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Full Feasibility Analysis
From “Preparing Effective Business Plans” by Bruce R. Barringer
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Note: |
All fields can be expanded to provide additional space to respond to the questions. A copy of this template, along with each of the assessment tools, is also available in PDF format at the authors’ Web site at www.prenhall.com/entrepreneurship. |
Introduction
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A. |
Name of the proposed business- Financial Fitness |
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B. |
Name of the founder (or founders)- Tyvon Holmes |
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C. |
One paragraph summary of the business- |
Financial Fitness Youth Center is a business that is catered to teaching children about being financially responsible. Being able to start financial responsibility at a young age is important. It will allow children to learn why it is important to manage the money. When you start teaching financial responsibility at a young age there is a greater potential of that child being able to handle their finances as an adult. The Goal is if you start early on in life with teaching this, it will in turn help out the economy in the long run.
Part 1: Product/Service Feasibility
Issues Addressed in This Part
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A. |
Product/service desirability
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B. |
Product/service demand
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Assessment Tools
Concept Statement Test
· Write a concept statement for your product/service idea. Show the concept statement to 5 to 10 people. Select people who will give you informed and candid feedback.
I will be starting a Youth Center which specializes in teaching children about financial responsibility. The company will provide a place for children to go after school or during summer breaks to continue to grow their education. The unique part about this youth center is that we are going to be able to further children education as well versus just helping them with their school work. My commitment is to help grow the community and help us improve our local economy.
· Attached a blank sheet to the concept statement, and ask the people who read the statement to (1) tell you three things they like about your product/service idea, (2) provide three suggestions for making it better, (3) tell you whether they think the product or service idea is feasible (or will be successful), and (4) share any additional comments or suggestions.
· Summarize the information you obtain from the concept statement into the following three categories:
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Strengths of the product or service idea—things people who evaluated your product or service concept said they “liked” about the idea.
All of the people that I presented my idea with liked it. They were impressed that there are people out there trying to grow the community with giving the youth somewhere to go.
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* |
Suggestions for strengthening the idea—suggestions made by people for strengthening or improving the idea.
I didn’t get a lot of feedback on suggestions to help improve the idea, but the one that someone told me was I shouldn’t just limit it to helping the youth, I need to help everyone because there are a lot of adults out there that hasn’t been taught how to manage money.
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Overall feasibility of the product or service concept—report the number of people who think the idea is feasible, the number of people who think it isn’t feasible, and any additional comments that were made
Everyone that I have spoken with thought the business was very feasible. Letting me know that there are a lot of grants out there that will help me get the business of the ground.
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Other comments and suggestions |
Buying Intentions Survey
· Distribute the concept statement to 15 to 30 prospective customers (do not include any of the people who completed the concept statement test) with the following buying intentions survey attached. Ask each participant to read the concept statement and complete the buying intentions survey. Record the number of people who participated in the survey and the results of the survey here.
· Along with the raw data recorded here, report the percentage of the total number of people you surveyed that said they would probably buy or definitely would buy your product or service if offered. This percentage is the most important figure in gauging potential customer interest. 88%
· One caveat is that people who say that they intend to purchase a product do not always follow through, so the numbers resulting from this activity are almost always optimistic. Still, the numbers provide you with a preliminary indication of how your most likely customers will respond to your potential product or service offering.
How likely would you be to buy the product or service described above?
____13__ Definitely would buy
___2___ Probably would buy
___2___ Might or might not buy
______ Probably would not buy
______ Definitely would not buy
Additional questions may be added to the buying intentions survey.
Conclusion (expand fields and report findings, in discussion form, for each area)
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A. |
Product/service desirability When it comes to a business like this I believe the desire for this is high. This gives children somewhere to go after school and during the summer to help further their education with something that isn’t really taught in school. It also keep kids off the street so they are not participating in any illegal activities.
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B. |
Product/service demand The demand for this type is service is high the more places where we can educate children the better. When we look at youth nowadays there are a lot of children having to raise themselves, due to single family households where parents are having to work 2 jobs just to take care of home an can’t provide their children the attention they require. |
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C. |
Product/service feasibility (circle the correct response) Not Feasible Unsure Feasible |
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D. |
Suggestions for improving product/service feasibility. Don’t just limit myself to helping children also help adults out as well because it’s a lot out there that hasn’t been taught financial responsibility |
Part 2: Industry/Market Feasibility
Issues Addressed in This Part
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A. |
Industry attractiveness |
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B. |
Target market attractiveness |
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C. |
Timeliness of entry into the target market |
Assessment Tools
Industry Attractiveness
· To the extent possible, assess the industry at the five-digit NAICS code level your potential business will be entering. Use a broader industry category (less NCICS digits) if appropriate (http://www.census.gov/epcd/www/naicstab.htm).
· Assess the attractiveness of the industry the potential business plans to enter on each of the following dimensions.
Industry Attractiveness Assessment Tool
(used to assess the broad industry, rather than the specific target market, you plan to enter)
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Low Potential |
Moderate Potential |
High Potential |
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1. |
Number of competitors |
Many |
Few |
None |
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2. |
Age of industry |
Old |
Middle aged |
Young |
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3. |
Growth rate of industry |
Little or no growth |
Moderate growth |
Strong growth |
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4. |
Average net income for firms in the industry |
Low |
Medium |
High |
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5. |
Degree of industry concentration |
Concentrated |
Neither concentrated nor fragmented
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Fragmented |
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6. |
Stage of industry life cycle |
Maturity phase or decline phase |
Growth phase |
Emergence phase |
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7. |
Importance of industry’s products and/or services to customers |
“Ambivalent” |
“Would like to have” |
“Must have” |
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8. |
Extent to which business and environmental trends are moving in favor of the industry |
Low |
Medium |
High |
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9. |
Number of exciting new product and services emerging from the industry |
Low |
Medium |
High |
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10. |
Long-term prospects |
Weak |
Neutral |
Strong |
Target Market Attractiveness
· Identify the portion or specific market within your broader industry that you plan to target.
· Assess the attractiveness of the target market on each of the following dimensions.
Target Market Attractiveness Assessment Tool
(used to assess the specific target market, rather than the broader industry, you plan to enter)
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Low Potential |
Moderate Potential |
High Potential |
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1. |
Number of competitors in target market |
Many |
Few |
None |
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2. |
Growth rate of firms in the target market |
Little to no growth |
Slow growth |
Rapid growth |
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3. |
Average net income for firms in the target market |
Low |
Medium |
High |
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Low Potential |
Moderate Potential |
High Potential |
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4. |
Methods for generating revenue in the industry |
Unclear |
Somewhat clear |
Clear |
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5. |
Ability to create “barriers to entry” for potential competitors |
Unable to create |
May or may not be able to create
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Can create |
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6. |
Degree to which customers feel satisfied by the current offerings in the target market |
Satisfied |
Neither satisfied or dissatisfied |
Unsatisfied |
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7. |
Potential to employ low cost guerrilla and/or buzz marketing techniques to promote the firm’s product or services |
Low |
Moderate |
High |
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8. |
Excitement surrounding new product/service offerings in the target market |
Low |
Medium |
High |
Market Timeliness
· Determine the extent to which the “window of opportunity” for the proposed business is open or closed based on the following criteria.
· Determine the timeliness of entering a specific target market based on other criteria.
Market Timeliness Assessment Tool
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Low Potential |
Moderate Potential |
High Potential |
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1. |
Buying mood of customers
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Customers are not in a buying mood |
Customers are in a moderate buying mood |
Customers are in an aggressive buying mood |
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2. |
Momentum of the market |
Stable to losing momentum |
Slowly gaining momentum |
Rapidly gaining momentum |
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3. |
Need for a new firm in the market with your offerings or geographic location |
Low |
Moderate |
High |
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4. |
Extent to which business and environmental trends are moving in favor of the target market |
Low |
Medium |
High |
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5. |
Recent or planned entrance of large firms into the market |
Large firms entering the market |
Rumors that large firms may be entering the market
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No larger firms entered the market or are rumored to be entering the market |
Conclusion (expand fields and report findings, in discussion form, for each area)
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A. |
Industry attractiveness The Industry attractiveness is moderate |
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B. |
Target market attractiveness The target market has high potential |
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C. |
Market timeliness The timeliness coming into the market has high potential |
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D. |
Industry/market feasibility (circle the correct response) Not Feasible Unsure Feasible |
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E. |
Suggestions for improving industry/market feasibility. |
Part 3: Organizational Feasibility
Issues Addressed in This Part
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A. |
Management prowess |
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B. |
Resource sufficiency |
Assessment Tools
Management Prowess
· Use the following table to candidly and objectively rate the “prowess” of the founder or group of founders who will be starting the proposed venture.
Management Prowess Assessment Tool
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Low Potential |
Moderate Potential |
High Potential |
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1. |
Passion for the business idea |
Low |
Moderate |
High |
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2. |
Relevant industry experience |
None |
Moderate |
Extensive |
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3. |
Prior entrepreneurial experience |
None |
Moderate |
Extensive |
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4. |
Depth of professional and social networks |
Weak |
Moderate |
Strong |
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5. |
Creativity among management team members |
Low |
Moderate |
High |
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6.
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Experience and expertise in cash flow management |
None |
Moderate |
High |
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7. |
College graduate
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No college education |
Some college education but not currently in college |
Graduated or are currently in college |
Resource Sufficiency
· The focus in this section is on nonfinancial resources. Use the following table to rate your “resource sufficiency” in each category.
· The list of resources is not meant to be exhaustive. A list of the 6 to 12 most critical nonfinancial resources for your proposed business is sufficient.
An explanation of the rating system used in the first portion of the table is as follows:
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1 |
Available |
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2 |
Likely to be available: will probably be available and will be within my budget |
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3 |
Unlikely to be available: will probably be hard to find or gain access to, and may exceed my budget |
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4 |
Unavailable |
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5 |
NA: not applicable for my business |
Resource Sufficiency Assessment Tool
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Ratings |
Resource Sufficiency |
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1 2 3 4 5 |
Office space |
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1 2 3 4 5 |
Lab space, manufacturing space, or space to launch a service business |
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1 2 3 4 5 |
Contract manufacturers or outsource providers |
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1 2 3 4 5 |
Key management employees (now and in the future) |
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1 2 3 4 5 |
Key support personnel (now and in the future) |
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1 2 3 4 5 |
Key equipment needed to operate the business (computers, machinery, delivery vehicles) |
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1 2 3 4 5 |
Ability to obtain intellectual property protection on key aspects of the business |
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1 2 3 4 5 |
Support of local and state government if applicable for business launch |
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1 2 3 4 5 |
Ability to form favorable business partnerships |
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Ratings: Strong, Neutral, or Weak |
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Strong |
Proximity to similar firms (for the purpose of knowledge sharing) |
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Strong |
Proximity to suppliers |
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Strong |
Proximity to customers |
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Strong |
Proximity to a major research university (if applicable) |
Conclusion (expand fields and report findings, in discussion form, for each area)
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A. |
Management prowess There is a high potential |
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B. |
Resource sufficiency Resource sufficiency is likely to be available |
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C. |
Organizational feasibility (circle the correct response) Not Feasible Unsure Feasible |
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D. |
Suggestions for improving organizational feasibility |
Part 4: Financial Feasibility
Issues Addressed in This Part
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A. |
Total startup cash needed |
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B. |
Financial performance of similar businesses |
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C. |
Overall financial attractiveness of the proposed venture |
Assessment Tools
Total Start-Up Cash Needed
· The startup costs (which include capital investments and operating expenses) should include all the costs necessary for the business to make its first sale. New firms typically need money for a host of purposes, including the hiring of personnel, office or manufacturing space, equipment, training, research and development, marketing, and the initial product rollout.
· At the feasibility analysis stage, it is not necessary for the number to be exact. However, the number should be fairly accurate to give an entrepreneur an idea of the dollar amount that will be needed to launch the firm. After the approximate dollar amount is known, the entrepreneur should determine specifically where the money will come from to cover the startup costs.
· The total startup cash needed can be estimate using the following table.
Total Startup Cash Needed (to Make First Sale)
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Capital Investments |
Amount |
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Property |
0 |
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Furniture and fixtures |
14000 |
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Computer equipment |
23000 |
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Other equipment |
6000 |
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Vehicles |
75000 |
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Operating Expenses |
Amount |
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Legal, accounting, and professional services |
800 |
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Advertising and promotions |
4000 |
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Deposits for utilities |
1500 |
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Licenses and permits |
680 |
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Prepaid insurance |
6000 |
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Lease payments |
2500 |
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Salary and wages |
175000 |
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Payroll taxes |
32000 |
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Travel |
4000 |
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Signs |
1500 |
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Tools and supplies |
3000 |
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Starting inventory |
0 |
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Cash (working capital) |
30000 |
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Other expense 1 |
0 |
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Other expense 2 |
0 |
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0 |
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Total Startup Cash Needed = |
378,980 |
Comparison of the Financial Performance of Proposed Venture to Similar Firms
· Use the following tables to compare the proposed new venture to similar firms in regard to annual sales (Year 1 and Year 2) and profitability (Year 1 and Year 2).
Comparison of the Financial Performance of Proposed Venture to Similar Firms Assessment Tool
Annual Sales
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Estimate of Proposed Venture’s Annual Sales—Year 1 |
Explanation of How the Estimate Was Computed |
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Estimate of Year 1 Sales 204,000__________ Summary: How proposed annual sales, on average, compares to similar firms (circle one) Below Average Average Above Average |
I estimated me having 50 children at $85 a week. |
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Estimate of Year 2 Sales 204,000__________ Summary: How proposed annual sales, on average, compares to similar firms (circle one) Below Average Average Above Average |
Same as above. |
Net Income
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Estimate of Proposed Venture’s Net Income—Year 1 |
Explanation of How the Estimate was Computed |
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Estimate of Year 1 Net Income- $174,980 __________ Summary: How proposed net income, on average, compares to similar firms (circle one) Below Average Average Above Average |
I took the took total annual sales. Subtracted by total startup cost. |
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Estimate of Year 2 Net Income _$29,020_________ Summary: How proposed net income, on average, compares to similar firms (circle one) Below Average Average Above Average |
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Overall Financial Attractiveness of the Proposed Venture
· The following factors are important in regard to the overall financial attractiveness of the proposed business.
· Assess the strength of each factor in the following table.
Overall Financial Attractiveness of Proposed Venture Assessment Tool
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Low Potential |
Moderate Potential |
High Potential |
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1. |
Steady and rapid growth in sales during the first one to three years in a clearly defined target market |
Unlikely |
Moderately likely |
Highly likely |
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2. |
High percentage of recurring income—meaning that once you win a client, the client will provide recurring sources of revenue |
Low |
Moderate |
Strong |
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3. |
Ability to forecast income and expenses with a reasonable degree of certainty |
Weak |
Moderate |
Strong |
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4. |
Likelihood that internally generated funds will be available within two years to finance growth |
Unlikely |
Moderately likely |
Highly likely |
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5. |
Availability of exit opportunity for investor if applicable |
Unlikely to be unavailable |
May be available |
Likely to be available |
Conclusion (report finding for each area)
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A. |
Total startup cash needed When doing the startup cost it was more than I thought it might be but I know there will be government funding and grants available to absorb some of the cost |
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B. |
Financial performance of similar businesses When it comes to business I know it’s hard to turn a profit in first year but if my estimations are correct by year 2 I should start seeing a profit. |
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C. |
Financial feasibility (circle the correct response) Not Feasible Unsure Feasible |
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D. |
Suggestions for improving financial feasibility |
Overall Feasibility: Summary and Conclusion
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Overall Feasibility of the Business Idea Based on Each Part |
Suggestions for Improving the Feasibility |
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Product/Market Feasibility
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Industry/Market Feasibility
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Organizational Feasibility
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Financial Feasibility
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Overall Assessment |
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Conclusion—briefly summarize your justification for your overall assessment.
With doing some more research on the industry I believe the overall assessment for my business is feasible, Judging by the data that I found I can see the business turning a profit by year 2. There is a lot more that I need to do to make this dream come to life but I believe I can make it happen.
A 60 seconds elevator Pitch for a Business
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall
