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Topic 4: Conducting Feasibility Analysis - Coggle Diagram
Topic 4: Conducting Feasibility Analysis
Idea Assessment
New business planning process:
business ideas
conducting an idea assessment
conducting a feasibility analysis
developing a business model
crafting a business plan
creating a strategic plan
launching the business
Use an idea sketch pad to ask key questions addressing:
customers
offering
value proposition
core competencies
people
Idea assessment
- the process of examining a particular need in the market, developing a solution for the need, and determining the entrepreneur’s ability to successfully turn the idea into a business.
Feasibility Analysis
Elements of a feasibility analysis:
industry and market feasibility
product or service feasibility
financial feasibility
entrepreneur or team feasibility
Porter's Five Forces Model:
rivalry among companies in the industry
- strongest of the five forces.
bargaining power of suppliers
- the greater the leverage of suppliers, the less attractive the industry.
bargaining power of buyers
- buyers' influence is high when number of customers is small and cost of switching to a competitor's product is low.
threat of new entrants
- the larger the pool of potential new entrants, the less attractive an industry is.
threat of substitute products or services
- substitute products or services can turn an industry on its head.
Feasibility analysis
- its role is to serve as a filter screening out ideas that lack the potential for building a successful business, before an entrepreneur commits the necessary resources to build the business plan.
Product or Service Feasibility
Primary research
- collect data first-hand and analyse it.
Customer surveys and questionnaires
- keep the survey short and word your questions carefully so that you don't bias, as well as use simple ranking system.
Focus groups
- a market research technique that involve enlisting a small number of potential customers (usually 8-12) to give an entrepreneur feedback on specific issues about a product or service (or the business idea itself).
Prototypes
- an original, functional model of a new product that entrepreneurs can put into the hands of potential customers so that they can see it, test it, and use it.
In-home trials
- a research technique that involves sending researchers into customer's home to observe them as they use the company's product or service.
Secondary research
- gather data that already has been compiled and analyse it.
"Windshield" research
- an informal survey where the health professional drives around the community/area they are researching, and records his/her observations.
Trade associations and business directories
Industry databases
Demographic data
- E.g. Sales and Marketing Management's Survey of Buying Power contains comprehensive statistics, ranking, projections on consumer.
Forecasts
Articles
Local data
Internet
- E.g. marketing information.
Product or service feasibility
- determines the degree to which a product or service idea appeals to potential customers and identifies the resources necessary to produce it.
Financial Feasibility Analysis
Estimated earnings
- forecasted income statement.
Time out of cash
- the total cash it will take to sustain the business until the business achieves break-even cash flow.
Capital requirements
- an estimate of how much start-up capital is required to lauch the business.
Return on investment
- combining the previous two estimates to determine how much investors can expect their investments to return.
Entrepreneur/Team Feasibility
Business Modeling Process:
Phase 1 - Develop the business model canvas
Phase 2 - Test the value proposition with customers
Phase 3 - Test the product with prototype or minimal viable product
Phase 4 - Pivot business model until ready to expand