Feasibility Analysis: Part 2 Assessing the Business Idea (Product/Service) Paper #3 Entrepreneurship & Innovation
Feasibility the measure of how beneficial or practical it will be to develop a particular business. Operational Feasibility Technical Feasibility Schedule Feasibility Economic Feasibility
Feasibility Analysis • Objective: to discover and document opportunities and risks for a nascent enterprise. • Rationale: An entrepreneur writes a formal feasibility plan to determine if his or her idea for a new product or service has the potential to become a successful venture.
6 Steps of Feasibility Analysis 1. Determine which Industry to choose 2. Capture & Assess the Business Idea 3. Research the market and customers 4. Gather Competitive Intelligence 5. Estimate Price & Profitability 6. Future Action Plan
Define the Value Proposition VALUE PROPOSITION - a clear statement of the tangible results a customer gets from using your products or services. • Most Effective VPs are – very specific (features or capabilities are not enough) – emphasize what the customer wants and values. – explains how product will solve problems for customer, improve existing solutions, or do more, better, faster, cheaper… http: //www. infosys. com/microsoft/value-proposition/default. asp
I. Customers perceive a need for product/service. 1. Customers don’t know anything. 2. Customers must be educated before they see a need. 3. Customers must be convinced to buy from me instead of my competitors. 4. Customers need my products/services and will often select mine over competitors’. 5. My customers need my products/services and want to buy from me. (Noug is the world's most expensive birdseed. Its high oil content makes it irresistible to the small, energetic songbirds. ) Washing Machine Flood Hose: http: //www. safehomeprod ucts. com/shp 2/sm/flood_ chek. asp
II. Product/Service is ready to sell. • I have not started developing my product/service. • still developing my products/services. • have sold some but they are not completely tested or trouble free. • I have thoroughly tested my products/services and am fixing the problems. • It’s all figured out! My products/services work well with minimal problems Cheetos Lip Balm by New York, NY based Lotta Luv LLC.
III. Product/Service has unlimited life. • Must be sold quickly so they don’t perish or become obsolete. • Has a relatively short life cycle which makes profits minimal. • I can make a profit before the life cycle ends. • Have a fairly long life cycle which will allow for ample profits. • Can be sold forever! Life cycle is unlimited. 50 years of Saran polyvinylidene chloride
IV. Product/Service is unique and protectable. 1. Not proprietary; all I offer is similar to the competition. 2. Not proprietary, but it stands out from the competition. 3. I’ll do my best to create proprietary rights for my products/services. 4. Somewhat unique in function or style and can be legally protected. 5. Unique in function and style and can be legally protected. Patent # 3, 241, 834 HIGHLY RESILIENT POLYBUTADIENE BALL
V. Product/Service NOT regulated by government. 1. 2. 3. 4. 5. Yikes! Complying with regulations requires time and money. Regulations are undergoing change, possibly more time and expense. Regulations are reasonable, watch Shuffle Master, Inc. is a licensed gaming supply them closely. company that provides products to casino customers. Shuffle Master is in a highly regulated industry, we unlicensed Easy to comply with regulations generally do not sell our equipment torecently begun individuals or organizations. We have shuffler for private Regulations are limited to those offering our Deck Mate® poker Not available for purchase and use for $14, 795. purchase in Colorado, New Jersey, Washington or Texas. imposed on all businesses.
VI. Product/Service line has expansion potential. • • • No expansion potential. I only have one product/service to sell. Definite expansion potential. . I have a line with several things to sell. My products/services complement each other, and I can easily add more to sell. Coleman
VII. Product has no liability risk. • May encounter a large legal risk. • Not sure what the risks are. • Can afford to protect myself for the risk involved in selling my products/services. • Minimal risk selling my products/services; I can afford to protect myself. • No liability risk. This is a candy dispenser that looks like a nose that you strap to your face. It oozes candy slime. They encourage you to stick out your tongue and catch the drips from the nose.
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