Most people know successful entrepreneurs. These entrepreneurs are often described as having the ability to pick the right business. But this is not necessarily true. I was listening to Kendra Scott share her story on Shark Tank, and her initial business was creating hats for women. Unfortunately, her timing was off and women were no longer wearing elaborate hats on a regular basis. She ended up closing that business. Stories like Kendra’s reinforce the need for conducting a feasibility study.
A suggested action for all potential businesses is to perform a feasibility study. While I often hear that entrepreneurs are passionate, hard workers, and natural risk takers, these traits are not enough. Although often ignored, a business feasibility study serves as an essential prerequisite action performed to analyze a business idea. It looks at several areas and helps identifies potential problems. In most feasibility studies, there are five areas that are considered and answers questions such as:
- Will this business idea work?
- Should I move forward with this idea?
- Is this a viable business economically?
- Do I have the skill to run this type of business?
- What is needed to operate this business successfully?
While the number of feasibility areas to consider vary, must experts in the field identify the following areas of feasibility.
Taking the time to look at these areas, prior to starting a business, is helpful in determining the viability of the business idea. A feasibility study can identify potential obstacles and help you discover alternative opportunities and solutions. Keep in mind that the ultimate purpose for a feasibility study is to make a go/no-go decision on the business idea.