Feasibility Analysis

Feasibility Analysis
• The process of determining whether a business idea is viable.

• Primary evaluation of business idea
• Is it worth pursuing?
Timing of Feasibility Analysis
Opportunity
Recognition
Feasibility
Analysis
Business
Plan
• The proper time to conduct a feasibility analysis is early in thinking through
the prospects for a new business.
• The thought is to screen ideas before a lot of resources are spent on them.
Role of Feasibility Analysis in
developing business idea
Components of Feasibility Analysis
Industry
Product/
/ Target
Service
Market
Organiza
Financial tional
Product/ Service Feasibility
• an assessment of the overall appeal of the product or service being
proposed.
• Before a prospective firm rushes a new product or service into

development, it should be sure that the product or service is what
prospective customers want.
Product/ Service Feasibility
Desirability
Product/service
Feasibility
Demand
Product/Service Desirability
Product/Service Desirability
Concept
Statement
Concept statement
• A concept statement is a one-page description of a business that is distributed to

people who are asked to provide feedback on the potential of the business idea.
• A sense of the viability of the product or service idea.
• Suggestions for how the idea can be strengthened or “tweaked” before proceeding
further.
Concept statement
• Product/ Service Description
• Target Market
• Why New Product/ Service?
• Special Feature
• Management team
Product/ Service Feasibility Analysis
• Product/Service Demand
• Step 1: Talking Face-to-Face with Potential Customers.
• Step 2: Using Online Tools, Such as Google AdWords and Landing Pages, To
Assess Demand.
Industry/ Target Market Feasibility
Analysis
• An assessment of the overall appeal of the industry and the target
market for the proposed business.
• An industry is a group of firms producing a similar product or service.
• A firm’s target market is the limited portion of the industry it plans to
go after.
Industry/ Target Market Feasibility
Analysis
Industry
attractiveness
Industry/Target
Market
attractiveness
Target Market
attractiveness
Industry Attractiveness
• Are young rather than old.
• Are early rather than late in their life cycle.
• Are fragmented rather than concentrated.
• Are growing rather than shrinking.
• Are selling products and services that customers “must have” rather than
“want to have.”
• Are not crowded.
• Have high rather than low operating margins.
• Are not highly dependent on the historically low price of key raw materials
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.
• Assessing the attractiveness of a target market is tougher than
assessing the attractiveness of an entire industry.
Organizational Feasibility Analysis
Management
Prowess
Organizational
Feasibility
Analysis
Resource
Sufficiency
Organizational Feasibility Analysis
• Two of the most important factors in this area are:
The passion that the sole entrepreneur or the founding team has for
business
idea.
The extent to which the sole entrepreneur or the founding team understands
the markets in which the firm will participate.
Resource Sufficiency
• This topic pertains to an assessment of whether an entrepreneur has sufficient

resources to launch the proposed venture.
• To test resource sufficiency, a firm should list the 6 to 12 most critical
nonfinancial resources that will be needed to move the business idea forward
successfully.
Financial Feasibility Analysis
• Is the final component of a comprehensive feasibility analysis.

• A preliminary financial assessment is sufficient.
Financial Feasibility Analysis
Financial
Performance
Total Start up of Similar
Cash Businesses
Overall Financial
Attractiveness of
Proposed Venture

Feasibility Analysis

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Feasibility Analysis

• The process of determining whether a business idea is viable.

• Before a prospective firm rushes a new product or service into

• A concept statement is a one-page description of a business that is distributed to

• This topic pertains to an assessment of whether an entrepreneur has sufficient

• Is the final component of a comprehensive feasibility analysis.

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