Perhaps the most crucial problem you will face after experiencing an interest in starting a new business or capitalizing on an apparent opportunity in your existing business will be determining the feasibility of your idea. Getting into right business at right time is a simple advice, but advice that is extremely difficult to implement. The high failure rate of new businesses and products indicates that very few ideas result into successful business ventures, even when introduced by well-established firms. Too many entrepreneurs strike out on a business venture so convinced of its merits that they fail to thoroughly evaluate its potential.
This checklist should be useful in evaluating your business idea. It is designed to help you screen out ideas that are likely to fail before you invest extensive time, money and effort in them.
A feasibility study involves gathering, analyzing and evaluating information with the purpose of answering the question: “Should I go into this business?” Answering this question involves a preliminary assessment of both personal and project considerations.
General personal considerations
The first seven questions ask you to do a little introspection. Are your personality characteristics such that you can both adapt to and enjoy small business ownership/management?
1) Do you like to make your own decisions (Yes / No)
2) Do you enjoy competition? (Yes / No)
3) Do you have willpower and self-discipline (Yes / No)
4) Do you plan ahead? (Yes / No)
5) Do you get things done on time? (Yes / No)
6) Can you take advice from others? (Yes / No)
7) Are you adaptable to changing conditions? (Yes / No)
The next series of questions stress the physical, emotional and financial strains of a new business
1) Do you understand that owning your own business may entail working 12 to 16 hours a day, probably 6 days a week, and may be on holidays? (Yes / No)
2) Do you have the physical stamina to handle the business? (Yes / No)
3) Do you have the emotional strength to withstand the strain? (Yes / No)
4) Are you prepared to lower your standard of living for several months or years? (Yes / No)
5) Are you prepared to lose your savings? (Yes / No)
Specific personal considerations?
1) Do you know which skills and areas of expertise are critical to the success of your project? (Yes / No)
2) Do you have these skills? (Yes / No)
3) Does your idea effectively utilize your own skills and abilities? (Yes / No)
4) Can you find personnel that have the expertise you lack? (Yes / No)
5) Do you know why you are considering this project? (Yes / No)
6) Will your project effectively meet your career aspirations? (Yes / No)
The next three questions emphasize the point that very few people can claim expertise in all phases of a feasibility study. You should realize your personal limitations and seek appropriate assistance where necessary ( i.e marketing, legal, financial )
1) Do you have the ability to perform the feasibility study? (Yes / No)
2) Do you have the time to perform the feasibility study? (Yes / No)
3) Do you have the money needed to have the feasibility study done? (Yes / No)