The whole point of the feasibility study is to determine if the business concept is feasible.  There is no need to go to all of the detail required by a business plan if a general testing of market numbers indicates the idea will not work.

It is alright to use educated guesses in the feasibility study.  The flexibility to use numbers backed by limited research will save you significant amounts of time in completing the study.  You can (and should) increase accuracy and detail in the business plan if your initial study indicates a complete Bplan is warranted. A good feasibility study should answer at least the following questions:

·         What is the size of the market (units sold)?

·         What market share can we expect to gain (% of market)?

·         How many units will we sell?

·         At what price?

·         What expenses will we incur?

Try to make a list of the resources you’ll need to operate the business (land, buildings, equipment, training, employees, licenses, permits & fees, inventory, interest, marketing etc.).  Do your expenses resemble within reason your consumption of these resources?  For example, if your resource list indicates you will need 1,500 sf of industrial space your expenses should reflect the use of this resource.  The point is that a resource list will help you make sure you don’t overlook major expense categories.

Next, Test your plan on a variety of inputs.  Generate a worst case, probable and best case number for each input.  This will provide you with a minimum threshold below which your idea is not feasible.  This will prove immensely valuable if you move on to the business plan stage.  When (if) you begin additional research, you’ll focus on the most critical number in the plan.  For instance, if you determine you need a market size of at least 30,000 customers meeting a specific demographic to make the plan work and you find out that there are only 20,000 then either find a plan to make it work with 20,000 or stop working the plan.

Now have a knowledgeable third party evaluate your study.  Incorporate their suggestions to make your plan more realistic.

After revision, ask yourself if the anticipated profits are worth the risks you will take?  Does it make sense to invest your time and money in this manner? If so, move on to the full business plan with a clear insight into where to focus your research.

I hope this information was helpful.  If I can assist you in evaluating business ideas call (888-586-5182) or email me.  We can discuss your particular goals and kick ideas around.  No Cost! No Pressure! No Sales Pitch!
www.myfranchisemarket.com