Assessing business feasibility is essential before you start writing your business plan. Beware! the easiest person to fool about your great new business idea is you. You may choose to gamble and put your own money on your “gut feel”. However, if you are looking for a bank or investor to do the same, your passion & gut is not going to be enough. They want something more concrete if they are to part with their hard-earned cash.
So, you need to get real, & get objective and carry out an assessment of Business Feasibility. The core business opportunity (or “proposition”) is at the heart of your business plan. And you are going to need to qualify and quantify this. One option is to invest in a feasibility study. However, if that is not affordable, you can make an assessment yourself. So, to start, you need to find relevant data from market reports & competing businesses. So, how do you go about this?
Market Data
One of the best ways to assess the feasibility of your business is to base your plan on independent market data. In other words, the more independent evidence that you have supporting your business opportunity, the more credible your business plan will be to an investor or bank.
Assuming you don’t have deep pockets for primary research, the first option to explore is freely available internet-based research. For example, this includes freely published information from industry & professional bodies, and also some research companies. In addition, corporate press releases may give you some more top level market & competitor data. However, there is a lot of fake or badly interpreted data out there, so make sure you check sources and cross-reference data to ensure they are reliable.
There are also market research reports (like Mintel) available that cover different industries and sectors. Be sure you know what you are buying before you start paying for these. They can be very expensive especially if they end up not containing the information you need.
Financial Modelling
Once you have some useful data you can use this to carry out some analysis and financial modelling for your business. This will enable you to see how your opportunity stacks up under different scenarios and in the context of the market. The aim of this is to confirm whether there is a genuine business opportunity and define it in the context of the market. Take note, that where the market is large and diverse it is as important to confirm what your opportunity is NOT as much as what it IS. Once you have this complete you will have “qualified” your opportunity. T
The next stage is to “quantify” the opportunity. So, this means establishing the size of the opportunity for your business. This can be done in several ways. For example, depending on the nature of the market you can quantify it in terms of unit sales, sales value, and anticipated growth. How your opportunity stacks up should based on a set of assumptions relevant to your specific business, not the wider market. For example, the market size for your types of products may be $30bn worldwide. However, you need to focus on the opportunity to sell your particular product to your accessible market. This is going to be a much smaller segment.
In conclusion, once you have a “qualified” and “quantified” opportunity you will have a tick in the box from anyone reviewing your plan. You can then describe in your business plan how you, rather than anyone else, are going to succeed in taking advantage of this opportunity.
Good Luck!
Jon Hunt
The Business Plan Team
www.TheBusinessPlanTeam.co.uk