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Feasibility Analysis

2 min read

  • Feasibility analysis is the process of determining if a business idea is viable
  • Proper time to conduct a feasibility analysis is early in thinking
  • 4 Types of Feasibility Analysis
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    • Product/Service Feasibility
      • Product/Service Desirability
        • Does the product makes sense and solves a particular problem. Will someone be willing to use it?
      • Product/Service Demand
        • Talking face-to-face with customers to see if you’re making what they actually need
        • Using online tools such as Google Keywords etc to understand the current trends and demands
          • Surveys and Forums can also help
    • Industry/Target Market Feasibility
      • Industry is a group of firms making similar products
      • Industry Attractiveness
        • Younger industries are preferred
        • Early in their lifecycle
        • Are fragmented rather than concentrated
          • Concentrated industries are industries with dominant players
        • Are growing rather than sinking
      • Target Market Attractiveness
        • Find a market that’s large enough for the proposed business but is yet small enough to avoid attracting larger competitors.
    • Organizational Feasibility
      • Management Prowess
        • Ability of an organization’s management team to satisfy the organization that management has the requisite passion and expertise to launch the venture
      • Resource Sufficiency
        • Availability of space, employee and contractors etc
      • Management team and Company Structure
        • Should consist of founder(s) and key management persons
        • Organizational Chart
      • Operations Plan
        • How the business will be run and how the product or service will be produced
      • Product/Service Design and Development Plan
        • If product then prototype should be designed initially
    • Financial Feasibility
      • Total Start-Up Cash Needed
        • List down the resources
        • Estimate the Cost of Listed Resources
        • Decide about Debt and Equity Financing
          • Boot Scrapping
            • Process of building a business from scratch without attracting investment or with minimal external capital
      • Financial Performance of Similar Businesses
        • Estimate financial performance by comparing to similar, already established businesses.
      • Overall Financial Attractiveness of the Proposed Investment
        • Ability to forecast income and expenses with a reasonable degree of certainty
        • Internally generated funds to finance and sustain growth
        • Availability of an exit opportunity for investors to convert equity to cash
  • Crowd Funders
    • Reward based Crowd funding platforms help to raise funding to build a prototype and market test a great idea or product
  • If a business idea passes the Feasibility Analysis, the next step is to complete a business plan

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