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Opportunity Seeking Lesson 1

This document discusses conducting a feasibility study to evaluate a new business opportunity. It provides definitions of a business idea and an innovative business opportunity. It then outlines the key stages of a feasibility study/analysis: [1] Examine the business idea; [2] Examine management capabilities; [3] Examine technical capabilities; [4] Examine the marketing potential; and [5] Examine costs and financing needs. Criteria for evaluation are provided for each stage. The document concludes by assigning the reader to propose 3 feasibility topics and explain why they were chosen and why each idea could succeed.

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Ross Evan
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664 views

Opportunity Seeking Lesson 1

This document discusses conducting a feasibility study to evaluate a new business opportunity. It provides definitions of a business idea and an innovative business opportunity. It then outlines the key stages of a feasibility study/analysis: [1] Examine the business idea; [2] Examine management capabilities; [3] Examine technical capabilities; [4] Examine the marketing potential; and [5] Examine costs and financing needs. Criteria for evaluation are provided for each stage. The document concludes by assigning the reader to propose 3 feasibility topics and explain why they were chosen and why each idea could succeed.

Uploaded by

Ross Evan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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OPPORTUNITY SEEKING

LESSON 1:
PROPOSING A FEASIBILITY STUDY
WHAT IS AN IDEA?
Idea according to Merriam-Webster is a formulated
thought or opinion. Others say it’s a thought or
suggestion as to a possible course of action.

But in a business perspective, business idea is a


concept that can be used for financial gain that is
usually centered on a product or service that can be
offered for money.
WHAT IS AN INNOVATIVE
BUSINESS OPPORTUNITY?
Innovative business opportunities refer to a set of
different elements within the processes whereby
entrepreneurs identify, act upon and realize new
combinations of resources and market needs to try
to benefit from their future economic potential.
VALUE
Why does business innovation matter?
STAGES OF FEASIBILITY
STUDY/ ANALYSIS
1. Examine the idea.
✓ Does the idea appear to meet set goals?
✓ What factors could prevent it from being successful?
✓ Is the entrepreneur prepared to make the sacrifices
necessary for this project to work?

Criteria considerations:
• Are the benefits from this idea sufficient to justify the cost in
terms of finance, personal stress and family sacrifice?
• What is the minimum ratio of benefits to cost that is tolerable?
2. Examine the management capabilities of the entrepreneur.
✓ What management skills are lacking in order to have effective
control over this enterprise?
✓ Can these skills be acquired?
✓ What effect will involvement in this project have on the family and
other enterprises?
✓ Will this new enterprise produce the lifestyle that I want for my
family and myself?

Criteria considerations:
• What specific skills need to be developed or hired?
• At what point does the lack of available skills become an obstacle?
3. Examine the technical capabilities of the organization.
✓ Is there access to the required raw materials?
✓ What technology, equipment and processes are required?
✓ Do staff understand the required technology, equipment and
processes?
✓ Does it appear that the production system is workable and
affordable?

Criteria considerations:
• How much time can be devoted to this project at the expense of other
enterprises?
• How much change is required to accommodate this project?
• At what point is it not worth the effort?
4. Examine the marketing potential for the product or service.
✓ features and benefits of the product or service?
✓ target market (Who is most likely to buy?)
✓ distribution options (best way to reach the target buyers)
✓ market demand (How many possible buyers, what volume and price?)
✓ competition (What products and companies compete?)
✓ trends (What is the expected life of the product?)
✓ expected price (highest, lowest and most often prices)
✓ expected sales (volume and market conditions)

Criteria considerations:
• What are the minimum values on sales volume and price needed to be viable?
• Is the potential for growth in sales adequate?
• Is this product the best option available?
5. Examine the cost and financing needs.
✓ pro forma (projected) income and expense statement
✓ cash flow statement
✓ opening balance sheet

Criteria considerations:
• Is the cost of sales acceptable relative to the product price?
• Does the venture meet or exceed the profit goals?
• Does the expected return meet or exceed the minimum acceptable level?
• Is there a better way to reach my financial goals?
Figure 1.
Feasibility process flow
chart.
ASSIGNMENT

Propose 3 feasibility topics and explain why did


you choose it and why do you think it will be a
success.
THANK YOU!

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