–The process of determining whether a business idea is viable. –It is the preliminary evaluation of a business idea, conducted for the purpose of determining whether the idea is worth pursuing. –Feasibility analysis takes the guesswork (to a certain degree) out of a business launch, and provides an entrepreneur with a more secure notion that a business idea is feasible or 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 prospects 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 four separate components, as shown in the figure on the next slide.
Product/Service Feasibility Analysis
•Product/Service Feasibility Analysis
–Is an assessment of the overall appeal of the product or service being proposed. –The idea is that before a prospective firm rushes a product or service into development, it should be confident that the product or service is what its prospective customers want. –The two components of a product/service feasibility analysis are: •Concept testing.
Preparing a Concept Statement(1 of 3)
–Before a company undertakes product/service feasibility analysis, a concept statement should be developed. –A concept statement is a one page description of a business that is distributed by a startup entrepreneur to people who are asked to provide feedback on the potential of the business idea. –The feedback will hopefully provide the entrepreneur (1) a sense of the viability of the business idea, and (2) suggestions for how the idea can be strengthened or “tweaked” before proceeding further.
Information to Include
–A description of the product or service being offered.
–The intended target market.
–The benefits of the product or service.
–A description of how the product will be positioned relative to similar ones in the market. –A description of how the product or service will be sold and distributed. –Information about the founder or founders of the firm.
–Is the method by which users of a product are asked to perform certain tasks in order to measure the product’s ease-of-use and the user’s perception of the experience. –Usability tests are sometimes called user tests, beta tests, or field trials, depending on the circumstances involved. •While it is tempting to rush a new product or service to market, conducting a usability test is a good investment of an entrepreneur’s or firm’s resources. •Many products that consumers find frustrating to work with have been brought to market too quickly.
Usability Testing (continued)
•Conducting a usability test typically requires the development of a prototype. •A prototype is the first physical depiction of a new product, which is usually still in a rough or tentative mode. –Virtual Prototype
•A virtual prototype is a computer-generated 3D image of an idea. It displays an invention as a 3D model that can be viewed from all sides and rotated 360 degrees.
Industry/Market Feasibility Analysis(1 of 6)
•Industry/Market Feasibility Analysis
–Is an assessment of the overall appeal of the market for the product or service being proposed. –For industry/market feasibility analysis, there are three primary issues that a proposed business should consider: •Industry attractiveness, market timeliness, and the identification of a niche market. •Industry Attractiveness
–A primary determinant of a new venture’s feasibility is the attractiveness of the industry it chooses.
Characteristics of attractive industries for new ventures
•Are large and growing (with growth being more important than size). •Are important to the customer.
•Are fairly young rather than older and...