If you’re thinking about starting or expanding a business, it may be premature to develop a complete business plan. At an early stage, a feasibility study helps to determine if your business idea is worth pursuing in the first place. You can then decide if it makes sense to develop a full business plan.
Analysis of Your Business Idea
A feasibility study provides a high-level evaluation of a business concept. It determines if your business idea is viable and worth pursuing. Think of the feasibility study as an initial ‘sanity check’. It is more than a ‘back of the envelope’ analysis but less than what you would do for a full business plan.
We can help you evaluate your business idea by identifying the strengths of your concept and where your business model needs to be revised.
Save Time and Money
Often, entrepreneurs are so enamored with their business idea that they are unable to step back and look at the concept objectively.
If the business idea has little chance of becoming successful, the feasibility study will save you the time, money, and aggravation of developing a complete business plan.
We conduct an objective feasibility analysis of your business concept. If it looks like the greatest thing since sliced bread, we’ll tell you. If it’s not, we’ll tell you as well and provide recommendations for what needs to get fixed.
If the business idea does appear to have merit, the information from the feasibility study is a great starting point for full-fledged business planning.
What Does the Feasibility Study Cover?
The analysis covers many important facets, such as:
What are the goals and objectives for the business?
What is your personal motivation for starting the business?
If you lack a deep motivation and a strong drive to launch your business venture and to make it successful, you can save yourself a lot of trouble by recognizing that earlier rather than later.
What do you plan on selling to your target market(s)?
Do you have a clear concept of what your firm will be offering to your customers?
This involves an initial evaluation of market potential, target markets, number of prospective buyers, market size, and market growth rate to determine if there's a viable, profitable market.
It all comes down to the question "Are you going to be able to make money?"
You always have competition. If it's not buying from a competitor, it may be a customer deciding to not spend any money at all and just do nothing.
The feasibility study looks at the competitive environment that impacts the viability of your business idea.
How do you plan to stand out from the competition? What will be unique about your business?
This is tied directly to your business venture's ability to attract customers and make money.
Pricing has a direct impact on your bottom line.
Price too low and you leave money on the table. Price too high and you miss out on the sale.
Pricing also plays an important in your firm's positioning and branding.
Here, we'll take a look at how you plan to manufacture your products and deliver your services.
What equipment, tools, and processes do you need? How many people do you need?
There are cost and profitability considerations. Quality, differentiation, and branding are also affected.
You need to think about your Sales & Marketing activities, systems, and processes.
How many people will be involved? Who will be doing what? How to create awareness and attract customers?
Obviously, this a key part of the feasibility analysis to determine if your business venture will be successful from day one or whether it's going to be a struggle to become profitable.
Think about what could go wrong and what the consequences might be for your startup.
Are there internal and external risk factors that you need to be aware of?
Creating sales forecasts and proforma financials for your start-up is very important.
This facet of the feasibility analysis will show if your business venture is likely to become profitable and how quickly.
If there are problems with your business model the financial analysis will quickly show that.
This aspect of the feasibility study reviews the proposed organizational study and the experience of the management team that will be leading the venture.
The review includes looking at staffing and training needs for taking the business venture through the start-up phase.
Feasibility Study Report
Upon completion of the feasibility study, you’ll receive a report highlighting strengths, weaknesses, and recommendations.
Keep in mind that a feasibility study is a relatively high-level analysis. It is not possible to guarantee that the feasibility study is a 100% accurate predictor of the venture’s chances of success. But it’s a good start.
Even the best business idea can still fail due to poor management, weak execution, lack of funding, unforeseen events, and of course just plain bad luck, just to name a few factors. On the flip side, a not-so-great idea that’s pursued anyway can become successful in the hands of an experienced management team.
Make the Go/No-Go Decision
A feasibility study forces you to take an objective look at your business idea. You can then make an informed go/no-go decision about what to do next.
To talk about carrying out a feasibility study of your business idea, please contact us.