Feasibility Study

Outline and Format for Feasibility Study

This is a very important checkpoint. You need to perform market research on your business idea before continuing any further. Some entrepreneurs refer to this research analysis as a feasibility study. Your goal here is to simply discover if your idea has substantial potential as a business opportunity. In other words–does your business model make sense? Simply stated–can it make money?

When you have finished with your market research, you should have an indication of either “yes” or “no” for taking your business idea into the next stage. (Or better yet – prototype it and do a trial launch. One experiment is worth a thousand theories.)

As described previously, you need to seek as much information as possible about four critical areas: the industry, the consumer, the competition, and the ability to make money. (You will need to perform a quick financial snapshot of your product or service venture.)

Most of what follows is in The Entrepreneur’s Journey. You simply have to answer the questions with as much factual information that you can find or have in personal experience. This is really not the place for WAGS. Will you answer all the questions? Probably not – only the one’s that have to do with your idea.

To make it easier for me to evaluate your effort – state the question and then the answer.

Answer the following questions:

• What is your Business Idea?

• Is your business idea just an “idea” or a “passion” idea?

• What is your Position in the marketplace?

• Where is your Business Located?

• How is your Business Different (and/or better)?

• Who is your Niche market?

• What personal skill or knowledge do you bring to the business?

Customer demographics / Customer psychographics:

• Describe the specific demographics of your customer.

• Describe the customer’s psychographics.

• Describe the geographic area of your customer base.

• How many people are you going to target.

• What quantity do you believe you can actually reach

in your geographic area (number or percentage)?

• What advertising and marketing techniques do your customers experience?

• How do you intend to reach them?

• Where do they usually buy products or services

similar to yours?

• What do they usually pay–more, less, or the same?

• What trends do your customers appear to be

influenced by?

• Why would your target customer select your business over the other direct and indirect competitors?

• How “fickle” is your customer base?

• What are their buying habits?

Primary competition / Secondary competition:

• Who are the leading direct competitors in your

geographic area?

• Who are the leading indirect competitors in your

geographic area?

• How many direct and indirect competitors are there?

• What are their strengths?

• What are their weaknesses?

• How do they position themselves?

• How do they attract customers?

• How many competitors have failed at what you are

proposing?

• What did they do wrong?

• What will you do different?

• Is anybody doing what you want to do in another

geographic area?

• What would keep them from moving into your area?

• What would you do if they did come into your

geographic area and provided that product/service?

State of the Industry:

• What’s the business idea?

• Is the idea a business opportunity?

• Does your idea fill a customer’s need, or do you have to create one?

• What’s the niche your business will serve?

• How unique is your business niche?

• How will you position your business?

• How will you differentiate your business from the competition?

• Where is your idea in its particular life cycle?

• What industry is your business idea a part of?

• What trade associations represent your industry?

• How has that industry been performing overall?

• How has your business idea been performing?

• What are the trends of that industry indicating?

• What’s been the success rate of similar ventures in your industry?

• Are there any paradigm shifts on the horizon that could affect your business?

Projected margin:

• Establish what you think your product or service margin will be.

• Establish what you think your rent might be for the business.

• Now divide the margin into the rent. This will tell you how many of those products or services have to be sold to just pay the rent.

• Establish what you think your labor cost will be for a month.

• Now divide the margin into the labor cost. This will tell you how many of those products or services have to be sold to just pay the labor costs.

• If you’re really ambitious, estimate what your other costs might be and divide your margin into those costs.

Tips and Considerations!

Have you looked at similar business plans on the web to get a feel for the depth of investigation, ideas, key words, and business terminology/phrasing?

Does it create a value proposition?

Can you deliver it profitably?

Is the profit in alignment with the risk?

Is it fundable?

Does it have a life expectancy?