Feasibility

Million Dollar Idea in the Making? Look at Feasibility First

Consider this: you’re a baking and creative extraordinaire in your home kitchen. After years of family and friends praising your skills, and seasonal sales to peers and colleagues, you decide you want to take your hobby to the next level. However, the market seems saturated with so many home-based chefs; not to mention the many bakeries and caterers that have a far wider reach than you. You decide to do some research and discover that there’s a growing pocket of vocal consumers who want an e-commerce solution. Very few businesses offer the option, and a few brainstorming sessions produce viable insight into what can be done better and simpler.

The above example, in a nutshell, is what the start of a feasibility study might look like. At its core, this study tells you whether your business idea is worthwhile from a growth and profitability perspective, if it requires more refinement, or if it can’t be taken to market. As Inc. defines it: “A feasibility study is advisable as a means of fully studying an action in advance of taking the action.” Consider it a proactive step that can save you both time and money that would’ve been better spent elsewhere in your entrepreneurial journey.

With that in mind, the importance of a feasibility study cannot be understated. For any new venture, it will form the basis for your business plan. To get yourself started, make a note of the following questions:

What is your business?

In an earlier blog, I wrote: “If I asked you to describe your business, the product/service, and its value proposition in one hundred words or less, would you be able to do it?” This exact concept applies to your feasibility study. The age old ‘who, what, when, where and why’ will prompt you to objectively examine your potential business. From the current and (possible) future state of the market to the required capital resources to funding to your organizational structure, the idea is to leave no stone unturned in giving a brief but clear picture of how you intend to make your business thrive.

What’s happening in the market?

I mentioned the market in the previous point, and the most important takeaway in that regard is impartiality. It’s understandable that you may have an attachment to your business idea, but if the market can’t support it, you’ll need to go back to the drawing board. Include information on the industry and its trends, the current and potential audience, what your competition looks like, prospective sales and long-term revenue opportunities. This section of the study is particularly important for determining the growth and evolution of your business.

What do you need to start?

My previous blog, Five Key Resources for Starting a Business, offers additional insight into factors that should be at the forefront of your mind and included in your feasibility study. In addition to the five points I raised there (i.e. funding, employees, resources, support system and work space), educate yourself on other key components of the small business space. Research topics like commingling, cash flow, business creditworthiness and bankability, leadership, and customer relationships. These quantitative and qualitative discussions will not only improve your business savvy; it’s excellent preparation for later documentation such as your business and marketing plans.

Our SME Toolkit offers information on all additional topics listed in this blog. Click here to read more.