Will my business idea work?

It’s important to look critically at your business idea when determining if it is worth investing your time and money. A feasibility study covering a particular aspect of business can help to reveal if your idea has a good chance of success.

Your feasibility study should include an assessment of the market and commercial viability.

Market feasibility

You need to have a clear idea of the market in which you will be operating your business. Your market feasibility should cover the following:

  • What is the demand for your products or services?
  • What type of customers will buy your products or services?
  • The number of potential customers, who they are and their location.
  • Why will your products or services appeal to potential customers?
  • How do you intend to sell your products or services?
  • Who are your competitors?
  • Do your products or services fill a need not already met by your competition?
  • How do your products or services rate in terms of price and quality compared to your competitors?
  • What are the strengths and weaknesses of your main competitors?
  • What is your unique selling proposition?
  • Are there any barriers to entering the market?

Commercial feasibility

Once you have determined that there is a market for your products or services you need to consider the financial requirements to make it viable. Your commercial feasibility should cover the following:

  • How much money do you need to make to meet your living expenses?
  • How long do you expect to be in business before you make your first sale?
  • How much money do you need to start up?
  • How do you intend to fund the business during the start up phase?
  • Estimate your fixed and variable costs.
  • What price would your customers pay for your products and services?
  • What is your sales forecast?
  • What is your breakeven point?
  • How long will it take to reach breakeven sales volume?
  • How much working capital will you need to sustain operations?
  • Return on investment
  • Cash flow analysis

Other considerations

You should also consider the following as part of your feasibility:

  • Are there any regulatory requirements you must satisfy?
  • Do you need to obtain protection for your intellectual property?
  • What factors could potentially delay your business?
  • Do you have the required skills to get the product or service to market?

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