The Importance of a Business Feasibility Study : You have a great business idea and can’t wait to bring it to life and share it with the world. Having pictured it in your head and you want to get started and hit the ground running.
Before you jump in with both feet and invest the money to get it going, take the time to sit back and put it all on paper. By investing your time and energy into analysing the feasibility of your business idea, you can map out both the opportunities, and the risks, of creating and implementing your new business.
Although the thought of writing out all of the details one by one on paper doesn’t sound that exciting, it’s an important step to take in order to really study all of the steps that you need to take – and risks you need to be aware of – before you launch your new business.
There’s no step-by-step guide in how to specifically analyse your business idea, but here are a few key questions to ask yourself in order to really review the feasibility of your business concept:
Company Name & Brand Name
What will your company be named? Naming, or branding, your business will be a critically important step. To set your business apart from the rest, communicate what your company is or does, and catch the attention of the potential customers, you want to make sure you have a unique name. In fact, you might want to consider a couple of different names.
Once you have your number one pick, you’ll need to make sure it hasn’t already been taken or registered by another business. (If your first name choice is taken, you’ll need to consider other names.) A couple of great resources to verify that the name hasn’t already been used are the Intellectual Property Office of New Zealand and the NZ Companies Register. Another consideration regarding the name of your business will be to check and see if a website name is available (the URL), as well as associated social media name handles for your business.
Creating a Business Plan
Creating and implementing a business plan will help you lay out the vision for your company. In this plan you will write out your strategies and game plan for developing and growing your business. This is not a one-time document. As your business grows, so too will your business plan. New goals and new avenues may be added, or you may decide to alter the focus of your company based on changing customer needs. Make it a priority to revisit your business plan annually with your business partner, accountant, or other trusted advisor.
What Makes Your Business Different?
There are endless numbers of businesses out there – what makes your business different or unique? Know what key point(s) set you apart from the competition so that you can effectively communicate that information to your customers. Is it a new product that doesn’t exist anywhere else, a new type of technology or service, or a new way of approaching the market that hasn’t been done before? Whatever your special product, service, or technique is, you will need to sell that information clearly and attractively to the public in order to capture their attention, and hopefully their business.
Establish a Business Budget
Although it’s not always the most exciting part of the business feasibility review, it is critical to honestly and realistically develop a budget for your company. You may be the big picture person, great with sales and marketing, but not necessarily a number cruncher. If you recognise this isn’t your main strength, now is the time to enlist the help of an accountant or financial advisor to establish the budget. They will need to help you establish a budget that takes into account fixed and variable costs, potential cost increases, taxes, business expenses, business insurance, and develop a financial plan for possible unexpected expenditures.
A very important part of your budget needs to be allotted to insurance. There are many different types of policies that help you to protect your business. Discussing your insurance needs with a professional can help you know what costs need to be included into your budget. Quotes for insurance can be obtained from a range of sources. You can contact the insurance companies directly, however this generally involves a lot of running around if you want to compare quotes from a variety of insurers.
Another option for many business owners is to use an insurance broker or adviser who can obtain quotes on your behalf from a wide range of companies offering insurance. BizCover has access to a network of insurance companies and can quickly provide you many policy options to choose from to secure the most suitable insurance to your business.
It’s better to start off on the right financial foot now, than to try to fix any problems later due to poor planning.
Who is your target customer? What product or service do they want or need, and how can you help them? Why should they choose your company? Asking yourself these questions, and knowing the answers, helps you identify your target customers, how you can help them, and aids in identifying the size of your potential customer base. When you are clear on your targeted customer, it will help you know how to communicate your company’s strengths and why they need to consider using your business to make their lives easier (or better!).
Knowing your competition — their strengths, weaknesses, pricing, products or services – will help you differentiate your company and assist in communicating what you have to offer that is better, more valuable, or unique compared to the current competitive businesses.
This information is a key component of your business feasibility review. The research you conduct into your potential competition will help you know who or what you may be up against should you decide to execute your business.
This is another critical area that needs to be analysed when conducting your feasibility study. By forecasting the numbers and anticipated revenue your business could bring in, you will start to see a very clear picture of where your strengths and weaknesses could potentially be in launching your business. It’s exhilarating to develop a business idea and want to jump right in to launching it, but it’s crucial to be realistic and unbiased about whether it financially makes sense. Forecasting will help bring this idea into focus.
Skills and Expertise
You have the great business idea, and the enthusiasm to get it started, but do you possess the right skills and expertise to execute the business? If not, is it something you can get trained on, learn, and become an expert on the subject or skill? Does it make more sense to be the big picture CEO and hire an expert staff that already has the experience and know-how to get this done? Analysing this key component of the business and having a clear understanding of what it will take to get it done, and done right, will be one of the most major areas that need to be decided on in your feasibility study.
Understanding Required Compliance Standards
As with any business, there are compliance standards which must be followed. Be clear on which standards pertain to your business by researching and following the relevant compliance requirements. Help is available through agencies and industry representatives which can walk you through the process. You can find this information at business.govt.nz.
Another important area of compliance is maintaining proper business insurance. This is an area that is crucial to include in your business feasibility study. You need to protect the business you’ve worked so hard to develop.
New business ventures are certainly very exciting and require a lot of effort. Knowing all of the benefits and risks, by conducting a thorough feasibility study, will enable you to make informed decisions and move forward with a well thought-out plan. Congratulations and best of luck!
THE BELOW WAS CUT OUT OF THE CONCLUSION DO NOT USE
Comprehensive business insurance should be established in order to protect your overall business, and to give you peace of mind so that you can concentrate on making your business successful. Additional policies are available to protect different aspects of your business, too. Areas such as employer’s liability, professional indemnity, public liability, as well as industry specific insurance coverage, are all important components of your overall business plan to protect your company.
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