1. Conducting a Feasibility Study and Crafting a Business Plan

2. Feasibility Analysis The process of determining whether an entrepreneur’s idea is a viable foundation for creating a successful business The process of determining whether an entrepreneur’s idea is a viable foundation for creating a successful business

3. Feasibility of Ideas Ways of testing the business concept in the market are: Testing product or service requirements Testing product or service requirements Talking to customers Talking to customers Studying the competition Studying the competition A feasibility study will help you determine a business idea’s potential and profitability.

4. Available Resources to Assist Small Business Owners Friends and Family Friends and Family Local and Municipal Government Local and Municipal Government State Government State Government

5. Available Government Agencies to Assist Small Business Owners SME’s SME’s Federal government agency whose purpose is to help small businesses. They provide management and technical advice to owners or prospective owners of small businesses. They also guarantee loans made by commercial banks. This means that the SME agree to pay the bank loan if you cannot. The SME will guarantee up to 90% of a bank loan. Federal government agency whose purpose is to help small businesses. They provide management and technical advice to owners or prospective owners of small businesses. They also guarantee loans made by commercial banks. This means that the SME agree to pay the bank loan if you cannot. The SME will guarantee up to 90% of a bank loan. Chamber of Commerce Chamber of Commerce State Governments State Governments

6. Elements of a Feasibility Analysis Financial Feasibility Industry and Market Feasibility Product or Service Feasibility

7. Industry and Market Feasibility Analysis To determine how attractive an industry is overall as a ‘home for a new business’ To determine how attractive an industry is overall as a ‘home for a new business’ To identify possible niches a small business can occupy profitably To identify possible niches a small business can occupy profitably

8. Five Forces Model Rivalry among existing firms SuppliersBuyers Potential Entrants Substitutes Threat of new entrants Bargaining Power of suppliers Bargaining Power of buyers

9. Rivalry Number of competitors is large or few (less than 5) Number of competitors is large or few (less than 5) Competitors are not similar in size or capability Competitors are not similar in size or capability The industry is growing at a fast pace The industry is growing at a fast pace The opportunity to sell a differentiated product or service is present The opportunity to sell a differentiated product or service is present

10. Suppliers Many suppliers sell a commodity product to the companies in it Many suppliers sell a commodity product to the companies in it Substitute products are available for the items suppliers provide Substitute products are available for the items suppliers provide Companies in the industry find it eas to switch from one supplier to another Companies in the industry find it eas to switch from one supplier to another The items suppliers provide account for a relatively small portion of the cost of finished products The items suppliers provide account for a relatively small portion of the cost of finished products

11. Buyers Switching costs to competitors is high Switching costs to competitors is high Number of buyers is large Number of buyers is large Customers demand differentiated products Customers demand differentiated products Customers find it difficult to gather info on suppliers costs etc Customers find it difficult to gather info on suppliers costs etc The items account for a relatively small portion of the customers’ finished products The items account for a relatively small portion of the customers’ finished products

12. New Entrants Advantages of economic scale are not present Advantages of economic scale are not present Capital requirements to enter are low Capital requirements to enter are low Cost advantages are not related to company size Cost advantages are not related to company size Buyers are brand-loyal Buyers are brand-loyal Governments do not restrict entry Governments do not restrict entry

13. Substitute Products Quality substitute products are not readily available Quality substitute products are not readily available Prices of substitute products are not lower Prices of substitute products are not lower Buyers’ cost of switching to substitute products is high Buyers’ cost of switching to substitute products is high

14. Product or Service Feasibility Analysis Are customers wiling to purchase our goods and services? Are customers wiling to purchase our goods and services? Can we provide the product or service to our customers at a profit? Can we provide the product or service to our customers at a profit?

15. Research Primary research Primary research Customer surveys and Customer surveys and questionnaires questionnaires Focus groups Focus groups Secondary research Secondary research Trade associations and business directories Trade associations and business directories Direct mail lists Direct mail lists Demographic data Demographic data Census data Census data Forecasts Forecasts Market research Market research Articles Articles Local data Local data WWW WWW

16. Trials Prototypes: an original, functional model of a new product that entrepreneurs can put into the hands of potential customers so they can see it, test it and use it Prototypes: an original, functional model of a new product that entrepreneurs can put into the hands of potential customers so they can see it, test it and use it In-home trials: a research technique that involves sending researchers into customers’ homes to observe them as they use the company’s product or service In-home trials: a research technique that involves sending researchers into customers’ homes to observe them as they use the company’s product or service

17. Financial Feasibility Analysis Capital CapitalRequirements Estimated EstimatedEarnings Return on Return onInvestment

18. A Business Plan A written summary of an entrepreneur’s proposed business venture, its operational and financial details, its marketing opportunities and strategy, and its managers’ skills and abilities A written summary of an entrepreneur’s proposed business venture, its operational and financial details, its marketing opportunities and strategy, and its managers’ skills and abilities

19. 3 Functions Guides an entrepreneur Guides an entrepreneur Attracts lenders and investors Attracts lenders and investors Reality Test Reality Test Competitive Test Competitive Test Value Test Value Test Represents/reflects its creator Represents/reflects its creator

20. Elements of a Business Plan Title Page and Contents Title Page and Contents Executive Summary Executive Summary Vision and Mission Statement Vision and Mission Statement Company History Company History Business and Industry Profile Business and Industry Profile Business Strategy Business Strategy Description of the Firm’s Product or Service Description of the Firm’s Product or Service Marketing Strategy Marketing Strategy Competitor Analysis Competitor Analysis Description of Management Team Description of Management Team Plan of Operation Plan of Operation Pro Forma Financial Statements Pro Forma Financial Statements The Loan or Investment Proposal The Loan or Investment Proposal

21. What Lenders and Investors Look for in a Business Plan Capital Capital Capacity Capacity Collateral Collateral Character Character Conditions Conditions

22. Executive Summary The company’s business model and basis for competitive edge The company’s business model and basis for competitive edge The company’s target markets and the benefits its product or service will provide The company’s target markets and the benefits its product or service will provide The qualification of the founders and/or key employees The qualification of the founders and/or key employees The key financial highlights The key financial highlights

23. Business and Industry Profile Overview of industry or market segment Overview of industry or market segment Existing or anticipated profitability of the industry Existing or anticipated profitability of the industry Company’s general business goals Company’s general business goals Company’s immediate objectives Company’s immediate objectives

24. Business Strategy How to gain competitive edge How to gain competitive edge How to achieve the goals and objectives How to achieve the goals and objectives Methods to satisfy KSFs of the industry Methods to satisfy KSFs of the industry

25. Description of Product or Service Overview of how customers will use it Overview of how customers will use it Any patents, trademarks or copyright Any patents, trademarks or copyright Honest comparison with competition Honest comparison with competition Feature (descriptive fact about a product or service) vs Benefit (what a customer gains from the product or service) Feature (descriptive fact about a product or service) vs Benefit (what a customer gains from the product or service) Description of production process, strategic raw materials, sources, costs. Description of production process, strategic raw materials, sources, costs.

26. Marketing Strategy Defining the target market Defining the target marketWho?Where? How many? Why? Proving that a profitable market exists Proving that a profitable market exists Showing customer interest Documenting market claims

27. Marketing Strategy Advertising Advertising Market Size and trend Market Size and trend Location Location Pricing Pricing Distribution Distribution

28. Competitor Analysis Each significant competitor Each significant competitor Advantage over each Advantage over each

29. Description of Management Team Qualifications of those with at least 20% ownership Qualifications of those with at least 20% ownership Resumes Resumes How to avoid primary reasons for business failures How to avoid primary reasons for business failures

30. Plan of Operation Organizational chart Organizational chart Form of ownership Form of ownership

31. Pro Forma Financial Statements Monthly for 3 years by quarter Monthly for 3 years by quarter 3 sets: pessimistic, most likely, optimistic 3 sets: pessimistic, most likely, optimistic Statement of assumptions Statement of assumptions

32. Loan or Investment Proposal Purpose of financing Purpose of financing Amount requested Amount requested Plans for repayment/exit strategy Plans for repayment/exit strategy Timetable for implementation Timetable for implementation Evaluation of risks Evaluation of risks

33. Let’s Review Compare risks and rewards of owning a business Compare risks and rewards of owning a business Determine essential factors needed to choose type of business to start Determine essential factors needed to choose type of business to start Assess business opportunities and trends, both domestic and global (include new and existing ideas, franchises, and web-based enterprises) Assess business opportunities and trends, both domestic and global (include new and existing ideas, franchises, and web-based enterprises) Apply idea-generation methods Apply idea-generation methods Determine feasibility of ideas Determine feasibility of ideas Outline available resources and government agencies to assist small business owners Outline available resources and government agencies to assist small business owners