Assessing your Business Idea
How do you assess the viability of your prospective business?
This is the more important step that you will perform especially in the business start up phase – feasibility is all important. Why test feasibility at all it only seems to add to overhead without generating any income.
The following is the justification for feasibility testing:
Such test simplify business processes (and your business life). They conserve and protect your capital, builds corporate assurance, personal security, (in the long-term) increases profits, sales and ROI. There is really no need to learn from your mistakes if you don’t make any in the first place!
Guessing your work to success increases business risk exponentially. The processes of feasibility testing considerably reduces the use of guessing. The statistics show that only one project out of five make a profit – only a 20% success rate. Concept feasibility testing helps to identify the four poor business ideas from the one profitable business. It is estimated that about 200,000 firms go bankrupt, feasibility testing will help prevent your business from being added to this statistic.
Feasibility tests have low financial impact on the business. You can make all sorts of mistakes and hardly be noticed.
Testing reduces time spent, arguments, indecision, risks, and delay. Tests put modern scientific method on your side.
Feasibility test builds on efficiency. If carried out properly they help in better use of capital. For example if you have $200,000 and use $20,000 for small tests you might be able to double the impact of the remaining $180,000 to $360,000. If it a increase of efficiency of only 20% that is $ 216,000 which is still worth it.
Good decision are made for you by the testing process. When you do a few tests a marketing plan is automatically made. Sound, practical decisions, are clearly indicated for product design, package, price, promotion, personal selling, physical distribution, publicity or advertising.
One of the best managed company’s Unilevers say that they just can not afford to market a new product before comprehensively testing the product, as the company just can not afford to recall the product.
The system of testing simulates, stimulates, clarifies and communicates. Done right testing will guarantee business success.
Some methods of checking the soundness of the idea are through:
Concept feasibility – deals with the financial aspects and planning aspects of the entire business idea. The most important element of survival is resilience of the underlying concept of the feasibility
Use Feasibility – Product testing to verify actual consumer requirement and performance of the product in the beta test phase.
Market feasibility – Assess the best methods to market and introduce the product to the market.
Concept Feasibility Test
|1. Is the plan affordable?|
|2. Market – who will buy?
Who is the key competitor?
Why are we better?
|3. Has the plan been prepared?|
|4. Has management reviewed and approved it?|
|5. Do prospects like it?|
Use Feasibility Test
|6. Prototype made?|
|7. User opinions?|
|8. Adjustments made?|
|9. Users rechecked?|
|10. Budget plan made?|
Market Feasibility Test
|Adjust and rerun:|