1.01 – Concept Feasibility Analysis
Starting a new business requires understanding the context in which it operates. If you are already committed to your business idea, know exactly what kind of business you want to run, or plan to start small with minimal funding, you might consider skipping this chapter. However, sticking around could be advantageous as not every business idea is viable at the time and place it is conceived. By examining the broader factors that will impact your business, you can significantly increase your chances of success.
Understanding Your Business Environment
Every successful business functions within an environment that influences all its activities. This environment includes the industry, market, economy, and interactions with other businesses and people. Your business doesn’t exist in a vacuum. Understanding your industry is crucial for the success of your venture.
If your business operates within a thriving, healthy industry, you have a better chance of success. Conversely, a business in a declining or highly competitive industry might struggle. Conducting a feasibility analysis helps you understand the landscape and determine the viability of your business id
Getting an Overview of Feasibility Analysis
A feasibility analysis involves a series of tests to learn more about your business opportunity. After each test, assess whether you still want to move forward. This process helps you refine your concept, ensuring it has the highest potential for success when launched.
Feasibility studies can also assist in securing financing. In the fast-paced world of online businesses, securing initial funding often hinges on a strong proof of concept. For traditional businesses, a thorough feasibility study can help avoid early mistakes.
Executive Summary
The executive summary is a critical component of a feasibility analysis. In two pages, it presents the most compelling points from your research, capturing the reader’s attention and proving the concept’s feasibility and market potential.
Key elements to include in the executive summary:
- Proof that customers want what you offer, based on primary research.
- Description of your founding team, highlighting their expertise and experience.
For online businesses, include a proof of concept that demonstrates why your idea will succeed. This could be website hits or a list of interested customers. For new products, present a market-quality prototype.
Business Concept
The first part of your feasibility analysis involves developing your business concept. Answer these questions:
- What is the business?
- Who is the customer?
- What is the value proposition?
- How will the benefit be delivered?
State your business concept concisely, including all four components. This is your elevator pitch, a brief conversation that captures your listener’s attention quickly and confidently. For investor presentations, state your business concept up front, then elaborate as needed. Here’s an example:
“Rural Power Tools is in the power equipment business, providing contractors and developers with solutions to power needs in remote areas through rental equipment outlets.”
Industry Analysis
Assess whether the industry can support your business concept. Evaluate industry trends, changes, and key players. Studying an industry first can reveal great opportunities. Detailed instructions for conducting an industry analysis are covered in the section “Researching an Industry.”
Market/Customer Analysis
Analyse your target customers within the industry. Identify a niche market not currently served, ensuring an entry strategy with the highest chance of success. Understand what your potential customers want and the demand for your product/service. Consider various distribution channels to deliver your product to customers. More details are in the section “Defining Your Market Niche.”
Genesis or Founding Team Analysis
Investors scrutinise the founding team closely. Evaluate the qualifications, expertise, and experience of your team. A successful business requires a strong team, as no single person can manage all aspects alone in today’s fast-paced environment.
Product/Service Development Analysis
Prepare for market entry by planning the necessary tasks for product or service development. This includes developing the product, obtaining patents, and creating a service implementation plan. Identify preparatory tasks and set a realistic timeline for their completion.
Financial Analysis
Determine how much money is needed to start the business and achieve a positive cash flow. Distinguish between different types of funding, which will be crucial in defining your financial strategy. Additional information on securing funding is available in the “Advanced Business Planning” course.
Feasibility Decision
After completing all tests in the feasibility analysis, decide whether to proceed. Throughout the process, you may discover reasons to halt your project based on industry, market, product, or service analyses. If you decide to move forward, clearly define the conditions under which you will proceed.
Timeline to Launch
Conclude your feasibility analysis with an action plan. Establishing a list of tasks and a timeline for their completion increases the likelihood of a timely launch. The research conducted will inform decisions about task durations and help ensure a smooth business launch.
