2. Understand your market:

Do you know who your clients are? How do you know that they would pay for your service? Who are your competitors? How much will you charge for your services and why?

Understanding your market will put you one step ahead of people who offer the same products and services as you do throughout the life of your business. This commitment to giving your customers what they want should start when you're thinking about setting up a social enterprise, as it would with any new business venture. Make time to thoroughly research the market to ensure that there is sufficient demand at the price point you will need to charge and in your location.

If you're entering an established market sector ensure that you have a proposition that can be shown to deliver better or "added" value either through the nature of the product/ service or by the way you go to market (i.e. your business model). Remember being a social enterprise may add to your appeal, but in itself it is unlikely to be a sufficient hook to keep you permanently in front of competitors or to make one-time customers buy from you repeatedly.

Using professional researchers can help you get an accurate and realistic assessment of the likely success of your product, as they have experience in conducting structured focus groups with potential customers. If you can't afford a professional company to start with, you may like to conduct your own focus groups; there 's plenty of information online to help you plan one.

As well as determining the viability of your social enterprise, research can also help steer how you proposition your product or service (high or low price, high value or every day goods etc) to make it more appealing to your target audience and your enterprise profitable. Importantly it will help to identify who your best customers are likely to be; the price they might pay and what they may already pay for alternative products/ services. Research also isolates the most potent competitive benefits that your potential consumers think your social enterprise offers – are you in a central location? Do you offer a wide range of experience? etc.

Building a customer base of regular buyers underpins most successful businesses, so keep a record of who your best customers are and what you know about them. Marketing agencies often do this by writing a profile of an imaginary buyer, for example "Jane, aged 35, health-conscious, wants a family in the next three years, buys organic food weekly, motivated to purchase healthy baking from our social enterprise by brand loyalty (local product), price and recyclable packaging". Identify which customers can afford what you will be offering and how you might persuade them to trial additional products or services.

You might find it useful to determine which is the group that is most likely to be interested in your product and easiest to reach ... often described by marketers as 'the low hanging fruit'. This analysis is typically done by age, disposable income, interests and, very importantly for small enterprises, by location. Will your target market pass by, or will you need to persuade them to make a special effort to visit you? Good location is often key to a successful retail business but can be more expensive. However persuading people to make a special visit and find you, can be even more expensive because it requires you to promote your business through fliers, publicity and advertising (both on and off and line).

If you 'd like to learn more about how to instil and 'live' the mission in your organisation, or about how to measure your success against your mission, please email info@sparkchallenge.org.uk.

• Go back – 10 Steps to a successful social enterprise