It would be best to start with feasibility research when starting a business. This step consists of a series of tests you conduct as you learn more and more about your opportunity.
After each test, you ask yourself whether you still want to implement the idea or not. Is there anything here that prevents you from going forward with this business? Feasibility is a process of finding, and during that process, you will probably adjust your original concept several times until you get it right.
That’s the actual value of feasibility, the way that it helps you refine your idea so that you have the highest potential for success when you launch your business.
Today, you can often go for financing on the power of a feasibility study alone. Indeed, in the case of Internet industries, speed is at the core. Many online businesses have gotten first-round financing on their proof of concept alone and a business plan before investing more considerable dollars in venture capital. But even if your business is a traditional one, feasibility can help you avoid big early mistakes.
Business concept
The first step for feasibility research is to have clear answers to these questions:
- Who is the target user?
- What is the business about?
- What is the value proposition of the business?
- How are you going to deliver the values?
When you have clear answers in the simple form for the above questions, it’s time to structure your pitch.
It’s important to state your business concept in a few clear, concise, and direct sentences that include all four of the components of the idea.
When you pitch your idea to other people or investors, you only have a few minutes to convince them whether the idea is good enough or not.
If you’re preparing a feasibility analysis to show to investors, you should state your business concept right up front in the concept section. Then you can elaborate on each point as a follow-up.
As you find out more about your business concept, you’ll also want to consider the various spin-off products and benefits you may be able to offer.
Industry analysis
Testing whether or not the industry you will be operating in will support your concept is an essential part of any feasibility analysis. Here you look at the status of your industry, identify trends and patterns of change, and look at who the players in terms of competitors may be. Also, don’t forget to find an excellent opportunity to study an industry first.
customer analysis
you also need to test your customers and users. Ideally, you find a market segment appropriate to your business inside your industry. Then you identify a niche that is not properly served so that you have an entry strategy with the lowest obstacles possible and the highest probability of success.
In this part of the analysis, you also look at your potential customer’s needs and your product/service demand. You will also consider various distribution channels to benefit the customer.
“Train yourself to let go of
everything you fear to lose.”
Master Yoda
Financial analysis
In this part of the feasibility analysis, you figure out how much money you need to start the business and carry it to a positive cash flow. You also determine the types of money, which will be essential in defining your financial strategy.
Technical Feasibility
This involves evaluating the technical aspects of the proposed business, including the technology, equipment, and systems required to implement the business. It also involves assessing the availability of the necessary resources and expertise to bring the business to life.
Legal and Regulatory
This process involves researching and understanding the legal and regulatory requirements that may impact the business, including licenses, permits, and regulations.
Here are some key elements that are considered during a legal and regulatory analysis:
- Licenses and Permits: Startups need to determine what licenses and permits are required to operate their business. This can vary depending on the type of business, location, and industry. It’s important to identify all necessary licenses and permits and obtain them before starting operations.
- Environmental Regulations: As a startup founder, you need to understand the environmental regulations that apply to your business. This includes regulations related to waste management, air and water quality, and hazardous materials.
- Labor and Employment Laws: Startups also need to familiarize themselves with the labor and employment laws that apply to their business. This includes minimum wage laws, overtime pay, safety and health standards, and non-discrimination laws.
- Intellectual Property Laws: another critical aspect of legal analysis for Startups is to understand and protect their intellectual property, including patents, trademarks, and copyrights. This involves researching existing patents and trademarks and seeking legal advice to ensure that their business does not infringe on the rights of others.
- Taxation Laws: Startups need to understand the taxation laws that apply to their business, including corporate taxes, sales taxes, and payroll taxes. It’s essential to seek professional advice to ensure compliance with these laws.
Operational Feasibility
This involves evaluating the operational aspects of the business, including the processes, systems, and resources required to run the business. It also involves assessing the available resources and the ability to manage the day-to-day operations effectively.
Conducting comprehensive feasibility research is critical for startups, as it helps determine if the idea has the potential to become a successful business. By using these standard methods, entrepreneurs can gain a better understanding of the market, the competition, and the viability of their concept and make informed decisions on whether to move forward with their business.
