Feasibility Analysis Business Plans Entrepreneurship Chapter 5.

Feasibility Analysis Feasibility Analysis Business PlansBusiness Plans

EntrepreneurshipEntrepreneurshipChapter 5Chapter 5

Feasibility AnalysisFeasibility Analysis

Testing an OpportunityTesting an OpportunityThrough ResearchThrough Research

Step #1Step #1

Develop a business conceptDevelop a business concept A single statementA single statement IncorporatesIncorporates

• Product or serviceProduct or service• Who the customer isWho the customer is• The benefitThe benefit• The distribution usedThe distribution used

Step #2Step #2

Test your conceptTest your concept Testing the industryTesting the industry Talking to customersTalking to customers Testing product or service requirementsTesting product or service requirements Evaluate your teamEvaluate your team Study your competitionStudy your competition What are your start up needsWhat are your start up needs Analyze your distribution channel-value chainAnalyze your distribution channel-value chain

Why Test the Industry?Why Test the Industry?

TrendsTrends Major playersMajor players Health of the industryHealth of the industry

Why Talk to Potential Customers?Why Talk to Potential Customers?

The most important part of the analysisThe most important part of the analysis Is there interest?Is there interest? To better define your features/benefitsTo better define your features/benefits May get better insight into your businessMay get better insight into your business To find out your customer profileTo find out your customer profile

Why Test Products/Services?Why Test Products/Services?

Develop prototypeDevelop prototype Not physical business-designs, blueprints, Not physical business-designs, blueprints,

flow charts etc.flow charts etc.

Why Evaluate Your Team?Why Evaluate Your Team?

Must be an effective team/works well Must be an effective team/works well togethertogether

Must be well roundedMust be well rounded Important to have knowledge + experience Important to have knowledge + experience

in venturein venture Bank pays a lot of attention to this Bank pays a lot of attention to this

informationinformation

Why Study the Competition?Why Study the Competition?

Know their target customerKnow their target customer Know their benefitsKnow their benefits Know how they distributeKnow how they distribute Know their strengths/weaknessesKnow their strengths/weaknesses Know where you can fit into the equationKnow where you can fit into the equation

Can you fill a void in the marketplace?Can you fill a void in the marketplace?

Why Research Start up Cost?Why Research Start up Cost?

How much money must you have?How much money must you have? PayrollPayroll Equipment/suppliesEquipment/supplies Purchases of inventoryPurchases of inventory LocationLocation Capital to keep going until profit generatesCapital to keep going until profit generates

Why Analyze the Value Chain?Why Analyze the Value Chain? Value chain includesValue chain includes

ManufacturersManufacturers DistributorsDistributors RetailersRetailers

Goal-to deliver product to the customer at the Goal-to deliver product to the customer at the least possible costleast possible cost Belkon (consolidating freight)Belkon (consolidating freight) Wholesale distributor-can buy in larger quantities to Wholesale distributor-can buy in larger quantities to

save costssave costs Use of the internetUse of the internet

Why is the Feasibility Analysis an Essential Part of the Development of a

Business?

Business PlanBusiness Plan

Entrepreneurship 5.2Entrepreneurship 5.2

Purpose of Business PlanPurpose of Business Plan

Describes the new businessDescribes the new business Itemizes the strategies needed for start-upItemizes the strategies needed for start-up

Recipients of the PlanRecipients of the Plan

InvestorsInvestors BankersBankers Potential ManagementPotential Management Strategic Partners-What do these words Strategic Partners-What do these words

relate to?relate to?

Items Included in a Business PlanItems Included in a Business Plan

Executive SummaryExecutive Summary Management Team PlanManagement Team Plan Company DescriptionCompany Description Product and Service PlanProduct and Service Plan Mission and Vision StatementsMission and Vision Statements Industry OverviewIndustry Overview Market AnalysisMarket Analysis Competitive AnalysisCompetitive Analysis Marketing PlanMarketing Plan

Business Plan con’tBusiness Plan con’t

Operational PlanOperational Plan Organizational PlanOrganizational Plan Financial PlanFinancial Plan Growth PlanGrowth Plan Contingency PlanContingency Plan Cover page, title page, table of contents, Cover page, title page, table of contents,

and supporting documents in an appendixand supporting documents in an appendix

The Executive SummaryThe Executive Summary

Not more than 2 pagesNot more than 2 pages Most important part-catches the eye of the Most important part-catches the eye of the

readerreader Most investors only read the executive Most investors only read the executive

summary summary Includes important information from each Includes important information from each

sectionsection

Management Team PlanManagement Team Plan

Qualifications of partnersQualifications of partners Educational expertiseEducational expertise Work experience that relatesWork experience that relates How you can you execute and be effective How you can you execute and be effective

Company DescriptionCompany Description

Outlines the company’s backgroundOutlines the company’s background Gives basic business conceptGives basic business concept Helps investors understand the scope and Helps investors understand the scope and

sizesize

Product and Service PlanProduct and Service Plan

Present the product or service with a clear Present the product or service with a clear concept statementconcept statement

Address any spin-offs that could be Address any spin-offs that could be possible-shows growth possibilitiespossible-shows growth possibilities

Vision and Mission StatementsVision and Mission Statements

Vision-talks to the company’s value and Vision-talks to the company’s value and belief systembelief system

Mission-talks to the specific goals and Mission-talks to the specific goals and aspirations of the companyaspirations of the company

Industry OverviewIndustry Overview

Shows trends and growth in industryShows trends and growth in industry Ex: WCA growth is directly related to the Ex: WCA growth is directly related to the

industrial growth of the county.industrial growth of the county. Walton County’s business growth is expected Walton County’s business growth is expected

to quintuple within the next few years.to quintuple within the next few years.

Market AnalysisMarket Analysis

Include your customer profileInclude your customer profile Includes geographic, economic, and Includes geographic, economic, and

demographic data about the site of demographic data about the site of business (county or city)business (county or city)

Do your customer profile and demographic Do your customer profile and demographic of the community correlate?of the community correlate?

Analyzes your customer and competitionAnalyzes your customer and competition

Competitive AnalysisCompetitive Analysis

Does your business fill a void within the Does your business fill a void within the market?market?

If so, where.If so, where. Gather information from your competitors.Gather information from your competitors.

Operational PlanOperational Plan

Hours of operationHours of operation How will you get your product or service to How will you get your product or service to

the consumer?the consumer? Direct vs Indirect Channel to consumersDirect vs Indirect Channel to consumers

Organizational PlanOrganizational Plan

What type of business?What type of business? Sole ProprietorshipSole Proprietorship CorporationCorporation LLCLLC PartnershipPartnership

Compensation packages for mgt.Compensation packages for mgt. Employment policiesEmployment policies

Financial PlanFinancial Plan

Shows that concept is profitable and viableShows that concept is profitable and viable Presents forecastsPresents forecasts Bankers are interested in longevityBankers are interested in longevity Formed with financial statementsFormed with financial statements

Growth PlanGrowth Plan

Talk about future plansTalk about future plans Short range (1-5 years)Short range (1-5 years) Long range (beyond 5 years)Long range (beyond 5 years) Plans in place for future retirements?Plans in place for future retirements?

Contingency PlansContingency Plans

RisksRisks Lower sales than expectedLower sales than expected Downturn of economy Downturn of economy Ways to minimize risks Ways to minimize risks

• Risk transfer-insuranceRisk transfer-insurance• SBA loans will require some type of insuranceSBA loans will require some type of insurance

Common Mistakes in Preparing Common Mistakes in Preparing Business PlansBusiness Plans

Exaggerated sales growthExaggerated sales growth Not developing a strong business teamNot developing a strong business team Claiming performance that exceeds Claiming performance that exceeds

industry averagesindustry averages Under estimating need for capital-most Under estimating need for capital-most

common mistakecommon mistake

Ask for HelpAsk for Help

Small Business AdministrationSmall Business Administration Service Corps of Retired ExecutivesService Corps of Retired Executives Small Business Development CentersSmall Business Development Centers Chambers of CommerceChambers of Commerce Trade AssociationsTrade Associations Professionals within same industryProfessionals within same industry

Packaging PlanPackaging Plan Very ImportantVery Important Haphazard plan reflects your commitment as a Haphazard plan reflects your commitment as a

business ownerbusiness owner Professionally bind with index tabs for dividersProfessionally bind with index tabs for dividers 12 pt Times Roman Font12 pt Times Roman Font Bold subheadings with bullets to facilitate fast Bold subheadings with bullets to facilitate fast

readingreading Include Logo at top of each pageInclude Logo at top of each page Include a Statement of ConfidentialityInclude a Statement of Confidentiality Statement on front of packet prohibiting copyingStatement on front of packet prohibiting copying