Feasibility of your business idea
It’s important to look critically at your business idea when determining if it is worth investing your time and money. A feasibility study covering a particular aspect of business can help to reveal if your idea has a good chance of success.
Your feasibility study should include an assessment of the market and commercial viability.
You need to have a clear idea of the market in which you will be operating your business. Your market feasibility should cover the following:
What is the demand for your products or services?
What type of customers will buy your products or services?
The number of potential customers, who they are and their location.
Why will your products or services appeal to potential customers?
How do you intend to sell your products or services?
Who are your competitors?
Do your products or services fill a need not already met by your competition?
How do your products or services rate in terms of price and quality compared to your competitors?
What are the strengths and weaknesses of your main competitors?
What is your unique selling proposition?
Are there any barriers to entering the market?
Once you have determined that there is a market for your products or services you need to consider the financial requirements to make it viable. Your commercial feasibility should cover the following:
How much money do you need to make to meet your living expenses?
How long do you expect to be in business before you make you first sale?
How much money do you need to start up?
How do you intend to fund the business during the start up phase?
Estimate your fixed and variable costs.
What price would your customers pay for your products and services?
What is your sales forecast?
What is your break-even point?
How long will it take to reach break-even sales volume?
How much working capital will you need to sustain operations?
Return on investment
Cash flow analysis
You should also consider the following as part of your feasibility:
Are there any regulatory requirements you must satisfy?
Do you need to obtain protection for your intellectual property?
What factors could potentially delay your business?
Do you have the required skills to get the product or service to market?
► How to build your
business plan. ► Find out whether you need a licence or permit to operate your business. ► Visit SBDC to view IBIS World industry and market research. ► Discuss business benchmarks with one of our business advisers or Business Local service provider.