Online Business Startup - Conducting A Feasibility Study
Once you've decided to start an online business, your next step is to do some research to validate to yourself that your idea is a good one. Or, perhaps you have several ideas that you need to decide upon. Either way, you've got to do a bit of research to help you determine whether it's going to be worth it to you to leave your job, start out on a part time basis, or abandon a particular idea.
I use three different methods in making these determinations.
1. Informal research
2. SWOT Analysis
3. Feasibility Study
In this article, I'm going to discuss the third one that I use - Feasibility Study.
By now, you may be wondering if it is really necessary to go through all this research before you start your online business. Without question, this research is a critical component in determining the likelihood of you having success in your business. Sure, these steps take some time and they can be a bit of a hassle, but believe me, you'll be much more confident once the research you complete show you have a good chance for success.
The final component of researching your business idea / product is the feasibility study. This will provide you with the final proof you need that your idea is viable and that you should move forward.
The Feasibility Study Will Answer Three Key Queries:
1. Will this product or service work?
2. What are the start up costs for this product or service?
3. Can this idea / business be profitable? If so, how long will that take?
4. Is this idea / product / service going to be worth all the time and effort that is going to be required to get this going?
This study is the most comprehensive of the three areas of research. It involves in depth investigation so that you'll have more detailed answers to questions in five key areas:
1. Your Costs
* How much will it cost me to develop and manufacture my product or service?
* What are the business costs that I'll face? (Break all the expenses down in a spreadsheet)
* What kind of money will I need to get this business off the ground?
* Do I have access to this kind of money? If not, do I have access to funding?
* When can I expect the business to turn a profit?
2. Your Competition
* Identify your competition. Who are your main and secondary competitors? Describe what they do really well and what it is that you think you can do better.
* What methods do my competitors use to market their products and services?
* Why do I feel that I can do a better job than my competition?
* Are my products or services easy for a competitor to copy? If so, what can I do to prevent this from happening?
3. The Market Or Industry You Are Competing In
* What is the current demand for my product or service? Is this likely to change in the future?
* Know your customers - who are they? Determine what your target market is.
* What is the size of the market I plan on selling to?
* Is the market growing, stagnant or retracting?
* What is are the best methods of reaching potential customers?
4. You And Your Team's Experience
* Will I need to have a management team, or do I have sufficient experience to go it alone?
* Do your employees have the experience required to effectively operate your business?
* List the skills that you have that pertain to your new business
* Identify sills that are missing or weak and how you will overcome this
* Identify how much time you can devote to your business.
5. Your Product Or Service
* What exactly is your product or service?
* How will it be utilized by my customers?
* What vehicle will you use to sell your product or service?
* How will my product or service be delivered to my customers?
* What kind of testing is needed to ensure my product or service will function as planned?
You may look at this study as something that takes far too much effort. Don't fall into that trap! Be sure that when you answer the question above, back them up with detailed research! Otherwise, your wasting your time.
The best way to complete this study is to write each answer up in a one page summary that covers what you've discovered. The summary needs to answer the 5 basic questions while providing you with the proof that you need for your own piece of mind that your business idea is indeed a viable one. Let's face it - there will be no one checking on the results of this study, but if you are not willing to get this done completely and correctly, what chance do you really think you have of running a successful online business? If you are cutting corners before you even get your business off the ground, I don't give you much of a chance of success once you open for business.
I use three different methods in making these determinations.
1. Informal research
2. SWOT Analysis
3. Feasibility Study
In this article, I'm going to discuss the third one that I use - Feasibility Study.
By now, you may be wondering if it is really necessary to go through all this research before you start your online business. Without question, this research is a critical component in determining the likelihood of you having success in your business. Sure, these steps take some time and they can be a bit of a hassle, but believe me, you'll be much more confident once the research you complete show you have a good chance for success.
The final component of researching your business idea / product is the feasibility study. This will provide you with the final proof you need that your idea is viable and that you should move forward.
The Feasibility Study Will Answer Three Key Queries:
1. Will this product or service work?
2. What are the start up costs for this product or service?
3. Can this idea / business be profitable? If so, how long will that take?
4. Is this idea / product / service going to be worth all the time and effort that is going to be required to get this going?
This study is the most comprehensive of the three areas of research. It involves in depth investigation so that you'll have more detailed answers to questions in five key areas:
1. Your Costs
* How much will it cost me to develop and manufacture my product or service?
* What are the business costs that I'll face? (Break all the expenses down in a spreadsheet)
* What kind of money will I need to get this business off the ground?
* Do I have access to this kind of money? If not, do I have access to funding?
* When can I expect the business to turn a profit?
2. Your Competition
* Identify your competition. Who are your main and secondary competitors? Describe what they do really well and what it is that you think you can do better.
* What methods do my competitors use to market their products and services?
* Why do I feel that I can do a better job than my competition?
* Are my products or services easy for a competitor to copy? If so, what can I do to prevent this from happening?
3. The Market Or Industry You Are Competing In
* What is the current demand for my product or service? Is this likely to change in the future?
* Know your customers - who are they? Determine what your target market is.
* What is the size of the market I plan on selling to?
* Is the market growing, stagnant or retracting?
* What is are the best methods of reaching potential customers?
4. You And Your Team's Experience
* Will I need to have a management team, or do I have sufficient experience to go it alone?
* Do your employees have the experience required to effectively operate your business?
* List the skills that you have that pertain to your new business
* Identify sills that are missing or weak and how you will overcome this
* Identify how much time you can devote to your business.
5. Your Product Or Service
* What exactly is your product or service?
* How will it be utilized by my customers?
* What vehicle will you use to sell your product or service?
* How will my product or service be delivered to my customers?
* What kind of testing is needed to ensure my product or service will function as planned?
You may look at this study as something that takes far too much effort. Don't fall into that trap! Be sure that when you answer the question above, back them up with detailed research! Otherwise, your wasting your time.
The best way to complete this study is to write each answer up in a one page summary that covers what you've discovered. The summary needs to answer the 5 basic questions while providing you with the proof that you need for your own piece of mind that your business idea is indeed a viable one. Let's face it - there will be no one checking on the results of this study, but if you are not willing to get this done completely and correctly, what chance do you really think you have of running a successful online business? If you are cutting corners before you even get your business off the ground, I don't give you much of a chance of success once you open for business.
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