Feasibility Analysis
Presented by: Julie Messing
Kent State University
jmessing@kent.edu
Except where specified, the slides are from:
Launching New Ventures
Kathleen Allen
Houghton-Mifflin
2006
What Is A Feasibility Analysis?
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Preliminary evaluation of idea to determine
if it is worth pursuing
Provides more secure notion that a business
idea is viable
– Is there a customer base and a market of
sufficient size to make the concept
viable?
– Do the capital requirements to start,
based on estimates of sales and
expenses, make sense?
– Can an appropriate start-up or genesis
team be put together to execute the
concept?
Benefits of a Feasibility
Analysis
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Identify viable concepts, including
complementary products/services
Get it right the first time; avoid
obvious pitfalls
Save valuable time and money
Validate it is what the customer needs,
wants and will purchase
When To Conduct a Feasibility
Analysis
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Timing of Feasibility Analysis
– After concept statement evaluation
– After opportunity recognition, before business plan
– Before a lot of resources are invested
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Four Components of Full Feasibility Analysis
– Product/Service Feasibility
– Industry/Market Feasibility
– Organizational Feasibility
– Financial Feasibility
Barringer & Ireland (2006)
Feasibility Analysis (Barringer &
Ireland, 2006)
Role of feasibility analysis in developing successful business ideas
Feasibility Analysis Process
Feasibility Analysis
Outline
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Cover
Executive Summary
Title Page
The Business
Concept
Industry/Market
Analysis
Founding Team
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Product/Service
Development Plan
Financial Plan
Timeline
Bibliography
Appendices
Developing a Business
Concept
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A business concept is a concise
description of an opportunity that
contains four essential elements:
1. The customer definition
2. The value proposition and compelling
story
3. The product/service
4. The distribution channel
Business Concept: The
Customer Definition
– The customer is the one who pays.
– The end use customer is as important as
the intermediary customer.
Business Concept: The
Value Proposition
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The compelling story is the benefit
that the customer derives from the
product or service
– It is often intangible.
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The compelling story answers the
questions:
– Why the interest?
– What problem does this solve?
Business Concept
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The Product/Service
– What does the customer need?
– What is the team’s core competency?
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The Distribution Channel
– How will the benefit be delivered to the
customer?
The Concept Statement
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Who is being helped: the primary
customer?
What is the market’s burning
problem/pain?
What emotions does the pain evoke?
What is the company’s tag line?
Questions to Answer:
Concept
What is the product/service being
offered?
 What is the value proposition?
 Who is the Customer?
 How will the customer get access
to your product/service?
 Are there ways to innovate the
distribution channel?
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Questions to Answer:
Industry, Market/Customer
What are the demographics and
trends in the industry?
 Are there any barriers to entry? If
yes, how will you overcome them?
 What are the typical profit margins in
the industry?
 Who are your competitors?
 Who is your perfect customer and are
there enough of them?
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Questions to Answer:
Founding Team
What specific skills or expertise
will you need to start this
business?
 What are your team gaps and how
will you fill them?
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Questions to Answer:
Product/Service
What are the results of concept
testing?
 What are results of usability testing?
 What are the features & benefits?
 Are there opportunities for
intellectual property?
 How is your product/service
differentiated from others in the
market?
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Questions to Answer:
Financial Assessment
What are your start-up capital
requirements?
 What are the amounts and
sources of expected revenues?
 What are your anticipated
expenses?
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Questions to Answer:
Financial Assessment
How long will it take to achieve a
positive cash flow from the
revenues generated?
 What is the break even point for
the business?
 Provide an initial pro forma cash
flow statement
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Once Completed, You Can
Answer:
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Is there a customer base and a market
of sufficient size to make the concept
viable?
Do the capital requirements to start,
based on estimates of sales and
expenses, make sense?
Can an appropriate start-up or genesis
team be put together to execute the
concept?
Feasibility Analysis (Barringer &
Ireland, 2006)
Role of feasibility analysis in developing successful business ideas
Questions?
Feasibility Analysis
Presented by: Julie Messing
Kent State University
jmessing@kent.edu