Feasibility Study
A formalised, written approach to evaluating your business idea.
· Shows you what facts and figures are needed to aid decision-making.
· Shows whether or not your idea is viable.
· Allows you to discover and look at alternative approaches and solutions to putting your idea into practice.
The Study should be written by you; for you; in language and terms you can relate to, and about your business idea.
1. THE BUSINESS IDEA
How would you describe your business idea? What is it? Will it work? How is it different from existing businesses? Who will buy from you?
Can you put your idea on paper?
It is not enough simply to say "A Service business" or "A coffee shop". Paint a picture of your business idea in words so that anyone reading this description knows exactly what you are talking about.
To start your Feasibility Study - start with your business idea, on paper. Discuss it with others and adjust it as you obtain more information and ideas.
2. PROFILES - KEY PEOPLE
It is not enough to have a good idea - you need people who can implement it.
Who are they? You, your partners, your family. That is, the people upon whom the business will rely. What are your/their skills and strengths? Does their background help or hinder the proposed venture?
Create a one page Resume of each key person. This is not merely a job history, but a picture of each key person, showing pertinent strengths, skills, experience, training and qualifications.
It will reveal to you and any potential lender, supplier, partners or agent, the operational/management strengths (and weaknesses) of you and your team. It will also show you the need to acquire any missing skills you can identify.
3. PERSONAL OBJECTIVES
Why do you want to go into business? Answer - To make money!
Remember: Business is principally a means of allowing people to achieve the things they want in their private life, like a home, cars, holidays and a good lifestyle.
You need to set personal objectives. Do you know what you want in your private life?
Consider Short Term - say up to one year; Medium Term - one to three years; Long term - greater than three years. You need to sort out personal desires first to avoid potential conflict in private and business lives.
4. THE MARKET
Customers: You cannot sell to everyone. So, who are your potential customers? Make a List. Why will they buy from you?
Identify your Market Segments or groups: What knowledge do you have of your market segments or groups? How many are there? What will they buy? How often will they buy? What will be their average purchase?
Products & Services: Create a list showing the products / services you will be offering to each segment. Also look at how long it will take you to produce or procure them. Determine how much it will cost to buy or produce them and how much you can sell them for.
Suppliers: Identify preferred and alternative suppliers on a list and show products /services / prices on this list. Collect catalogues and brochures to assist this study.
Competition: List your competitors and show their perceived strengths and weaknesses. For each main competitor, list two good points and two bad points. You need to understand why they are competition to your proposed business.
Ask the Question: How can you attract their customers from them? Price is not the only answer.
Map: Obtain a map and on it define your market boundaries, your location, your competitors, your suppliers, and any demographic information on your market.
5. YOUR BUSINESS OVERVIEW
Location Identify your site, is it rented, owned, or at home? Why locate there? What are the advantages and disadvantages?
Site Plan Draw up the site plan. Sketch the floor plan, identify assets and if necessary, use several alternative floor plans.
Floor Plan Legend Work through your plan, placing a value on each item. Identify those you already have and those to be purchased or leased.
This will allow you to:
1. Identify the assets and equipment you will require
2. Place a value on each item
3. Identify resources you will be injecting into the business
4. Identify funding needs to be addressed.
6. STAFFING
What staff will you need, and why?
If none, who will back you up, do the banking, allow you to take holidays?
If you need staff:
o Who will they be?
o What will be the cost?
o What are their duties?
o What training will be required?
o What alternatives are there?
7. LEGAL CHECKLIST
What assistance do you need?
Your Solicitor
Who will it be, what can they offer and at what cost? Will your solicitor check your lease(s), contracts, and agreements and liaise with other Solicitors?
Business Licence Information Service (BLIS)
Office of Fair Trading, offering advice on licensing requirements and applications from State and Federal authorities which you will require for your proposed business. This is a free service.
Office of Fair Trading
The NSW Consumer Protection Agency.
Office of Industrial Relations
Award enquiries, Awards, Dangerous Goods, Weights and Measures, etc.
Retail Tenancy Disputes Unit
Retail lease legislation, Hotline service, Mediation role.
Local Council
Zoning regulations, Home Industry/Occupation, Health regulations & inspections, Promotional guidelines, eg. advertising with A frames, signs on buildings, etc.
Australian Taxation Office
Group Employers, Tax and Records
Australian Securities and Investment Commission
Advice on regulation of companies.
Insurance
Compulsory insurances - Superannuation, Workers Compensation, 3rd Party
Desirable insurance cover - List areas you believe you need to be covered by insurance.
8. WORKING CAPITAL
When calculating how much working capital you need it may be necessary to allow for up to six months funds. This may be due to no sales or low sales, having to extend credit, buying too much or overheads being higher than expected.
After working through these details, the next step is to make a recommendation - either to begin or not to begin a business.
Recommendation:
Recommendations from the Study regarding the viability of putting the business idea into practice should be honest, short and direct.
These recommendations are not usually a straight "yes" or "no", but rather
"Yes, if . . . ." Or
"No, unless . . . ."
You use the feasibility study to help make your decision:
"Will this business idea work for me or not?"
9. SOURCES OF HELP
To write your Feasibility Study, you need to go to others for help and information. Don't try to do it all yourself when there are so many sources of assistance available.
Business Advisory Services
Information, business counselling, training workshops, research facilities, back up and support facilities, networking, and publications.
Accountant
Advise on all financial issues, assist in feasibility study, legal structure suggestions, assist in funding estimates, sourcing and applications, check books if buying an existing business.
Solicitor
Contracts, leases, legal representation.
Bank
Finance, information and support, leasing, advice on contracts, specialist services.
Business Advisers/Consultants
Someone to talk to, specialist advice, mentoring, negotiations, training, back-up.
Trade Associations
Membership and support, group deals, training, advice, research, industrial relations expertise, and networking.
Potential Suppliers
Information, back-up, promotional support, training, etc.
10. SOURCES OF INFORMATION
Own Research
Business Advisory Services, librarian, libraries, publications, directories, Chambers of Commerce, other business people.
Government Departments
Information and publications available from many Departments including the Australian Bureau of Statistics.
Local Council
Demographic reports, publications, studies, future plans for development.
Competitors
Check out your competition, their location, layout, advertising and service. This can be a great source for ideas - what are they doing right or wrong?
http://www.smallbiz.nsw.gov.au/frame.cfm?l=/business/starting/links.html&r=/business/starting/study.html
A formalised, written approach to evaluating your business idea.
· Shows you what facts and figures are needed to aid decision-making.
· Shows whether or not your idea is viable.
· Allows you to discover and look at alternative approaches and solutions to putting your idea into practice.
The Study should be written by you; for you; in language and terms you can relate to, and about your business idea.
1. THE BUSINESS IDEA
How would you describe your business idea? What is it? Will it work? How is it different from existing businesses? Who will buy from you?
Can you put your idea on paper?
It is not enough simply to say "A Service business" or "A coffee shop". Paint a picture of your business idea in words so that anyone reading this description knows exactly what you are talking about.
To start your Feasibility Study - start with your business idea, on paper. Discuss it with others and adjust it as you obtain more information and ideas.
2. PROFILES - KEY PEOPLE
It is not enough to have a good idea - you need people who can implement it.
Who are they? You, your partners, your family. That is, the people upon whom the business will rely. What are your/their skills and strengths? Does their background help or hinder the proposed venture?
Create a one page Resume of each key person. This is not merely a job history, but a picture of each key person, showing pertinent strengths, skills, experience, training and qualifications.
It will reveal to you and any potential lender, supplier, partners or agent, the operational/management strengths (and weaknesses) of you and your team. It will also show you the need to acquire any missing skills you can identify.
3. PERSONAL OBJECTIVES
Why do you want to go into business? Answer - To make money!
Remember: Business is principally a means of allowing people to achieve the things they want in their private life, like a home, cars, holidays and a good lifestyle.
You need to set personal objectives. Do you know what you want in your private life?
Consider Short Term - say up to one year; Medium Term - one to three years; Long term - greater than three years. You need to sort out personal desires first to avoid potential conflict in private and business lives.
4. THE MARKET
Customers: You cannot sell to everyone. So, who are your potential customers? Make a List. Why will they buy from you?
Identify your Market Segments or groups: What knowledge do you have of your market segments or groups? How many are there? What will they buy? How often will they buy? What will be their average purchase?
Products & Services: Create a list showing the products / services you will be offering to each segment. Also look at how long it will take you to produce or procure them. Determine how much it will cost to buy or produce them and how much you can sell them for.
Suppliers: Identify preferred and alternative suppliers on a list and show products /services / prices on this list. Collect catalogues and brochures to assist this study.
Competition: List your competitors and show their perceived strengths and weaknesses. For each main competitor, list two good points and two bad points. You need to understand why they are competition to your proposed business.
Ask the Question: How can you attract their customers from them? Price is not the only answer.
Map: Obtain a map and on it define your market boundaries, your location, your competitors, your suppliers, and any demographic information on your market.
5. YOUR BUSINESS OVERVIEW
Location Identify your site, is it rented, owned, or at home? Why locate there? What are the advantages and disadvantages?
Site Plan Draw up the site plan. Sketch the floor plan, identify assets and if necessary, use several alternative floor plans.
Floor Plan Legend Work through your plan, placing a value on each item. Identify those you already have and those to be purchased or leased.
This will allow you to:
1. Identify the assets and equipment you will require
2. Place a value on each item
3. Identify resources you will be injecting into the business
4. Identify funding needs to be addressed.
6. STAFFING
What staff will you need, and why?
If none, who will back you up, do the banking, allow you to take holidays?
If you need staff:
o Who will they be?
o What will be the cost?
o What are their duties?
o What training will be required?
o What alternatives are there?
7. LEGAL CHECKLIST
What assistance do you need?
Your Solicitor
Who will it be, what can they offer and at what cost? Will your solicitor check your lease(s), contracts, and agreements and liaise with other Solicitors?
Business Licence Information Service (BLIS)
Office of Fair Trading, offering advice on licensing requirements and applications from State and Federal authorities which you will require for your proposed business. This is a free service.
Office of Fair Trading
The NSW Consumer Protection Agency.
Office of Industrial Relations
Award enquiries, Awards, Dangerous Goods, Weights and Measures, etc.
Retail Tenancy Disputes Unit
Retail lease legislation, Hotline service, Mediation role.
Local Council
Zoning regulations, Home Industry/Occupation, Health regulations & inspections, Promotional guidelines, eg. advertising with A frames, signs on buildings, etc.
Australian Taxation Office
Group Employers, Tax and Records
Australian Securities and Investment Commission
Advice on regulation of companies.
Insurance
Compulsory insurances - Superannuation, Workers Compensation, 3rd Party
Desirable insurance cover - List areas you believe you need to be covered by insurance.
8. WORKING CAPITAL
When calculating how much working capital you need it may be necessary to allow for up to six months funds. This may be due to no sales or low sales, having to extend credit, buying too much or overheads being higher than expected.
After working through these details, the next step is to make a recommendation - either to begin or not to begin a business.
Recommendation:
Recommendations from the Study regarding the viability of putting the business idea into practice should be honest, short and direct.
These recommendations are not usually a straight "yes" or "no", but rather
"Yes, if . . . ." Or
"No, unless . . . ."
You use the feasibility study to help make your decision:
"Will this business idea work for me or not?"
9. SOURCES OF HELP
To write your Feasibility Study, you need to go to others for help and information. Don't try to do it all yourself when there are so many sources of assistance available.
Business Advisory Services
Information, business counselling, training workshops, research facilities, back up and support facilities, networking, and publications.
Accountant
Advise on all financial issues, assist in feasibility study, legal structure suggestions, assist in funding estimates, sourcing and applications, check books if buying an existing business.
Solicitor
Contracts, leases, legal representation.
Bank
Finance, information and support, leasing, advice on contracts, specialist services.
Business Advisers/Consultants
Someone to talk to, specialist advice, mentoring, negotiations, training, back-up.
Trade Associations
Membership and support, group deals, training, advice, research, industrial relations expertise, and networking.
Potential Suppliers
Information, back-up, promotional support, training, etc.
10. SOURCES OF INFORMATION
Own Research
Business Advisory Services, librarian, libraries, publications, directories, Chambers of Commerce, other business people.
Government Departments
Information and publications available from many Departments including the Australian Bureau of Statistics.
Local Council
Demographic reports, publications, studies, future plans for development.
Competitors
Check out your competition, their location, layout, advertising and service. This can be a great source for ideas - what are they doing right or wrong?
http://www.smallbiz.nsw.gov.au/frame.cfm?l=/business/starting/links.html&r=/business/starting/study.html
