Feasibility analysis involves assessing your new business idea in detail to determine if it will be viable. This can build on any initial research you've already done. Show A feasibility analysis helps you consider the costs and activities required to set up and run a business, and how to make an informed decision about whether to start a business and how to do it. Most importantly, it will give you a picture of the costs involved that you'll need to consider and the revenue and profit you can realistically expect to generate. On this page
To determine if your business idea is practical and achievable, there are areas you can investigate and study. Ask yourself these practical questions and how they relate to your situation as a starting point.
How to analyse the feasibility of your businessTo conduct a feasibility analysis, you will need a detailed understanding of:
A feasibility analysis – to provide details for a formal business plan – may be necessary when preparing a pitch to investors, lenders or potential partners for your business, and when applying for government funding.
Follow these steps to analyse the feasibility of your business.
There are different types of feasibility analysis that you can use. Each type will focus on a specific part of your business operations.
Use this type of analysis to determine if your business has adequate economic resources to meet its goals (e.g. funding, capital, profit). Consider:
Use this type of analysis to determine if your business successfully meets the necessary legal requirements to operate (e.g. business registrations, permits and licences). Consider:
Use this type of analysis to determine if your business has the operational resources it requires to be successful (e.g. business structure, premises, suppliers, human resources and equipment). Consider:
The business plan template contains an action checklist that you can use to help assess your business's financial, legal and operational feasibility. Read more about writing a business plan.
Financial viability is your business's capacity to generate enough income to meet its operating costs while maintaining required service levels. Make sure you've calculated the costs required to start your business and that you have funds to cover these. To assess the financial viability of your business, consider if your business:
You will need to:
Your cash flow, key profit figures and budget will contribute to your business plan. You might choose to compile this financial information yourself or work with a financial adviser. For more information, see:
'Starting lean' describes the method for starting a business or introducing a product or service as efficiently as possible. Starting lean can help you to determine the feasibility of your business while minimising costs, time commitment and resources. Starting lean may involve:
When the business concept, idea or product is validated, you can proceed to establishing your business. Product and service viabilityProduct and service viability is a type of analysis that looks specifically at considerations associated with business products and services, rather than the business itself. Product viability refers to the potential that business products have to generate demand in the market and be profitable. To help you determine if a product is viable, consider the following:
Long-term viability of products and servicesIt can be beneficial to consider the long-term value of your business products or services when determining their viability and how much to invest in production or marketing. Consider the following:
Customer needs now and in the futureCustomers are the end-users of your products and services. Considering both the current and future needs of your customers is key to determining if your business idea, product or service is feasible. To help ensure that your customer needs are met, consider:
You can use the following checklist to help you consider if your business idea, product or service will be feasible.
A business model outlines the core attributes of a business. It defines the business products and services, target market and costs, and details a high-level strategy for how the business plans to make a profit. You should consider the long-term operation of the business when assessing its feasibility – the business must be viable in the start-up phase and be able to maintain this viability into the future. Consider:
Choosing the ideal teamPart of analysing a business's feasibility is analysing its human resources. You should consider the attributes people, within and outside the business, should have to help your business succeed.
Other key people may benefit your business and help you build capacity for growth and improvement, such as:
Also consider...
|