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Topic 4: Conducting a Feasibility Analysis and Designing a Business Model,…
Topic 4: Conducting a Feasibility Analysis and Designing a Business Model
Porters' Five Forces Model
Rivalry among companies in the industry
Bargaining power of suppliers
Bargaining power of buyers
Threat of new entrants
Threat of substitute products or services
Feasibility Analysis
: to determine whether they can transform the idea into a viable business.
Idea assessment
: Examining a particular need and developing a solution for that need & determining entrepreneur ability to successfully turn the idea into a business
Idea assessment
:
1.Customers
Offering
Value proposition
Core competencies
People
Elements of feasibility Analysis
Product & Service Feasibility
Research technique
Secondary Research:
Gather data that already has been compiled and analyze it
Examples:
Industry databases : Demographic data : Eg: Sales & Marketing Management survey of buying Power contains comprehensive statistics, ranking , projections on consumer.
Forecasts
Articles : read art done by professionals (that are related)
Local data: same like data base ( contact department that are related)
Internet : Eg, To get marketing Information
Primary Research:
Collect data firsthand and analyze it
Expensive , extra work , time consuming
Examples:
“Windshield” research : An informal survey where professionals drive around community to record their observation.Eg ; contact business that are already on market to ask their opinion.
In-home trials : A research technique that involves sending researchers into customers home to make observation on product usage.
Prototypes : An original functional model of a new product that distribute to potential customer.
Focus groups : A market technique that involves enlisting a small number of potential customers to give entrepreneur feedback on the product
Customer surveys and questionnaires : Keep survey short and use simple ranking system
Entrepreneur Feasibility
Is this idea right for me?
Assess entrepreneurial readiness: knowledge, experience, and skills necessary for entrepreneurs to be successful.
Assess whether the business will be able to generate enough profit to support everyone’s income needs.
Eg : Staff salary, (in cost stream)
Financial Feasibility Analysis
Capital requirements: an estimate of how much start-up capital is required to launch 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.
New business planning process :
Business ideas
Conducting an idea assessment
Customers
Offering
Value proposition
Core competencies
People
Conducting a feasibility analysis (part of the business planning process)
Developing a business model
Crafting a business plan
Creating a strategic plan
Launching the business
Assess industry attractiveness using six macro forces:
Sociocultural
Technological
Demographic
Economic
Political and legal
Global
Entrepreneur and team feasibility
FInancial Feasibility
Product or service Feasibility
Industry and Market Feasibility
