The feasibility of starting a business

Business basics

• Business survival: 50-70% in 1st 5 years
• Different for restaurant viability: 60 percent close or change ownership in the first year of business, 80 percent fail (Parsa, Self, Sydnor, et al, 2011)

Feasibility Analyses Tell You

• Management team possess entrepreneurial success characteristics
• Market conditions
• sales revenue, costs, B/E
• Associated pitfalls
• If your idea is still attractive (at the end of the process)

Steps: Asess the Market

• Are there enough customers willing to pay your price to cover expenses and earn a profit
• This is THE feasibility question!
• You must address a PAIN to establish competitive advantage
• (better, more convenient, less expensive, higher quality,better location, exclusivity etc)
• Can you persuasively communicate it?

Market, con't

• How many customers?
• Who are they?
• WHat are they like?
• Who is your competition (where do they go for the product;/service now)
• Can you wait out customer inertia?

Financial Feasibility

• Sales estimation methods
• industry data
• market potential/share
• customer counts
• competitive locations
• similar businesses