Feasibility Analysis

Feasibility Analysis = the process of determining whether a business idea is viable. 

when to conduct a feasibility analysis ???

• Timing of Feasibility Analysis

The proper time to conduct a feasibility analysis is early in thinking through the prospect

for a new business.

The thought is to screen ideas before a lot of resources are spent on them.

• Components of a Properly Conducted Feasibility Analysis

A properly conducted feasibility analysis includes 4 separate components.

Forms for Feasibility Analysis : 

- Product / Service Feasibility 

- Industry / Target Market Feasibility

- Organizational Feasibility

- Financial Feasibility

Management Prowess : 

A firm should candidly evaluate the prowess, or ability, of its management team to satisfy

itself that management has the requisite passion and expertise to launch the venture.

Two of the most important factors in this area are:

•The passion that the solo entrepreneur or the founding team has for the business idea.

•The extent to which sole entrepreneur or the founding team understands the markets in

which the firm will participate. 

Resource Sufficiency : 

This topic pertains to an assessment of whether an entrepreneur has sufficient resources

to launch the proposed venture.

Financial Feasibility Analysis : 

Is the final component of a comprehensive feasibility analysis.

Component of Financial Feasibility Analysis : 

1. Total Start-Up Cash Needed

2. Financial Performance of Similar Businesses

3. Overall Financial Attractiveness of the Proposed Venture

First Screen : 

- Shown in Appendix 3.1, is a template for completing a feasibility analysis.

- It’s called “First Screen” because it’s a tool that can be used in the initial pass at 

determining the feasibility of a business idea. 

- If a business idea cuts muster at this stage, the next step is to complete a business 

plan.