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Business feasibility means determining whether an idea will work at a high level. Part of the test is to see if the business can sell enough to support itself and pay all the expenses.
In the consulting process, feasibility analysis begins by determining the market you want to reach. Who is the customer? Where are they located? What is a potential they might spend in any given month on your product or service. Considerations include demographics, geographics, and psychographics to determine the potential size of a customer base.
The next step is determining start-up and monthly expenses required to support the sales of the business. The monthly expenses are usually the easiest to obtain by calling potential vendors and landlords. You also need to estimate payroll and benefits expenses, as well as equipment and building or remodeling.
Once the customer base, possible sales, start-up costs, and monthly ongoing costs are computed you can put figures into a spreadsheet to determine whether sales will be enough to support the costs of the business. Consultants use industry data to help create the best-case scenario for individuals pursuing risky endeavors. The CED knows that 80% of businesses fail in 7 years, and wants to avoid those outcomes for our clients.
Increase your chances of success by planning, researching. and getting advice. Let our business consultants help you by providing valid information and an objective, honest viewpoint regarding the viability of your idea.
Funded in part through a Cooperative Agreement with the U.S. Small Business Administration, Minnesota Department of Employment and Economic Development and regional support partners. All opinions, conclusions or recommendations expressed are those of the author(s) and do not necessarily reflect the program sponsors. Programs are open to the public on a nondiscriminatory basis. Reasonable accommodations for persons with disabilities will be made if requested at least two weeks in advance. Contact UMD CED at 218-726-7298.