Many entrepreneurs decide to go into business and then thrown on the concept of ideal business. There is nothing wrong with this approach, but it does beg the question of how to determine which business opportunity is right for you and if the business idea is worth pursuing. The process of formal business planning provides for this type of test. It is a process that helps the small business owner to remove their ” rose colored glasses ‘ and to investigate the business idea based on facts and realistic analysis.
Planning tool is used to determine the feasibility of a business opportunity is called study viability. The objective of the feasibility study is to minimize the degree of risk that a business is about to undertake. In conducting a feasibility study to be able to conclude whether the opportunity has potential for profit and therefore worth the investment of time , effort and finances. If the study shows that the business idea is financially viable , much of the information gathered can be used in formal business planning documents .A word of warning, curbing enthusiasm for a business idea until after the feasibility study has been completed. Do not spend a dime , do not sign anything , did not get anything going . Considering this only warning that could save a lot of money , time and pain.
An exact feasibility study should include:
The Business Opportunity
It begins with a description of the business opportunity as much detail as possible.
Legal Restrictions
It is necessary to investigate whether there are legal restrictions on the conduct of such business constraints. This could include regulatory requirements for specific qualifications or licenses. Home based businesses usually require council permission to operate from home. No point in starting a business that requires qualifications or licenses that you have .
Market and Customers
It is necessary to conduct market research to determine market size for your products and services and to outline the characteristics of both the market , competitors and potential customers. You should also evaluate if you can offer something unique , better or different offers being made by their competitors and likely determine the amounts of purchase and price points for their products. Your market research should also include identifying any problems that may have an impact on the market or industry in the near future .
Operational Issues
Operational issues such as business location and type of facilities needed to be investigated and treated. Examine the space required immediately and assesses whether it will be adequate in terms of their projected business growth in different time frames . Wondering how you will identify the location and type of most suitable space. You should also consider how you will finance the required space. Will your purchase, rent or lease out a long term? It logistical aspects of business operations, such as how will you handle, transport and store goods in and out of your business are discussed? What distribution channels will you use? Need to transport such as a van ,car, truck or forklift? What other plant and equipment are necessary to begin operations and what is needed over the life of the business?
