Picture this. You have what you think is a great idea for a new business and have told a couple of family members or friends. They slap you on the back, feed your ego and tell you it sounds like a winner. Sound familiar?
But does the new business idea really have a good chance of success?
Most business owners do not plan to plunge ahead blindly with an idea. They know they will have to write a business plan — especially if they are thinking of borrowing money.
Before you put pen to paper, a feasibility analysis can save valuable time.
A feasibility analysis is a chance to open your eyes, ask some very tough questions, then check to see whether the idea (as originally conceived) needs to be modified, refocused, changed dramatically or perhaps even scrapped altogether. It is better to drop an unworkable idea early on and move on, pursuing one of your other, potentially more successful, ideas.
How does a feasibility analysis differ from a business plan? Think of developing and planning a business as involving a few components:
1. Vision: identifying and articulating your business idea and concept.
2. Feasibility analysis: challenging your concept, identifying which components are in place that make it realistic to execute, recognising the biggest obstacles that are likely to be faced.
3. Business plan: clarifying your business strategy in detail, describing how you’re going to execute your vision, developing the major components of your business, projecting detailed financial forecasts.
4. Marketing/operations/technology plans: describing in detail and developing budgets for the internal aspects of how the business will run day-to-day.
Every feasibility analysis starts by evaluating yourself. Are you really suited to run a business? Do you personally have the knowledge and skills needed? Is the idea based on what the market truly wants or is it based on other motives?
A feasibility analysis is only a beginning to a business plan — and to your questioning and exploring. You should continually be challenging your assumptions. It is the entrepreneurs most willing to ask themselves the tough questions who succeed.