Determining Viability

Once we had framed the basic parameters of what we were going to offer, the key question we had to ask ourselves was whether the organization could be economically viable. Unfortunately, definitive answers to this question are probably never known in advance. The fact of the matter is that during their earliest phase, projects like JSTOR, even though they are not-for-profit, are still entrepreneurial ventures. They face almost all the same risks as for-profit start-ups, and the same tough questions must be asked before moving forward. Is there a revenue-generating "market" for the service to be provided?^[3] Does the enterprise have sufficient capital to fund up-front costs that will be incurred before adequate revenue can be generated? Is the market large enough to support the growth required to keep the entity vibrant?

Pursuing this analysis requires a complicated assessment of interrelated factors. What are the costs for operating the entity? That depends on how much "product" is sold. How much product can be sold, and what are the potential revenues? That depends on how it is priced. What should be the product's price? That depends on the costs of providing it. Because these factors are so closely related,

none of them can be analyzed in isolation from the others; however, it is natural for a not-for-profit project focused on cost recovery to begin its assessment with the expense side of the ledger.