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Tech which makes Sense

Many entrepreneurs decide to start a business and then search for the ideal business concept. There is nothing wrong with this approach, but it does raise the question of how to determine which business opportunity is right for you and whether the business idea is worth pursuing. The formal business planning process provides for this type of analysis. It is a process that helps the small business owner remove the ‘pink glasses’ and research the business idea based on hard facts and realistic analysis. The planning tool used to determine the feasibility of a business opportunity is called a feasibility study.

The objective of the feasibility study is to minimize the degree of risk that a business owner is about to take. Upon completion of a feasibility study, you should be able to conclude whether the opportunity has profit potential and is therefore worth your time, effort, and funding. If the study shows that the business idea is financially viable, much of the information gathered can be used in formal business planning documents.

One word of warning, hold back your enthusiasm for a business idea until after the feasibility study has been completed. Don’t spend a hundred, don’t sign anything, don’t start anything. Heeding this one caveat could save you a lot of money, time, and pain.

A detailed feasibility study should include:

The business opportunity

Begin with a description of the business opportunity in as much detail as possible.

Legal restrictions

You should investigate whether there are legal restrictions to conducting this type of business. This could include regulatory requirements for specific qualifications or licenses. Home-based businesses generally require permission from the local council to operate from home. There is no point in going into a business that requires qualifications or licenses that you don’t have.

Market and Customers

You should conduct market research to determine the size of the market for your products and services and to profile the characteristics of both the market and your competitors and potential customers. You should also evaluate whether you can offer something unique, better, or different than the offers made by your competitors and determine the likely purchase quantities and prices of your products. Your market research should also include identifying any issues that may affect the market or the industry in the near future.

Operational problems

You need to research and address operational issues such as the location of the business and the type of facilities required. Examine the space required immediately and assess whether it will be adequate given projected business growth over various time frames. He asks how he will identify the most suitable location and type of space.

You should also examine how you will finance the required space. Will you buy, rent, or take out a long-term lease?

Examine the logistical aspects of running the business, for example, how will you handle, transport and store products in and out of your business? What distribution channels will you use? Do you need transportation like a car, van, truck, or forklift? What other plant and equipment are needed to start operations and what is needed over the life of the business?

Management skills

Examine the management aspects of the business. Ask what types and levels of skills are required to run this particular business. Who will manage the business? What roles are required and who will fulfill them? This includes marketing, finance, sales, information technology management, etc.

Fundamentally, you need to examine the skills this business opportunity requires and compare them to your own skills. Do you have the necessary skills to start this business? If not, are they readily available? Are you interested in acquiring these skills?

Organizational skills

Examine the skills required by the company. Ask how many additional employees it will take to run this business idea. Will you need to hire new workers? If so, what skills and levels of proficiency will be required. Do you know how to recruit these staff members and are you able to effectively induct and train these new recruits?

Do you have sufficient knowledge about the legal aspects of hiring personnel? Are you aware of regulations related to wages and salaries, taxes, workers’ compensation, workplace safety, and equal opportunity? Do you know where to go to get this information?

Financial problems

The financial issues related to the business idea are examined in detail here. This includes all the important questions about what capital is required to start the business and how you will raise the required capital. What is your profitability estimate after all costs have been deducted, including taxes? How much do you need to live per year? How long will it take to break even?

You should also examine your own skills in relation to managing finances. Can you keep your own accounts? Can you manage cash flows? Do you know where to go for expert financial advice?

Sales and Marketing

This looks at what you expect your sales and marketing strategy to be. Analyze how much time and money will be allocated to the sales and marketing function and determine what should be the most profitable promotional methods. He also asks who will be responsible for this function.

Conclusions

The above is not an exhaustive list of questions to ask when conducting a feasibility study, but it does give you an idea of ​​what it should be. When you’ve done your research and found answers to key questions, you’re in a position to run a SWOT analysis. SWOT stands for strengths, weaknesses, opportunities and threats. It allows you to take all the information you have collected and make a general assessment of the viability of the business.

Running a feasibility study seems like a lot of work, especially when you’re eager to get started, but if you want to save a lot of time, money, energy, and pain, take the time to assess whether the business idea is really worth it. your investment. A feasibility study can help you examine a number of business ideas and allow you to discard those that are not worth pursuing and help you identify the one that is most likely to be successful.

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