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3-1. Feasibility Analysis. Most effective business plans Identifying a business idea Screening the idea(s) to determine their preliminary feasibility Conducting a feasibility analysis Writing the plan. Figure 3 - 1. Step 1 Identify a business idea.

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3-1

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  1. 3-1

  2. Feasibility Analysis Most effective business plans • Identifying a business idea • Screening the idea(s) to determine their preliminary feasibility • Conducting a feasibility analysis • Writing the plan

  3. Figure 3 - 1 Step 1 Identify a business idea. Step 2 Favorable Step 3 Favorable Step 4 Screen (or test) the results/proceed Conduct a full results/proceed Prepare idea to determine feasibility a written its preliminary Unfavorable analysis Unfavorable business feasibility. Results/stop or results/stop or plan reevaluate idea reevaluate idea Step 5 Present the business plan to investors and others

  4. Feasibility Analysis • Primary research • Original research collected by person completing the analysis • Secondary research • Probes data already collected

  5. Product/Service Feasibility • Product desirability • Is the product desirable and serve a need in the marketplace? • Is it reasonable?

  6. Concept Test A concept test is a preliminary description of a product or service idea to industry experts to solicit their feedback

  7. Product/Service Demand • Buying intentions survey • Gauge customer interest in a product or service How likely would you be to buy a product like this if we make it? • Definitely would buy • Probably would buy • Might or might not by • Probably would not buy • Definitely would not buy

  8. Industry/Target Market Feasibility Analysis Industry A group of firms producing a similar product or service

  9. Industry / Target Market Feasibility Analysis Target market The limited portion of the industry that the firm goes after or tries to appeal to

  10. Industry/Target Market Feasibility Analysis • Industry attractiveness • Target market attractiveness • Market timeliness

  11. Industry Attractiveness • Large and growing industries • Structurally attractive • Start-ups can enter the industry and compete • Favorable environmental and business trends • Importance of product to its customers

  12. Target Market Attractiveness Target market Should be large enough for the new business but small enough to avoid attracting larger competitors

  13. Market Timeliness • Window of opportunity • Time period that a firm can enter a market • Economics of the industry • Determine if the timing is right for a new entrant

  14. Organizational Feasibility Analysis • Management prowess • Resource sufficiency

  15. Financial Feasibility • Total start-up cash needed • Financial performance of similar businesses • Overall financial attractiveness of the proposed venture

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