I.
Feasibility Analysis
The
process of determining if a business idea is viable. Completing a feasibility
analysis require:
1.
Primary
Research is a research that is
collected by the person or persons completing the analysis.
2.
Secondary
Research probes data that is already
collected.
II.
Product/Service Feasibility Analysis
An assessment of the overall appeal of the
product/service being proposed.
1.
Product/Service
Desirability
A concept test involves showing a preliminary
description of a product or service idea, called a concept statement, to
industry experts and prospective customer to solicit their feedback.
2.
Product/Service
Demand
a.
Talking Face-to-Face With Potential Customer
The
idea is to gauge customer reaction to the general concept of what you want to
sell.
b.
Utilizing Online Tool
One
way of doing this is to buy keywords on the Google Search page. If someone click
on the link you have prepared, they will be taken to a landing page, which is a
single web page that typically provides direct sales copy.
c.
Library, Internet, and Gumshoe Research
Your
university or college library is a good place to start, and the Internet is a marvelous
resource. Simple gumshoe research is also important. A gumshoe is a detective
or an investigator that scrounges around for information or clues wherever they
can be found.
III.
Industry/Target Market Feasibility Analysis
An assessment of the overall appeal of the
industry and the target market for the product or service being proposed.
1.
Industry
Attractiveness
An industry is a group of firms producing a
similar product or service. The top three characteristic of Attractive
Industries are (1) young rather than old, (2) early rather than late in their
life cycle, and (3) fragmented rather than concentrated.
2.
Target
Market Attractiveness
A target market is a place within a larger
market segment that represents a narrower group of customers with similar
needs. Most start-ups simply don’t have the resources needed to participate in
a broad market, at least initially. Instead, by focusing on a smaller target
market, a firm can usually avoid head-to-head competition with industry leaders
and can focus on serving a specialized market very well.
IV.
Organizational Feasibility Analysis
Conducted to determine whether a proposed
business has sufficient management expertise, organizational competence, and
resources to successfully launch.
1.
Management
Prowess
·
The passion
for the business
·
The extent
to understands the market in which the firm will participate
2.
Resource
Sufficiency
·
Identify the
most important nonfinancial resources and assess their availability
·
The ability
to obtain intellectual property protection on key aspects of the business
(doesn’t apply on all start-ups)
V.
Financial Feasibility Analysis
Preliminary
financial analysis of whether a business idea is worth pursuing.
1.
Total Start-Up
Cash Needed
An
actual budget should be prepared that lists all the anticipated capital
purchases and operating expenses to get the business up and running. After determining
a total figure, an explanation of where the money will come from should be
provided.
2.
Financial
Performance of Similar Business
a.
Substantial
archival data, which offers detailed financial reports on thousands of
individual firms, is available online.
b.
Ask the
owner or manager of the business (if the business is not likely to be a direct
competitor).
c.
Simple observation
and legwork (suitable in some cases).
3.
Overall
Financial Attractiveness of the Proposed Venture
Evaluating the financial
attractiveness based primarily on a new venture’s projected sales and rate of
return (or profitability).
VI.
A Feasibility Analysis Template
First
Screen is a template entrepreneurial firms use to complete a feasibility
analysis. It is called First Screen because a feasibility analysis is an
entrepreneur’s initial pass at determining the feasibility of a business idea. The
value is that it draws attention to issues and forces the founders to think
about alternatives.
Comments
Post a Comment