Feasibility Analysis

Feasibility Analysis for New Businesses:

Feasibility Analysis for new businesses aims to put ideas under test to check their viability. It makes out a “bridge” for new business ideas to move to more rigorous steps in launching the business, specifically writing the business plan. This topic is presented to you in your channel Management with Merits – Manage to Prosper within our discussion of the 2nd book in the channel (Entrepreneurship 2012), which was introduced before in a previous video. The book presents the entrepreneurial process in 5 steps that make out the book’s five parts. We have already finished the 1st one (deciding to become an entrepreneur). Also, last post we started discussing the 2nd step (developing successful business ideas), specifically the 1st task of it (recognizing opportunities and generating ideas). Feasibility analysis is the 2nd task of the 2nd step in the process.

Feasibility Analysis for new businesses comes under the 2nd step of the entrepreneurial process (developing successful business ideas)
Part 2 (Step 2): Developing Successful Business Ideas – Chapter 3: Feasibility Analysis
  Source: Barringer, R.B. & Ireland, R. D. (2016). Entrepreneurship, Successfully Launching New Ventures. (5th edn.). U.S.A.: Pearson

Feasibility Analysis – Appendix (3.1): First Screen

 In this post/video, we didn’t put any PDF presentation as usual. Instead, we made a link to Appendix No. (3.1) in the book (part 2, chapter 3), titled (First Screen). It simplifies the whole process of feasibility analysis in clear parts; each of which consists of 5 questions. Each question shall be answered by choosing an alternative among three to specify the idea’s feasibility with reference to the question. Besides, each alternative has a text description and a score of either -1 (minimum), 0 (neutral) or +1 (maximum). As a result, each part shall have a final score that ranges from -5 (min) to +5 (max). You can view and download the Appendix in PDF (2 pages), as it appears in the book, by clicking here.

Parts & Components :

Feasibility Analysis consists of 4 parts where new business ideas must pass through all of them.
Feasibility Analysis Parts & Procedure
Source: Barringer, R.B. & Ireland, R. D. (2012). Entrepreneurship, Successfully Launching New Ventures. (4th edn.). U.S.A.: Pearson

The book states 4 points in feasibility analysis. Business ideas must pass through all of these points in order to become eligible for further steps (writing business plan). Other wise, failure in one or more of them means that ideas must be amended or discarded. Performing the analysis requires hard work, patience and flexibility. It also requires collecting, analyzing & interpreting data by primary means (performed by the entrepreneur such as interviews or questionnaires) and secondary methods. Definitely, using the appendix stated above helps in the process. The elements are broken down to smaller ones. They are listed and briefly explained below.

 Part 1: Product/Service Feasibility (Desirability & Demand):

Here comes the difference between desirability and demand. Desirability means that customers desire or want to get the product/service. However, demand means that customers have required purchasing power to obtain the product/service and sacrifice some of their resources (like money) to get it. This part in the analysis is the most important one because if the new product/service doesn’t match customers’ desirability and demand, the whole business will fail no matter how well their performance is in any other areas.

 Part 2: Industry/Target Market Feasibility (Industry & Target Market Attractiveness):

We need here to distinguish between the industry and the target market. Industry means all the buyers & sellers (whole market) of the proposed product/service. On the other hand, target market means the focused group of customers that the business targets, depending on many variables such as their age, gender, hobbies etc.

Part 3: Organizational Feasibility: (Management Prowess & Resource Sufficiency)

We would like to note here that watching and following our channel’s content helps to successfully pass this part, especially the previous book in the channel (Management 2015), which explains managerial functions of planning, organizing, leading and controlling. You can access all this book’s sessions from here.

Part 4: Financial Feasibility: (T).

 This part consists of there elements, which are Total Start-up Cash Needed, Financial Performance of Similar Businesses, and Overall Financial Attractiveness of the Proposed Ventures. Despite the meticulousness needed by entrepreneurs in this part in recognizing and filling out all cash and costs amounts and sources for the startup, they don’t need to utilize huge effort in producing outstanding detailed proforma budgets and financial sheets for the next years. These tasks are part of the step proceeding feasibility analysis (writing business plans).

Overall Assessment:

It refers to the whole analysis and all its parts, along with any suggestions for improvement. It concludes all the parts of the analysis and decides whether the idea is acceptable for next steps, needs amendments, or must be discarded.

Thank you so much for watching and following us. Next session we will discuss the following task of the 2nd step (writing business plans), with focus on the first point in it (making effective business models). Watch and follow us each Thursday on your channel Management with Merits – Manage to Prosper. Please support your channel strongly so that it can continue its glorious mission and services. Subscribe to the channel in YouTube and activate the notifications bell there. Follow us, participate with us and share the channel and all its electronic contact platforms.

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