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Entrepreneurship
Lecture 4
Mr. Ibrahim Mohamed Ali
BBA,MBA (HRM)
Human Resource Director
Hormuud University
Mogadishu-Somalia.
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 Section 4

Conducting a feasibility Analysis and

Designing Business Model.
 Idea Assessment
Idea assessment:

The process of examining a particular

need in the market, developing a
solution for that need, and
determining the entrepreneur’s
ability to successfully chance the
idea into a business.
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 Feasibility Analysis
Is a particular idea a possible foundation
for creating a successful business?

Feasibility study addresses the question:

“Should we continue with this business
idea?”

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 Establishing a feasibility study of projects is a critical
factor in business success.
Here are some key reasons why conducting a
feasibility study is crucial for business success:
✔ Risk Assessment: A feasibility study helps identify
potential risks and challenges related with the
project.
✔ Resource Allocation: Conducting a feasibility study
allows businesses to assess the required resources
for the project, including financial, human, and
technological resources.
✔ Market Analysis: A feasibility study involves analyzing
the target market, its size, dynamics, and potential
demand for the future product 5
or service.
 Types of feasibility Study
1. Technical feasibility :This study focuses on evaluating the technical aspects of a
project.
2. Economic feasibility: This study focuses on the financial feasibility of the
project. It analyzes the costs and benefits related with the project, including
investment costs, operational expenses, potential revenue and the overall
financial feasibility.
3. Operational feasibility :This study evaluates the practicality and efficiency of
implementing the project in terms of its operational processes and workplans.
4. Legal Feasibility Study: This study examines the legal and regulatory aspects
related to the project.
5. Market Feasibility Study: This study assesses the potential market demand and
acceptance for a product or service.
6. Schedule Feasibility Study: This study focuses on the timeline and schedule of
the project.

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 Feasibility includes
1. Project name
2. Problem or opportunity definition
3. Project description
4. Expected benefit
5. Consequence of rejection
6. Resource requirements
7. alternatives
8. Other consideration
9. Conclusion and Recommendations

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The feasibility study framework

The document should include sections on:

❖ Own details
❖ The Business Idea
❖ Critical factors
❖ Market analysis
❖ Resource requirements
❖ Financial possibility
❖ Capital requirements
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Feasibility Analysis: testing AN OPPORTUNITY
Testing the Industry

The largest level of

feasibility analysis looks
at the industry in which
the business will operate.
INDUSTRY
a group of businesses with a
common interest
 Feasibility Analysis: testing AN
OPPORTUNITY
TALKING TO THE CUSTOMER
The most important part
of the feasibility analysis
is testing customers to
measure interest and
identify the target
customers. TARGET CUSTOMERS
people most likely to buy a
business’s products and services
Feasibility Analysis: testing AN OPPORTUNITY

STUDYING THE COMPETITION

An easy way to evaluate

the competition is to
create a competitive grid.
COMPETITIVE GRID
a tool for organizing important
information about a business
venture’s competition
Elements of a Feasibility Analysis

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Environmental Forces
and New Ventures

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 Industry and Market Feasibility
Analysis
Evaluate industry attractiveness using six
macro forces:
1. Sociocultural
2. Technological
3. Demographic
4. Economic
5. Political and legal
6. Global
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 Product or Service
Feasibility Analysis
❖ Determines the point to which a product or service
idea demands to potential customers and identifies the
resources necessary to produce it.
❖ Two questions:
1. Are customers willing to purchase our product
or service?
2. Can we provide the product or
service to customers at a profit?

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 Marketing Research
Marketing research: is the systematic gathering,
recording and analyzing of data about problems
relating to the marketing of goods and services.

Market research will give you the data you need to

identify and reach your target market at a price
customers are willing to pay.
Marketing research focuses and organizes marketing
information to:
❖ current and upcoming problems in the current market
❖ Reduce business risks
❖ Identify sales opportunities
❖ Improve plans of action
 • Market research will identify movements that affect
sales and profitability.
• Population shifts
• Legal developments
• The local economic situation should be monitored to
quickly to identify problems and opportunities

• Keeping up with competitors' market strategies also is

important.
• Every small business owner must ask
the following questions to plan
effective marketing strategies:

❖ Who are my loyal customers and

potential customers?
❖ Who is my target customers?
❖ What are my business goals and
objectives?
❖ What are the most effective marketing
channels for reaching my target
customers?
 Why do market research?
1. Understanding the Target Market: Market research helps
businesses gain a deep understanding of their target market.
2. Identifying Market Opportunities: Market research helps identify
new market opportunities and potential that a business can
target.
3. Mitigating Risks: Market research helps identify potential risks
and challenges in the market.
4. Monitoring Customer Satisfaction and Brand Reputation: Market
research helps measure customer satisfaction, gather feedback,
and monitor brand reputation.
5. Supporting Business Planning and Growth: Market research
provides data and insights that support business planning and
growth strategies.
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 How to do market research
• Analyze returned items.

• Ask former customers why they moved.

• Look at competitors’ prices.

• Formal marketing research simply makes this familiar process logical.

It provides a framework to organize market information.
 Market Research
Primary research:
Collect data firsthand and analyze it.

Secondary research:
Gather data that already has been compiled and
analyze it.

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 Primary & Secondary Research
Techniques
Primary Research
❖ Customer surveys and questionnaires
❖ Focus groups
Secondary research:
❖ Market research
❖ Forecasts
❖ “Articles
❖ Local data
❖ Internet
❖ Trade associations and business directories
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Financial Feasibility Analysis
❖ Capital requirements: an estimate of how much
start-up capital is required to the business.
❖ Estimated earnings: forecasted income statements.
❖ Time out of cash: the total cash it will take to sustain
the business until the business achieves break-even
cash flow.
❖ Return on investment: combining the previous two
estimates to determine how much investors can
expect their investments to return.

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 Entrepreneur Feasibility
Is this idea right for me?
Evaluate entrepreneurial willingness: knowledge,
experience, and skills necessary for
entrepreneurs to be successful.
Evaluate whether the business will be able to
generate enough profit to support everyone’s
income needs.

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What is a Business Model
❖Business model – A plan for the
successful operation of a business,
identifying sources of revenue, the
future customer base, products, and
details of financing.
❖Business model – set of planned
activities designed to result in a profit in
a marketplace.
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 Measurement of the design process
Product Quality – How good is the product.?
Product Cost – What is the manufacturing cost.?
Development Time – How quickly was the product
developed.?
Development Cost – How much was spent to develop the
product.?
Development Capability – can the team be better able to
develop future products.?

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Five Forces of Business Model
Potenti
al
Entrant
s
Threat of new entrants

Competition among Bargaining

Bargaining Buyers
existing firms Power of
Power of
suppliers buyers

Substit
utes

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Thank You For Attending

This Session.