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 your 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 breakeven point?
- How long will it take to reach breakeven 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?