When To Conduct a Feasibility Analysis
- Timing of Feasibility Analysis
- Components of a Properly Conducted Feasibility Analysis
Forms of Feasibility Analysis
- Product/service feasibility
- Industry/target market feasibility
- Organizational feasibility
- Financial feasibility
1. Product/service feasibility
- determine the basic appeal of the product or service.
- Administer a Concept Test
- knows Product/Service Demand
- Buying Intentions Survey
- Library, Internet, and Gumshoe Research
2. Industry/target market feasibility
- Industry Attractiveness
- Have higher rather than low operating margins
- Are not crowded
- Are early rather than late in their life cycle.
- Target Market Attractiveness
- The challenge in identifying an attractive target market is to find a market that’s large enough for the proposed business but is yet small enough to avoid attracting larger competitors.
3. Organizational feasibility
- Two of the most important factors in this area are
- The passion that the solo entrepreneur or the founding team has for the business idea
- The extent to which sole entrepreneur or the founding team understands the markets in which the firm will participate.
- Examples of nonfinancial resources:
- Availability of affordable office or lab space
- Likelihood of local and state government support of the business
- Quality of the labor pool available
- Proximity to key suppliers and customers
- Willingness of high quality employees to join the firm
- Likelihood of establishing favorable strategic partnerships
- Proximity to similar firms for the purpose of sharing knowledge.
- Possibility of obtaining intellectual property protection in key areas.
4. Financial feasibility
- Component of financial feasibility:
- Total Start-Up Cash Needed
- Financial Performance of Similar Businesses
- Overall Financial Attractiveness of the proposed Venture
Note: Feasibility Analysis