.
(f ) The provision of primary health care education, sex education or family planning.

67
3. Land and Housing

(a) The development, construction, upgrading, conversion or procurement of housing units for
the benefit of poor and needy persons.
(b) The development, servicing, upgrading or procurement of stands, or the provision of building
materials, for purposes of the activities contemplated in subparagraph (a).
(c) The provision of residential care for retired persons, where more than 90 per cent of the
persons to whom the residential care is provided are over the age of 60 and regular meals
and nursing services are provided by the organisation carrying on such activity.
(d) Building and equipping of community centres, clinics, sport facilities or crèches or other
facilities of a similar nature for the benefit of the poor and needy.
(e) The promotion, facilitation and support of access to land and use of land, housing and
nfrastructural development for promoting official land reform programmes.
(f ) Granting of loans for purposes of subparagraph (a) or (b) subject to such conditions as may
be prescribed by the Minister by way of regulation.
(g) The protection, enforcement or improvement of the rights of poor and needy tenants, labour
tenants or occupiers, to use or occupy land or housing.

4. Education and Development

(a) The provision of education by a ‘‘school’’ as defined in the South African Schools Act, 1996,
(Act No. 84 of 1996).
(b) The provision of ‘‘higher education’’ by a ‘‘higher education institution’’ as defined in terms
of the Higher Education Act, 1997, (Act No. 101 of 1997).
(c) ‘‘Adult basic education and training’’, as defined in the Adult Basic Education and Training
Act, 2000, (Act No. 52 of 2000), including literacy and numeracy education.
(d) ‘ ‘Further education and training’’ provided by a ‘‘public further education and training
institution’’ as defined in the Further Education and Training Act 1998, (Act No. 98 of 1998).
(e) Training for unemployed persons with the purpose of enabling them to obtain
employment.
(f ) The training or education of persons with a severe physical or mental disability.
(g) The provision of bridging courses to enable educationally disadvantaged persons to enter
a higher education institution as envisaged in subparagraph (b).
(h) The provision of educare or early childhood development services for pre-school children.
(i) Training of persons employed in the national, provincial and local spheres of government,
for purposes of capacity building in those spheres of government.
(j) The provision of school buildings or equipment for public schools and educational
institutions engaged in public benefit activities contemplated in subparagraphs (a) to (h).
(k) Career guidance and counselling services provided to persons for purposes of attending
any school or higher education institution as envisaged in subparagraphs (a) and (b).
(l) The provision of hostel accommodation to students of a public benefit organisation
contemplated in section 30 or an institution, board or body contemplated in section 10(1)
(cA)(i), carrying on activities envisaged in subparagraphs (a) to (g).
(m) Programmes addressing needs in education provision, learning, teaching, training,
curriculum support, governance, whole school development, safety and security
at schools, pre-schools or educational institutions as envisaged in subparagraphs (a) to (h).
(n) Educational enrichment, academic support, supplementary tuition or outreach
programmes for the poor and needy.
(o) The provision of scholarships, bursaries and awards for study, research and teaching on
such conditions as may be prescribed by the Minister by way of regulation in the Gazette.

5. Religion, Belief or Philosophy

(a) The promotion or practice of religion which encompasses acts of worship, witness, teaching
and community service based on a belief in a deity.
(b) The promotion and/or practice of a belief.
(c) The promotion of, or engaging in, philosophical activities.

68
6. Cultural

(a) The advancement, promotion or preservation of the arts, culture or customs.


(b) The promotion, establishment, protection, preservation or maintenance of areas, collections or buildings of historical or
cultural interest, national monuments, national heritage sites, museums, including art galleries, archives and libraries.
(c) The provision of youth leadership or development programmes.

7. Conservation, Environment and Animal Welfare

(a) Engaging in the conservation, rehabilitation or protection of the natural environment, including flora, fauna or the
biosphere.
(b) The care of animals, including the rehabilitation, or prevention of the ill-treatment of animals.
(c) The promotion of, and education and training programmes relating to, environmental awareness, greening, clean-up or
sustainable development projects.
(d) The establishment and management of a transfrontier area, involving two or more countries, which—
(i) is or will fall under a unified or coordinated system of management without compromising national sovereignty; and
(ii) has been established with the explicit purpose of supporting the conservation of biological diversity, job creation,
free movement of animals and tourists across the international boundaries within the peace park, and the building of
peace and understanding between the nations concerned.

8. Research and consumer rights

(a) Research including agricultural, economic, educational, industrial, medical, political, social, scientific and technological
research.
(b) The protection and promotion of consumer rights and the improvement of control and quality with regard to products
or ervices.

9. Sport

The administration, development, co-ordination or promotion of sport or recreation in which the participants take part on a
non-professional basis as a pastime.

10. Providing of funds, assets or other resources

The provision of—


(a) funds, assets, services or other resources by way of donation;
(b) assets or other resources by way of sale for a consideration not exceeding the direct cost to the organisation providing
the assets or resources;
(c) funds by way of loan at no charge; or
(d) assets by way of lease for an annual consideration not exceeding the direct cost to the organisation providing the asset
divided by the total useful life of the asset, to any—
(i) any public benefit organisation which has been approved in terms of section 30;
(ii) any institution, board or body contemplated in section 10(1)(cA)(i), which conducts one or more public benefit
activities in this part (other than this paragraph);
(iii) any association of persons carrying on one or more public benefit activity contemplated in this part (other than this
paragraph), in the Republic; or
iv) any department of state or administration in the national or provincial or local sphere of government of the Republic,
contemplated in section 10(1)(a) or (b).’’

69
11. General

(a) The provision of support services to, or promotion of the common interests of public benefit
organisations contemplated in section 30 or institutions, boards or bodies contemplated in
section 10(1)(cA)(i), which conduct one or more public benefit activities contemplated in this
part.
(b) The hosting of any international event approved by the Minister for purposes of these
regulations, having regard to—
(i) the foreign participation in that event; and
(ii) the economic impact that event may have on the country as a whole.

70
ANNEXURE 2
SITUATION ANALYSIS

History of the community:


Focus on the evolution and development of the community.

Environment:

Landscape and climate:

Geographical boundaries:

Open spaces:

71
Location of roads, railway lines and facilities for pedestrians:

The volume and nature of vehicle traffic:

The use of land in the area, and interaction and balance between industrial, commercial and
residential areas:

Range and nature of recreational facilities:

Layout of streets and properties:

Man’s influence on environmental change by activities like vandalism, graffiti and littering:

Inhabitants:

Population (numbers, gender, age, socio-economic groups, marital status, educational qualifica-
tions, degree of literacy):

72
Housing (over-population, property rights, households with or without facilities like running water and electricity, number of
houses occupied, shared or vacant):

Work (number of employed or unemployed, considering age and gender, number of women working either full-time or part-
time, commuting):

Social welfare (food distribution, school attendance, social grants, juvenile delinquency, child mortality, social services, family
structure and functions, divorce rate):

Perceptions by the inhabitants of community needs and problems, as well as the causes thereof:

Community networks (family, neighbours, friends):

Values, traditions and culture:

Psychological facts (character of people and their preferences and feelings about life, social change in general, including past
frustrations):

73
Organisations:

Assess the following types of organisations in terms of the nature and range of services, structures,
goals, policy, funding and personnel, the impact on and purpose for the community. Also list any
other organisations and resources available to the community.
Education (schools, adult education, juvenile care):

Economic activities (income generation, type of job opportunities available, distribution between
government and private work sectors, prejudices regarding employment, economic leaders and
organisations, distribution of occupations, unemployment):

Cultural organisations (values, norms, traditions):

Faith-based organisations (churches, participation in faith-based activities):

Societies (aims, functions, activities, members and characteristics in terms of age, gender and
economic class):

Health structures (hospitals, clinics, community health services):

74
Communication:
Verbal contacts:

Information distribution (pamphlets, newsletters, posters):

Print media:

Electronic media (radio, television, internet, telephones):

Power and leadership:


Local government:

Elected politicians:

Politics of the inhabitants (organisations with power to influence the community):

75
Existing opportunities in the community:

Deficiencies and problems in the community:

76
ANNEXURE 3
TECHNIQUES TO IDENTIFY SOCIAL BUSINESS IDEAS
Mind mapping
This is an approach used to solve problems, make decisions and defining concepts such as the vision for a social enterprise. It
is a diagram that represents words, tasks, ideas, etc linked and arranged around a central word or idea. You will find that mind
mapping works well with people with low literacy levels as it uses pictures, symbols and images rather than only text (i.e. words),
thereby helping people to understand concepts.

To mind map you will need a sheet of paper and pens/pencils in different colours. Follow these instructions:

• Start in the centre of the sheet of paper with an image of the topic.
• Use different colours to help your understanding. Colours can also be used to group certain concepts together.
• You can use any images, symbols, pictures, etc in your mind map.
• Identify concepts by using key words.
• Each word/image should “stand alone”. It might be necessary for you to combine more than one concept or thought.
• The lines should be connected, starting from the central image (i.e. radiating from the centre). Use different colours, types
of lines (e.g. solid lines versus dotted lines) and weights (i.e. thicker or thinner lines) to describe the relationships between
concepts.
• It helps to make the lines the same length as the word or image they support.

Here is an example of a mind map:

Visualisation

This approach is similar to brainstorming, but uses cards pinned on posters or other surfaces rather than lists. Use the same
techniques as in brainstorming but write down comments on cards and place these on a notice board or wall. People participating
(e.g. community members) can see all the suggestions and statements they make in a visible way. It supports and encourages
transparency and is a good method for indicating the way to change, strategies and implementation, as well as adjustments
required.

77
Logical Framework Analysis (LFA)24
The LFA was actually developed as a project planning and management tool because it is used for
designing, planning and evaluating a project or business. However, it can also be used to identify
business ideas and develop an outline to establish a social enterprise. It is focused on the problem(s),
objective(s) and target group(s) and allows for participation by all role-players.

There are six steps in the LFA process. The first five must be followed in sequence (e.g. completing the
first step before moving on to the second step). However, the sixth step must be applied throughout
the process (i.e. from the first to the fifth step).

• Step 1: Define the problem, as well as the possible causes and potential effects.
• Step 2: Set objectives to solve the problem.
• Step 3: Define the expected results based on the objectives set in step 2. Remember to
include indicators (measurements to prove success).
• Step 4: Write down the actions you will need to take to reach the objectives and achieve
the results.
• Step 5: Work out the resources you will need for each activity.
• Step 6: Note your assumptions about the project and identify potential risks. Remember
to do this throughout the first five steps.

Step 1: Defining the problem, possible causes and potential effects


When developing a problem statement (step 1) it is important to analyse the causes and effects
of the problem identified. One of the best ways to do this is by using the problem tree approach.
This approach has three main advantages:

• It allows you to keep track of causes and effects.


• It validates your analysis.
• It ensures the completeness of the analysis.

Here is an example of the application of the problem tree approach to describing a specific problem
area:

Step 1 – Write down the principal problem:

Only 5% of deaf people in the local area are able to use sign language.

Step 2 – Draw up a list of the most likely effects of the problem.

These should be severe enough to justify the establishment of a social enterprise to address the
problem.

• Deaf people in our community are denied access to information.


• Deaf people will become even more isolated because they are unable to communicate with
hearing people.
• Deaf people are denied basic human rights due to the communication difficulties they
experience when interacting with a hearing world.
• Deaf people are not able to access employment and are thus not able to earn money and be
financially independent.

Step 3 – Draw up a list of the most common causes of the problem.

Often, each of these causes can become a principal area to investigate.

• There are no sign language instructors in our community.


• Because there are no special schools in our area, most deaf people have been unable to attend
school or obtain an education.
• There is a general lack of awareness about sign language in our community.
• Because of our geographical location in a very rural area, we are not able to access the services
enjoyed by people in the larger cities.

78
ANNEXURE 4
IDEAS LIST25
You will need to start an ideas list for your social enterprise. As you identify ideas, write them down on the list as shown in the
example below:

IDEAS LIST FOR MY OWN SOCIAL ENTERPRISE


Idea Description
Preserving I know about and enjoy cooking and preserving. There is no one else in my town doing this. Because many
vegetables grown tourists visit over weekends, the business is likely to attract many customers willing to pay for the product.
by community However, my main customers (the tourists) will only be buying over weekends. It might be necessary to
projects develop ideas that fit well with this idea (e.g. peeling and chopping vegetables for busy mothers) which
could attract customers during the week. I won’t need a lot of money to start the business. I will be adding
value to the produce grown by community groups. This will help them as they struggle to find markets for
their products.

You can find an ideas list form for generating social business ideas below. Use this form to build your own list of business ideas
for your social enterprise. Remember to include the ideas you developed while considering the needs in your community.

IDEAS LIST FOR MY OWN SOCIAL ENTERPRISE


Idea Description

79
80
ANNEXURE 5
BUSINESS IDEA INFORMATION FORM
BUSINESS IDEAS INFORMATION FORM

1. Name of business:
2. Products or services sold:
3. Main customers:
4. Social/environmental need addressed:

5. When and why did the owner decide to start this business?

6. Why did the owner think it was a good idea to start that kind of business?

7. How did the owner find out what local people wanted?

8. What strengths or assets (e.g. previous experience, training, family background, contacts, hobbies) did the owner use to
start this business?

9. What problems did the owner face in setting up the business?

10. Has the business product/service changed over time?

81
Notes:

82
ANNEXURE 6
FIELD RESEARCH

This is a process of collecting information from your community and environment. By talking to customers, suppliers and
members of the business community you can gather useful information about the factors that affect your business idea. You
can have informal discussions and make observations or you can arrange more formal visits and interviews. The visits will take
time, but by doing this field research you are already starting to act like a successful business person. In addition, the contacts
you make during these visits will also be useful to you when you start your social enterprise.

Who should you talk to?

Who you talk to is determined by your idea or the area you are investigating:
• If you are thinking about starting a retail shop, you will need to talk to other shop owners. These people may be your
competitors or people who have similar shops. Because it might be difficult to get good information from people who will
be in direct competition with you, you could visit a nearby town to talk to similar shops who will not be competing with
you.
• You also need to talk to the suppliers of the goods you will use or sell to find out about different products, availability, prices,
storage and transport.
• If you are thinking of manufacturing a product, you need to find out how it is made and what equipment you will need
to make it. You will also need information about suitable premises, remembering that municipalities often do not allow
manufacturing businesses to operate in residential area. You should also talk to the people who supply the raw materials
that go into your product and to the people that sell the tools or machinery/equipment you will use. Remember to ask
about availability, reliability and repairs.
• If you are thinking about providing a service, you will need information about the preferences of customers, similar services
that area already available and the skills that will be
required.

Regardless of your business idea, you must talk to


potential customers. They will be able to tell you whether
you have a good idea. Find answers to the following
questions:

• Who will buy your product or service?


• Will your beneficiaries be the ones who pay you, or
will you generate income from other sources?
• What will your average customer look like? Build
a profile about their age, gender, economic status,
geographic location and other relevant information.

Once you understand who your customers will be,


you need to talk to them. Try to find a good sample
of customers by talking to different types of people. If
your product is likely to be bought by anyone, be sure
to talk to both men and women, young, old and middle-
aged people, the better off and the less well off. If you
are going to sell to one specific type of customer (e.g.
middle-aged women) try to find differences within that
group (e.g. different ethnic groups, different professions,
different neighbourhoods, etc).

You should talk to at least ten potential customers. Remember to write down details about each (age, gender, an estimate of
their income brackets, etc).

83
Potential customers are not the only people you should be talking to. Key informants (opinion leaders)
are people who know a lot about the business you want to start and your potential customers. They
could include buyers for big companies, administrators

of institutions in your area, people who work for government departments, managers of large
companies or people who work for non-profit organisations or social enterprises.

Make a list of the type of information you will need to gather and identify people who might be able
to help you with this. While it is sometimes difficult to meet with busy people like these, if you can
approach one key informant, they might help you to meet others.

Conducting good interviews

When you are talking to people to gather information, you are also presenting your idea to start a
social enterprise and yourself as a community leader. It is important to prepare well so that you can
make a good impression and get the support of people in your community. Remember, this is your
first chance to promote your idea.

Here are some hints to help you:

• Dress neatly.
• Describe your idea positively.
• Explain why you want to start a social enterprise and how the community will benefit from your
business.
• Explain why you think your product or service will be something customers want.
• Carry your questionnaires on a clipboard rather than a book or a large pad which can easily
intimidate people, making them less likely to want to help you.
• Ensure that you have enough paper to write down what people tell you. Also make sure that
you have a spare pen in case your
pen is lost or broken.
• Ask people if they mind you taking
notes. Some people might feel
uncomfortable if you write down
what they say. In such cases, try to
remember as much as you can and
write it down as soon as possible
after the interview.
• Even if you are using a questionnaire,
allow your conversation to flow
naturally. Let one subject lead to
another. If you allow people to talk
freely rather than simply asking a list
of questions, you will be surprised
by how much you can learn.
• When you ask close-ended questions
(i.e. questions that can be answered
by either “yes” or “no”), follow these
up with open-ended questions (i.e.
questions like “who?”, “what?”, “why?”, “where?”, “when?” and “how?”). For example, don’t only
ask “Are you satisfied with this product”. Follow this question with another such as “What do you
like about the product?” or “What would you like to add to the product?”
• Don’t be afraid to follow one question with another. This can often provide you with additional
information.
• Keep an open mind and don’t provide answers for people. Allow people to share their views
with you.
• Only ask one question at a time. For example, ask “How much profit do you make on each
order?” rather than “How much profit do you make and how much do you have to spend on
transport?”
• Ensure that you correctly understand what people are telling you. If you are unsure, ask another
question. Sometimes it helps to repeat what people have told you in different words.
• Having a sample or even a picture of your product can be very useful because you can ask

84
people what they like about it and what they don’t like. This information can help you to refine your product so that you
will be able to sell more.
• It is best to ask questions that make people think carefully.
• Offer people choices when answering your questions. For example, ask “Will you buy from my shop once a week or once a
month?” rather than “Will you buy from my shop?”
• When asking about prices, offer a number of prices and ask which price the person thinks is most reasonable. For example,
ask “What would be a reasonable price for a vetkoek and mince? Between R4 and R6 or between R7 and R10?”

Gathering information like this is known as a market survey. Here is an example of two market surveys (one for products and the
other for services) that you can use:28

MARKET SURVEY (PRODUCT)

Name of product:
1. Do you currently buy this product?
  Yes – Continue by asking questions 2 - 9
  No – Continue by asking questions 10 – 12.

2. Where do you usually buy the product?

3. How much do you pay for it?


4. How many items do you buy each time?
5. How often do you buy this product?
6. Do you buy more at certain times than others?
  Yes – When?
  No
7. Can you usually find this product when you want to buy it?
  Yes
  No – What do you do when you can’t find it?

8. Are you usually satisfied with the quality?
  Yes – Why?

  No – Why not?

9. Would you buy more if you could find this product
  At a cheaper price?
  Of better quality?
  Available more often?
  At a more convenient location?
10. Do you sometimes need this product?
  Yes – When?
  No
11. Would you use this product as a substitute for something you already buy?
  Yes – For what?

85
  No
12. Why would you start buying this product?

MARKET SURVEY (SERVICE)


Name of service:
1. Do you currently pay someone for this service?
  Yes – Continue by asking questions 2 - 8
  No – Continue by asking questions 9 – 10.

2. Which store or person do you usually pay for this service?

3. How much do you pay for it?


4. How often do you pay for it?
5. Do you need this service more at certain times than others?
  Yes – When?
  No
6. Do you need this service more at certain times than others?
  Yes
  No – What do you do?

7. Are you usually satisfied with the quality?
  Yes – Why?

  No – Why not?

8. Would you buy this service more often if it was available
  At a cheaper price?
  Of better quality?
  Without a long wait?
  At a place more convenient to you?
9. Do you sometimes need this service?
  Yes – What do you do?

  No
10. Why would you start paying someone to provide this service for you?

86
When talking to suppliers, wholesalers or competitors you will need to ask different questions. Here is an example of a survey
that you can use:

SURVEY FOR SUPPLIERS


1. How easily can you get these products?

2. Are the products always available?


  Yes
  No –Why not?

3. What kind of quality is available?

4. At what price?

5. How would I need to store this product?

6 What packaging is available?

7. What after sales service do you offer?

8. What delivery services do you offer?

9. What payment terms and options do you offer?

10. What other information can you offer me about this product?

87
You can use some of these questions when speaking to wholesalers, competitors or other key
informants, but you can also add other questions. Here are some examples:

Wholesalers

1. How much would my products or materials cost at a given quantity?


2. How reliable is the supply?
3. Who else supplies these products or materials?
4. Are there any special issues concerning storage, transport or use of the product or material?

Competitors

1. How much or how often do you think people would buy a product or service like mine?
2. How many other competitors are already supplying my product or service?
3. Is the demand (i.e. the number of people buying) for my product or service constant or does it
change during the year? Remember that people may buy more of a certain product at certain
times, e.g. blankets in winter, gifts at Christmas time or fertilizer before the planting season.
4. Are there aspects of the product or service that people want but can’t find easily?
5. What else do you think people would buy?
6. What trends do you see coming in the future?

Key informants

1. How will this business help people in my community?


2. How much do you think people need this product or service?
3. What do you think would be most important to encourage people to buy?
4. Do you think this is a business that could grow over time?
5. What are the current trends?
6. Do people need this product all the time or does the demand change during the year?
7. Are there aspects of the product or service that people want, but can’t find easily?
8. What else do you think people would like to have?

Remember that what you ask your key informants depends on who they are. You have chosen them
because they have some special knowledge that you need.

88
Activity

Start with just one of the three social business ideas you have selected. You want to get as much
information as possible about this type of business. Use the space below to make a plan for getting
the information.

Business idea:

1. I will need to find the following information:

2. I will need to talk to the following people:

89
3. I will ask the following questions:

• Collect the information as identified in your plan (see above).


• Make another plan for the second business idea.
• After gathering the information about the second business idea, go on to the third. You will find
that the work will go quicker as you gain experience.
• When you have gathered all this information you will begin to see which idea is the best one.

90
ANNEXURE 7
SWOT ANALYSIS29
People often use this method to decide on the most suitable business idea to start a business, including a social enterprise. It
will help you to focus on potential problem areas and advantages for each business idea.

SWOT is an abbreviation which stands for:

S – Strengths
W – Weaknesses
O – Opportunities
T – Threats

Inside the business:

To analyse the strengths and weaknesses of a business idea you need to look inside the business you are planning. What will
the business be good at and what are the weaker areas?

Strengths are the specific positive aspects which will give your proposed business an advantage over similar business ventures
and competitors. It could be that you propose to sell a better quality product or to have a location which is more accessible to
your customers.

Weaknesses on the other hand are the specific aspects that your business will not be good at. Perhaps your costs will be high
because your business is located far from suppliers and you will have to pay more for transport.

Outside the business:

To analyse the opportunities and threats of your proposed business you will need to look outside the business, i.e. the external
environment. What aspects of the external environment will benefit the business and what aspects will negatively affect the
business.

Opportunities are ongoing potential developments around you that will be good for your business. It could be that the demand
for the product you are proposing will increase because of an influx of tourists.

Threats are probable events that may affect your business negatively. For example, the business idea could be so simple that
other people may start similar businesses in your area and reduce your share of the market.

91
CASE STUDY

This is how Mrs Mandaza does the SWOT analysis for one of her proposed businesses – a shop
selling second-hand clothes to the local community.

SWOT Analysis
Business idea: Second-hand clothes shop
Inside the business
Strengths Weaknesses
1. Good marketing skills. 1. The proposed rental for the shop is high. (*)
2. Worked in a clothing shop previously.
3. A flair for fashion.
4. The proposed business site is close to both
suppliers and customers. (*)

Outside the business


Opportunities Threats
• The price of new clothes is unaffordable for • The cost of importing second-hand clothes is
many of the potential clients. (*) high.
• Prices increase all the time so that more • There are plans to start a Sunday market
people are likely to buy second-hand clothes. where second-hand clothes will be available.
(*)

Are there more strengths than weaknesses?   Yes   No

Are there more (*) for strengths than weaknesses?   Yes   No

Are there more opportunities than threats?   Yes   No

Are there more (*) for opportunities than threats?   Yes   No

How will I deal with the weaknesses?

• I will spend more time to find a shop with lower rent.


• I can also take a stall at the Sunday market and use it to advertise the shop.

Ms Mandaza does a SWOT analysis for all six business ideas and decides to choose to go ahead and
develop a business plan for the second-hand shop because it has more strengths than weaknesses
and some of the weaknesses are easy to correct. There are opportunities as well because the market
for second-hand clothes will continue to grow with the escalating cost of living.

92
Activity

Do a SWOT analysis for each of the three business ideas you have selected.

1. Use the SWOT analysis form below. Make copies of this form for each of the other ideas you need to analyse.

2. Write your first business idea on the SWOT analysis form. Think carefully about strengths and weaknesses in the business
(e.g. your personal characteristics, financial issues, marketing issues related to the product, the place of business, price,
promotion and selling aspects.

3. Write these down.

4. Think of the external environment for this business. What are the opportunities and threats to this business in your
environment? The key informants you spoke to during your field research may have pointed these out to you. Write them
down.

5. Review what you have written and mark any points you think are very important and will have a big impact on the business
with a star (*).

6. Count the points you noted and answer the questions on the SWOT analysis form.

7. Ask yourself:
• Can I overcome the weaknesses and avoid the threats for this business?
• Can I build on the strengths and opportunities for this business?

8. Think about how you will overcome the weaknesses in the proposed business and write down your decisions on the SWOT
analysis form.

9. Repeat steps 2 to 7 above for the second selected business idea using the second SWOT analysis form. Then do the same
for the third idea you selected using the third SWOT analysis form.

10. When you have completed all three SWOT analyses for your business ideas, compare them carefully and select the business
idea with the most strengths and opportunities. This will probably be the most suitable and successful for you to start.

93
SWOT ANALYSIS
Business idea:

Inside the business


Strengths Weaknesses

Outside the business


Opportunities Threats

Are there more strengths than weaknesses?   Yes   No

Are there more (*) for strengths than weaknesses?   Yes   No

Are there more opportunities than threats?   Yes   No

Are there more (*) for opportunities than threats?   Yes   No

How I will deal with the weaknesses:

94
ANNEXURE 8
FEASIBILITY STUDY QUESTIONS30

Feasibility Question 1: Demand/Competition


1. What product or service do you want to sell?

2. In which town or area will you sell?

3. What is the name of the competitor you are analysing?

4. Where is this competitor located?

5. Describe the quality of your competitor’s products/services:

6. How many products/services does this competitor sell per week?

7. When does your competitor sell the most products/services?

8. At what price does your competitor sell his/her products or services?

95
Feasibility Question 2: Skills training

1. Do the people in your target group have the ability to do the work required?

  Yes – Why do you think so?

  No – Why do you think so?

2. Does someone in the target group already have the necessary skills?

  Yes

  No

What is the name of the person?

What is the specific skill(s)?

Does he/she agree to teach this skill?

  Yes

  No

When is he/she available?

3. Is there someone in the local community who could teach this skill to your potential workers?

  Yes

  No

What is the name of the person?

What is the specific skill(s)?

Does he/she agree to teach this skill?

  Yes

  No

When is he/she available?

How much would he/she charge?

4. Is there a local school or institute that could this skill to your potential workers?
  Yes
  No

What is the name of the school/institute?

Who did you contact there?

What is the specific skill?

Has this person agreed to organize a special class?


  Yes
  No

96
When is he/she available?

How much would he/she charge?

5. What is the best way to teach the necessary skills to the target group?

Feasibility Question 3: Materials, tools and equipment

1. Find information about the raw materials or supplies you will always need in the space below. Also identify two different
places where you can buy these materials or supplies and write down the prices they charge.

Item Place to buy Price

2. List the tools you will need to buy sometimes and identify suppliers and their prices.

Item Place to buy Price

97
3. Write down the equipment you will need to buy to start your social enterprise. Identify two suppliers and their prices.

Item Place to buy Price

4. Write down the furniture you will need to start your social enterprise. Identify two suppliers and their prices.

Item Place to buy Price

It is cheaper and easier to buy everything you need locally. However, sometimes you might need to buy raw materials, tools or
equipment from other countries. Review all your answers above and list what you will need to import. Answer the questions
below for each item that you will need to import.

5. Can you order the items you need from a local company?

Item Yes No

98
6. Can you pay this company in your local currency?

Item Yes No

7. If you need to order items from another country, do you need an import licence?

Item Yes No

8. Can you obtain this licence?

Item Yes No

9. If you have to pay for the items in foreign currency, can you obtain the necessary foreign exchange?

99
Item Yes No

10. Can you arrange to transport the items into your country?

Item Yes No
1.

2.

3.

11. Will you have to pay customs duty?

Item Yes No
1.

2.

3.

100
Feasibility Question 4: Workplace
1. Identify the minimum requirements for the space you need:

Accessibility for workers

Appropriate and sufficient space to work in

Space to store finished goods

Space to store raw materials

Office/meeting space

Good security

Sufficient daylight to work by

Electricity

Running water

Heat or air conditioning

Telephones

Accessibility for customers

2. Visit possible workplaces which meet your requirements. Complete the following information for three places you visited:

Place 1 Place 2 Place 3


Geographic location

Contact person and contact


details

Rent per month

Monthly cost of utilities


(electricity, water, etc)

Date available

Minimum lease period

101
Feasibility Question 5: Selling place
1. Visit at least three possible places and describe them in terms of:

Place 1 Place 2 Place 3

Name of the place or dealer

Contact person and contact


details

Rent/cost per month

How often you can sell there

2. If you are going to sell a service, is your workplace conveniently situated for your customers?

  Yes

  No

Feasibility Question 6: Transport


1. How can you transport your raw materials and supplies to your working place?

Mode of transport Cost per trip How often?


Walk and carry

Motorbike/Bicycle

Car

Taxi

Truck

Train

Other

2. Think of the place(s) where you will sell your product(s). How can you transport the product(s) to the selling point?

Mode of transport Cost per trip How often?


Walk and carry

Motorbike/Bicycle

Car

102
Taxi

Truck

Train

Other

3. Will you have to package your product(s) to transport it to the selling point?

  Yes

  No

If “yes”, what will the packaging cost per item be?

4. If your social enterprise is going to sell a service, will your customers come to your working place?

  Yes

  No

If “no”, how will you transport the item you will service to your workplace and back to the customer?

Mode of transport Cost per trip How often?


1.

2.

3.

4.

Feasibility Question 7: General and financial management


1. Who will own the social enterprise?

2. How will the social enterprise be legally constituted?

3. Do you have a person available who has experience in keeping financial records for a business?

  Yes

  No

If “yes”, who is this person?


Is he/she willing to help you?

  Yes

  No

If “yes”, how much will you have to pay him/her?


103
Feasibility Question 8: Pricing

1. Calculate your sales.

Product/service Number of units you Price per unit Total sales income
can sell

Total sales

2. Calculate your expenses. What will it cost you to produce your product during the first year of trading? Refer back to
Feasibility Questions 1 to 7 for the expenses you have already calculated.

• Column A: In this column you will record your expenses during your “start-up” period (i.e. before you start making money
from sales). Remember that you will need to spend money on big items such as equipment or machinery (called capital
investment). You will also need to meet your monthly expenses (e.g. rent, salaries/wages, utilities, raw material, etc). Plan
on a start-up period of at least six months. You must be sure that you have enough start-up money to last until your social
enterprise begins to make money from sales.
• Column B: In this column you will record all the expenses you will have after your start-up period. These are recurrent
expenses and must be covered by the money you project you will make from sales.

104
Expense items Column A (6-month start-up Column B (Recurrent
period) expenses)

Training and skills development

Raw materials

Tools

Equipment and furniture

Rent for workplace

Utilities (e.g. electricity and water) for workplace

Rent for selling place

Utilities for selling place

Transport for raw materials to workplace

Transport for finished goods to market

Packaging

Management salaries

Worker salaries and wages

Taxes

Sub-total

Unexpected expenses (10% of the sub-total for emergencies)

Replacement costs (20% of the sub-total to replace tools,


equipment, etc)

TOTAL

3. Calculate your profit/loss by subtracting your recurrent expenses from your sales:

Total sales

Total recurrent expenses

PROFIT/LOSS

105
Feasibility Question 9: Production

1. Refer back to Feasibility Question 8 on pricing and write down how many products or services you will need to sell during
the first year:
2. Calculate how many working days in the year:
3. Divide the number of products or services by the no. of working days:
Number of products/services ÷ Number of working days = Number of products or services per
day
This amount indicates how much you need to produce on average per working day.
4. Is this possible?
  Yes
  No

5. Since you need to produce a certain amount daily, you will also need to have enough raw materials on hand throughout the

year. Are the necessary raw materials available for you to buy on a regular basis all year?

  Yes

  No

If “no”, can you buy large amounts of raw materials periodically and store them until you need them?

  Yes

  No

6. If you need water or electricity, can you count on having it every day when you need it?

  Yes

  No

7. If you need fuel (e.g. diesel) to run a machine, can you buy it on a regular basis?

  Yes

  No

106
Feasibility Question 10: Financing

1. How much money are you likely to need to start your social enterprise?

2. Where are you likely to find this money?

3. How much money do you have available to invest in your social enterprise (i.e. owner’s equity)?

4. Visit at least five potential funding sources to enquire about possible financing:

Name of funder Person contacted Possible funding


1.

2.

3.

4.

5.

107
108
ANNEXURE 9
WRITING UP YOUR SOCIAL BUSINESS IDEA
My social business idea:

Type of business:

  Retailing

  Wholesaling

  Manufacturing

  Service providing

My products or services will be:

My customers will be:

The following needs of customers will be satisfied:

109
My social enterprise will address the following social or environmental issue(s):

I have the following skills and knowledge of this type of business:

I have chosen this business idea because:

My proposed social business will be successful due to the following factors:

Customers:

Competitors:

110
Skills development:

Suppliers:

Working premises:

Selling place:

111
Transport:

Management:

Pricing:

Production:

Financing:

112
I will need start-up financing in the amount of:

I will find the required start-up financing from the following sources:

113
114
New forms of social purpose business
are emerging in South Africa.
Community-based organizations are
recognizing the need to generate sustain-
able income streams to fund their social
purpose, to reduce their dependence on
grants and donations. Social entrepre-
neurs are setting up enterprises that are
run like businesses but that exist for a
social purpose rather than private
benefit.

This training guide is part of the Interna-


tional Labour Organization’s Social
Business Development Services Resource
Pack. This is a system of interrelated
training packages and other resources
for social entrepreneurs with limited or no
previous exposure to management
training. The training products in the
package include Introduction to Social
Enterprise (ISE), Generate Your Social
Business Idea (GYSBI) and Generate
Your Social Business Plan (GYSBP). Each
has a Trainers’ Guide and a Learners’
Guide.

The Resource Pack also includes a set of


25 case studies of social enterprises in
South Africa, two guides on finance and
legal forms for social enterprises in South
Africa, and a Social Business Plan Com-
petition Handbook.

The Resource Pack was produced by the


International Labour Organization as
part of its work on social economy enter-
prise development in South Africa. The
ILO is grateful to the Government of
Flanders for its support for this work.

ILO Pretoria
Crestway Block C
20 Hotel Street
Persequor, Pretoria
PO Box 11694, Hatfield 0028
+27 (0)12 818 8000

www.ilo.org