Chapter 5 conducting a feasibility analysis and crafting a winning business plan

Chapter 5 conducting a feasibility analysis and crafting a winning business plan

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  Chapter 5 Conductinga Feasibility Analysis and Crafting a Winning Business Plan planning is bringing the future into the present so that you can do something about it now- Alan Lakein if u wait until all the lights are “green” before you leave home, you’ll never get started on your trip to the top. Zig Ziglar
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  Conducting a FeasibilityAnalysis Definition of feasibility study The process of determining whether or not entrepreneur’s idea is a viable foundation for creating a successful business. Elements of a Feasibility Analysis 1) Industry and market feasibility 2) Product or service feasibility 3) Financial feasibility
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  Conducting a FeasibilityAnalysis 1) Industry and market feasibility Good starting point - A basic analysis of the industry and targeted market segments - The focus- - 1) To determine how attractive an industry is overall as a “home” for a new business - 2) To identify possible niches a small business can occupy profitably.
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  Conducting a FeasibilityAnalysis The Five Forces Model a model that recognizes the power of five forces-rivalry among competing firms, bargaining power of suppliers, bargaining power of buyers, threats of new entrants, and threat of substitute products or services-on an industry. Michael E. Porter.
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  Conducting a FeasibilityAnalysis 2) Product or Service Feasibility Analysis an analysis that determines the degree to which a product or service idea appeals ot potential customers and identifies the resources necessary to produce the product or provide the service. Two methods that can be used: a) Primary research Information that an entrepreneur collect firsthand and analyze b) Secondary research Information that has already been compiled and is available for use, often at a very reasonable cost or sometimes even free. EG: customer surveys and questionnaires, focus group, market research, articles, local data and www
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  Conducting a FeasibilityAnalysis Prototypes an original, functional model of a new product that entrepreneurs can put into the hands of potential customers so they can see it, test it and use it. In home trials a research technique that involves sending researchers into customers’ home to observe them as they use the company’s product or service.
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  Conducting a FeasibilityAnalysis 3) Financial Feasibility Analysis-the major elements to be included in a financial feasibility analysis include the initial capital management, estimated earnings and resulting return on investment. a) Capital requirements-estimated start up capital. b) Estimated earnings-an entrepreneur should forecast the earning potential of the proposed business. c) Return on investment-the final aspect of the financial feasibility analysis combines the estimated earnings and the capital requirements to determine the rate of return the venture is expected to produce.
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  Crafting a WinningBusiness Plan Why Develop a Business Plan? Business plan A written summary of an entrepreneur’s proposed business venture, its operational and financial details, its marketing opportunities and strategy, and its managers’ skills and abilities.
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  Crafting a WinningBusiness Plan The elements of a Business Plan 1) Title page and table of contents 2) Executive summary 3) Vision and mission statement 4) Company history 5) Business and industry profile 6) Business strategy 7) Description of the company’s product or service 8) Marketing strategy 9) Documenting market claims 10) Competitor analysis 11) Description of the management team 12) Pro forma (projected) financial statements 13) The loan or investment proposal
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  Crafting a WinningBusiness Plan What Lenders and Investors Look For in a Business Plan Five C’s of credit Criteria lenders and investors use to evaluate the creditworthiness of entrepreneurs seeking financing capital, capacity, collateral, character and conditions.