Feasibility Study - Business Plan Preparations, Entrepreneurship & Small Businesses Video Lecture | Entrepreneurship & Small Businesses - B Com

well this video is the first of a series
of videos related to the subject of
entrepreneurship and entrepreneurship as
we know is extremely important and is
responsible for a lot of economic growth
a lot of job growth and that starts with
individuals starting businesses taking
risk
assuming that risk for the intention or
the intent at least of receiving some
type of reward in the future usually in
the form of profits although there are
other rewards besides strictly monetary
so the first thing we need to do though
is obviously we have some type of idea
and all ideas are not necessarily
created equal right simply because you
have an idea of a potential business
does not mean that you should follow
through with it there needs to be a
process in place for how you evaluate
and assess the strength of that idea
unfortunately many entrepreneurs and
many individuals who start businesses do
so out of emotion or do so in a rush to
try and turn a quick profit without
really assessing the market the industry
and even the product for that matter and
so one of the things that can be done as
a way of trying to lessen the harmful
impact associated with starting a
unsuccessful business is by completing
what we refer to as a feasibility study
often referred to as a feasibility
analysis a feasibility study is simply
designed to assist the entrepreneur in
determining simply the viability of the
business idea
the very basic purpose is to come to a
conclusion essentially either the
business idea is essentially a go or we
have what we call a no-go okay and
before you know you realize obviously
the kind of the negative spin on
obviously not pursuing the idea
oftentimes this can be just as helpful
because you're saving yourself that the
time energy and resources that you would
expend in starting the business without
doing a careful amount of research and
that really is what the feasibility
study is about now the feasibility study
is what we call an objective analysis
okay and it's this is an extremely
important characteristic of this type of
study is that it is objective meaning
that it is more than your own opinion
okay it is based on actual credible
research it's based on statistics and
that's unfortunately something that a
lot of entrepreneurs do not rely on when
starting companies a lot of times we
rely on our own opinions regarding the
matter right which will only we can only
can consider so much or rely on the
opinions of family and friends which
oftentimes is even worse because family
and friends will often you know lie to
us to protect our feelings which isn't
doing us any favors and so by doing an
objective analysis we get the ability or
the opportunity rather to get a gauge on
the success or potential success of our
particular business okay we're trying to
reduce those harmful effects of a
business failing and so a feasibility
study is really divided into a couple of
different areas that we include usually
in first you have the product and/or the
service depending upon what type of
business you're potentially starting and
so we're trying to determine the
viability once again of that particular
area that's our primary focus in this
particular category here and so one of
the things that we're typically trying
to do is first as we identify features
and benefits of our products right
not only the actual characteristics so
what the product does but really what
benefit does it provide people what type
of value does it provide consumers right
it all products should provide some type
of value the product must solve a pain
okay and this is the that the feeling in
the market that is present because your
product or service is not in existence
okay the pain is very real the pain is
the feeling that consumers have because
they have an unmet need and in some way
shape or form your product or service
solves this pain okay it's very very
important that you consider that in the
product or service arena you definitely
want to consider competitors right you
want to consider competing products what
they offer in direct direct competition
and a host of other things outside of
the product or service you also want to
consider the market in the industry
and once again we are trying to figure
out viability simply because we have a
product or service that might work we
have to figure out is the market is it
large enough to accommodate us right can
we do we have enough potential customers
to really make this thing work from a
financial standpoint that's a very very
important subject and a lot of
entrepreneurs unfortunately do not spend
enough time really assessing the market
and determining not only viability but
the size the strengths competitors all
these different things this is very very
important that you assess the market in
the industry right looking at things
like well okay what is my target market
right what are the set of
characteristics of the customer that I'm
trying to attract right things like
demographic variables psychographics
geographic variables all of those
different things that we'll discuss in
subsequent videos over time but we're
generally focusing on those in addition
to a host of other things in addition to
that area we also focus on the financial
viability
and so from a financial viability
standpoint we're typically trying to
assess whether or not we're going to
make any money and that's generally a
very important thing obviously we're not
necessarily producing significant income
statements in pro forma statements and
those types of things but we're just
trying to take a look at you know basic
fundamentals things like you know our
revenues our costs our earnings those
basic ideas just to get a quick you know
kind of impression or idea if you will
about what are we going to earn with
this particular venture here and then
we're also concerned with our capital
requirements right how much are we going
to have to invest what are our startup
costs like things like equipment
insurance you know different things that
we have to buy associated with getting
this business off the ground we're
typically concerned with those areas now
one of the things I want to mention here
real quick is that a feasibility study
or feasibility analysis is not the same
as a business plan okay now these are
very different documents a feasibility
study for the most part we consider it
to be an internal document meaning that
nobody really sees it outside of the
company founders and so it's simply
designed for you to make relatively
quick and I and I say quick is relative
because this does take some time to
prepare and the accuracy of your
decision is only going to be as accurate
as the information that you gather and
the detail that you put into it so you
can you know spend you know half a day
doing a feasibility study and maybe your
decision won't be accurate but its
internal and so we're trying to figure
out if we're going to get this thing off
the ground a business plan typically
although some people do it before they
launch a business can be done when the
business is already up and running and
the business plan usually is not used
for external reasons in large part
you're using it to gather funding right
so you're showing it to potential
investors you're showing it to to banks
you're showing it to potential employees
right if you
trying to hire people onto your
organization so it's rather an external
document and oftentimes it includes more
detailed financial statements and some
other factors as well that really you
wouldn't have the ability to assess
unless you were up and running to begin
with so for the most part in any courses
that I teach we usually conduct a
feasibility study or analysis first and
then one of businesses up and running
then we gravitate towards actually
formulating an actual business plan so
that just gives you the structure of the
feasibility study what's included that
what we'll be doing over the course of
the next few months or so at least from
the date of this recording is adding
additional content specifically related
to those three categories and what are
the specific things that you would
consider what are the the important
elements to include in your analysis so
that ultimately you can make a very very
accurate decision as to whether or not
you want to pursue a particular business
idea