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Entrepreneurship 5

How to manage Small businesses in Pakistan

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17 views19 pages

Entrepreneurship 5

How to manage Small businesses in Pakistan

Uploaded by

mashoodmoeen
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Feasibility Analysis

Lecture #5
What Is Feasibility Analysis?

• Process of determining whether a


business idea is viable.

• To determine the viability of an


idea, such as ensuring a project is
legally and technically feasible as
well as economically justifiable.
• Cost & Expected value
 Timing of Feasibility Analysis
 It is conducted before the business
plan.
 Thus, to screen ideas before a lot of
resources are spent on them
When To Conduct
a Feasibility  Components Feasibility Analysis
Analysis  Feasibility analysis includes four
separate components
Role of feasibility analysis in developing business ideas.
Role of feasibility analysis in developing business ideas

• Product/Service Feasibility Analysis

• Assessment of the overall appeal of the product or service being proposed.

• Start-up should be sure that the product or service is what prospective customers
want.

• Does it make sense? Consumers will get excited about

• Take advantage of environmental trends, solve a problem, or gap in marketplace

• Timing of product launch


Role of feasibility analysis in developing business ideas

• Product/Service Feasibility Analysis


• Administer a Concept Test
• A concept statement should be developed.
• It is a one-page description distributed to people to get their feedback

• Comparison testing: two or more concepts are presented to the respondents.


• Monadic test: Target audience divided into multiple groups & each group gets shown only one
concept.
• Sequential monadic test: Target audience is split into multiple groups & each group is presented
with all the concepts.
Role of feasibility analysis in developing business ideas

• Product/Service Demand

• There are two steps to assessing product/service demand.

Administer a Buying Intentions Survey

 Conduct library, Internet, and Gumshoe research


Product/Service Demand

• Buying Intentions Survey


• To gauge customer interest in a
product or service.
• Consists of a concept statement or a
similar description of a product or
short survey to gauge customer
interest.

• Internet sites like Survey Monkey make


administering a buying intentions survey
easy and affordable.
Product/Service Demand

 Library, Internet, and Gumshoe Research

 Reference librarians help you investigate a


business idea, such as industry-specific trade
journal and industry reports.

 Internet searches often yield important


information about product or service idea
viability
 A gumshoe is a detective or an investigator
that solicits around or information or clues.

E.g Educational toy


Product/Service Demand

• An effective idea is to hit the streets and


talk to potential customers.

• Administering a survey about


a new product idea.
Industry/Target Market
Feasibility Analysis

• Purpose

• To assess the overall appeal of


the industry and the target
market for the proposed
business.

• A firm’s target market is the


limited portion of the industry it
plans to go after.
• Industry • Target Market
Attractiveness Attractiveness
• Industries vary in • To find a market
Industry/Target terms of their that’s large
overall enough for the
Market attractiveness. proposed business
Feasibility but is yet small
enough to avoid
Analysis • Particularly
attracting larger
important—the
degree to which competitors.
environmental and • Assessing the
business trends are attractiveness of a
moving in favor target market is
rather than against tougher than an
the industry entire industry.
Start-up Feasibility Analysis

 Management Agility
 To evaluate the competence, or ability, of its Start-
up team and requisite passion and expertise to
launch the venture.

 Two of the most important factors in this area are:


 The passion that the solo entrepreneur or the
founding team has for the business idea.
 The extent to which sole entrepreneur or the
founding team understands the markets
Start-up Feasibility Analysis

 Start-Up Cash Needed

 The cash needed to prepare the business to make its first sale.

 Finances required (capital & operating expenses) to generate the first


$1 in revenues.

 To determine proposed venture realistic cash need.


Start-up Feasibility Analysis

• Financial Performance of Similar Businesses


• Estimate financial performance by comparing it with similar,
businesses.

• There are several ways to doing this

Read reports available, some for free and some that require a fee.
Observational research may be needed.
Example, Observe similar business.
Nonfinancial resources critical to the successful launch

Availability of Private or state Proximity to key


Quality of the labor
affordable office or government support suppliers and
pool.
lab space. incubators. customers.

Likelihood of Proximity to similar Process of obtaining


Willingness of high-
establishing firms for the intellectual property
quality employees
favorable strategic purpose of sharing protection in key
to join start-up.
partnerships. knowledge. areas.

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