Before you start a social business

The first objective is to establish whether or not your idea for a social business is a feasible proposition.

Is there a market for your service or product? Are there customers who can afford to pay for the service or product? You need to be confident that your idea is feasible before you start thinking about company or charitable structures.

For a social business to be feasible requires a number of things to be in place. These are listed below. When they are all achieved, you can move to the next stage – starting up.

In this section:

Don't worry about what legal form to use at this stage. The most appropriate legal form will become apparent at the business planning stage. A legal entity is one of a number of resources you should acquire at start-up and not before. If you incorporate too early you may well register an inappropriate legal form, which could be an expensive mistake.

To begin the process of starting up your social business you will need to demonstrate to people that you have established feasibility, for instance all the above tests have been passed. To do that, write a report using the above headings, or make sure that all the above issues have been addressed. This may be a dynamic document with several contributors and several versions as it evolves.

Download a checklist to help you write a feasibility report

Note that this is a feasibility study and not a business plan, although when the time comes to begin writing a business plan the starting points for much of the content will come from the feasibility study.

There may be a crossover period when you begin drafting the business plan before the feasibility study is complete. That's OK, but make sure that you do not begin acquiring resources for your social business until feasibility is established.

You can find out more about starting up a community based enterprise

on the Co-operatives UK website