No business is instantly profitable. Until your social business becomes profitable, it will require investment.
In this section we look more closely at outlining your investment requirements and the steps involved in securing investors.
You will not be able to launch your enterprise until you have raised investment. Feasibility therefore depends upon securing investment. However, it will be difficult to raise money before feasibility is established – a classic Catch 22 situation.
The key to breaking this deadlock is confidence. Inspiring confidence in potential investors is one reason why you need a good feasibility study.
Your feasibility study is an assessment of the practicality of your social business proposition. In it you describe and quantify the investment that your social business requires until it reaches the 'break even point' when it becomes profitable and self-sustaining.
When outlining your budget, state how much you will need, for what and for how long, as accurately as you can. This can be broken down into capital investment (money for large purchases) and working capital – the cash needed to ensure that all bills can be paid on time.
Once you have an idea of all your investment requirements, consider what sources of capital are available to you. If you have started talking with potential investors or if you have been promised support from individuals, including members of your steering group, you should include this in your feasibility study.
Types of investors
Investment comes in many forms. It's not just limited to cash loans and grants. The time and energy that people put into starting up an enterprise on a voluntary basis is known as 'sweat equity'. This includes the work of people such as yourself and the goodwill, gifts, opportunities and expertise that your supporters provide for free.