TECHNO - Quiz Chap3 Flashcards
the process of determining whether
a business idea is viable.
Feasibility Analysis
The proper time to conduct a feasibility analysis is _______________ through the prospects for a new business.
early in thinking
Spending the time and resources necessary to move forward with the business idea depends on:
PIOF
Product/Service Feasibility
Industry/Target Market Feasibility
Organizational Feasibility
Financial Feasibility
If the business is feasible in all PIOF areas, ____________
Proceed with business plan
If the business is NOT feasible in all PIOF areas, ____________
Drop or rethink business idea
Is an assessment of the overall appeal of the product or service being proposed
Product/Service
Feasibility Analysis
Components of product/service
feasibility analysis
Product/Service Desirability
Product/Service Demand
a one-page description of a business
that is distributed to people who are asked to provide feedback on the potential of the business idea.
concept statement
The feedback from the Concept Test will hopefully provide the entrepreneur:
- A sense of the viability of the product or service idea.
- Suggestions for how the idea can be strengthened or “tweaked” before proceeding further.
There are two steps to assessing product/service demand.
Step 1: Talking Face-to-Face with Potential Customers.
Step 2: Using Online Tools, Such as Google AdWords and Landing Pages, To Assess Demand.
T or F
In some cases, talking with potential customers will cause an entrepreneur to abandon an idea
T (true)
Is an assessment of the overall
appeal of the industry and the
target market for the proposed
business.
Industry/Target Market
Feasibility Analysis
a group of firms producing a similar product or service.
industry
A firm’s target market is __________
the limited portion of the industry it
plans to go after.
Components of industry/target market
feasibility analysis
Industry Attractiveness
Target Market Attractiveness
Characteristics of Attractive Industries
YEFGSNHN
Young
Early in Life cycle
Fragmented
Growing
Selling “must have” products or services
Not Crowded
High operating margins
Not highly dependent on the historically low price of key raw materials.
The challenge in identifying an attractive target market
find a market that’s large enough for the proposed business but is yet small enough to avoid attracting larger competitors.
T or F
Assessing the attractiveness of a target market is easier than assessing the attractiveness of an entire industry.
F; is tougher
must be employed to find information to assess the attractiveness of a specific target market.
ingenuity
Is conducted to determine whether a proposed business has sufficient management expertise, organizational competence, and resources to successfully launch a business.
Organizational Feasibility
Analysis
This analysis focuses on NON-FINANCIAL resources
Organizational Feasibility
Analysis
Components of organizational
feasibility analysis
Management Prowess
Resource Sufficiency
A proposed business should candidly evaluate the prowess, or ability, of its management team to satisfy itself that
management has the requisite passion and expertise to
launch the venture.
Management Prowess
Two of the most important factors in Management Prowess
Passion for the business idea
Extent of understanding of the market the firm will participate
This topic pertains to an assessment of whether an entrepreneur has sufficient resources to launch the
proposed venture.
Resource Sufficiency
To test resource sufficiency, a firm should
list the 6 to 12 most critical nonfinancial resources that will be needed to move the business idea forward successfully.
T or F
If critical resources are not available in certain areas, you can still proceed with the business idea.
F; impractical to proceed
Examples of nonfinancial resources
- Affordable office space.
- Lab space, manufacturing space, or space to launch a service business.
- Availability of contract manufacturers or service providers.
- Key management employees (now and in the future).
- Key support personnel (now and in the future).
- Ability to obtain intellectual property protection.
- Ability to form favorable business partnerships.
Is the final component of a
comprehensive feasibility analysis.
Financial Feasibility
Analysis
Components of financial
feasibility analysis
Total Start-Up Cash Needed
Financial Performance of Similar Businesses
Overall Financial Attractiveness of the Proposed Venture
Estimate the proposed start-up’s financial performance by
comparing it to similar, already established businesses.
Ways of comparing the start-up’s financial performance with existing businesses:
- checking reports of individual firms
- simple observational research
T or F
In the feasibility analysis stage, the extent to which a business opportunity is positive relative to each factor is based on an estimate rather than actual performance.
T
Financial Factors Associated With Promising Business Opportunities
SHAIA
- Steady and rapid growth in sales during the first 5 to 7 years in a clearly
defined market niche. - High percentage of recurring revenue—meaning that once a firm wins a client, the client will provide recurring sources of revenue.
- Ability to forecast income and expenses with a reasonable degree of certainty.
- Internally generated funds to finance and sustain growth.
- Availability of an exit opportunity for investors to convert equity to cash.
it’s a tool that can be used in the initial pass at determining the feasibility of a business idea
First Screen
If a business idea cuts muster at First Screen, the next step is ______________
to complete a business plan.
refers to the total cash needed to prepare the business to make its first sale.
first issue
