Feasibility Analysis - Part One

The first and most important rule of the feasibility analysis is to be honest with yourself. If you're not sure of something, find the truth of the matter, and don't forget to question assumptions. The second, equally important rule is to assume the worst when you're dealing with uncertain factors. These two rules can not be stressed enough.

The first actual steps of a feasibility analysis are the idea and the personal checklist. The idea is the inspiration part of starting a business; it's the idea that you're basing your start-up on. Additionally, you'll also need technical knowledge, industry knowledge, and a plan to go along with that idea. The personal checklist consists of questions you should ask yourself before going further in your feasibility analysis. The first question to ask is whether you have any management skills, and if you do, what are they? The second is asking yourself where your start-up will be in five years. The third is how you expect your lifestyle to change once you start a business (you're expected to make considerable sacrifices for it). This is where being honest with yourself is of the utmost importance.

The second step is research. You'll want to research as many aspects of your potential start up as you can reasonably manage beforehand. Still, there are a few fields of particular importance for any business owner. The first is researching the demand for your business at the time and place you're planning to found it. A low demand is not necessarily something that should stop you entirely (unless you're trying to sell something with so little demand that it's obvious you can't form a business), and you will want to consider the low demand for the future. You'll also want to research the competition in your start-up's industry, as well as research ways that you can do better than your competitors. You'll also want to look into other factors that make an impact on the general setting your business will be in (called the business environment), such as distribution matters (for retail-based businesses), supplier issues, and other effects that might help or harm your business. Finally, you'll want to get a clear picture of your industry's demographics (statistics showing you who your potential customers are).

Congratulations - you've reached the end of the pure research phase of your feasibility analysis. From here on out though, you'll be combining both research and theoretical decision-making to get you through the final three steps of the analysis. In the meantime, gather what you learned and prepare to put it to use.

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