Unit 3: Idea Feasibility Analysis

3a. Evaluate the potential success of entrepreneurial activities based on tools such as SWOT and competitive analysis

  • What are the mix of tools entrepreneurs can use to determine if their idea is a good one?
  • How might an entrepreneur conduct primary and secondary research on their idea?
  • What is a unique selling proposition?

Once an organization or a person has an idea for a business, it is important to research the idea to ensure it is viable. Entrepreneurs can use primary research, which they can do themselves at the cost of time and money. Secondary research is a type of research where a person finds already available data. 

For an idea to be recognized as an opportunity, it must meet three criteria: significant market demand, significant market structure and size, and significant margins and resources.

Another important step to take is to perform a competitive analysis. This involves listing competitors' strengths, weaknesses, quality levels, price points, and other factors. This can give an entrepreneur a good picture of the competition to determine a viable idea. SWOT analysis, which lists strengths, weaknesses, opportunities, and threats, is also a good way to determine if moving forward with an idea makes sense. A PEST analysis can also be used, which looks at external political, economic, societal, and technological factors to help determine the validity of an idea. Many other tools can be used, such as the VRIO Framework. Using various tools will help the entrepreneur clearly define their idea and their ability to move forward with the idea.

Some entrepreneurs will use the three circles to help them identify their unique selling proposition. An entrepreneur also wants to consider the business model, which includes addressing the company's offering, customers, financial viability, and infrastructure. 

Awareness of the type of economy the business will operate in is important because it can help the entrepreneur determine the viability of the product or service they wish to offer.

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3b. Analyze a feasibility analysis for a new proposed venture, such as by using a Business Model Canvas

  • What can a financial analysis tell an entrepreneur about their business idea?
  • How can a Business Model Canvas be used to hone in on the details of a business idea?
  • How can the customer empathy map be used to help understand the value proposition?

When entrepreneurs use feasibility analysis, they look at three aspects of their idea: organizational, financial, and market. A financial analysis seeks to project revenue and expenses. It might include a one-year profit and loss projection, breakeven calculations, and other financial estimates. A market feasibility analysis examines the overall market and focuses on the potential market share the entrepreneur can obtain. The organizational feasibility analysis focuses on what resources will be needed, how they might be obtained, and the abilities of the management team or entrepreneur to carry out the duties required to make the business successful. 

Using a Business Model Canvas can also help determine feasibility. A Business Model Canvas can help the entrepreneur map or lay out the initial concept of their business. Some businesses also use the customer empathy map, which portrays the customer's pain points, such as fears and frustrations, and the gains they hope to achieve. This type of map can help companies determine how their proposed idea is different, serves the customer, and creates a unique value proposition. 

Once an entrepreneur has done the necessary research, they may need to report this in a feasibility report, for example, if they are attempting to obtain outside funding. This would likely be part of the business plan. 

To review, see:

 

Unit 3 Vocabulary

This vocabulary list includes terms you will need to know to successfully complete the final exam.

  • Business Model Canvas
  • competitive analysis
  • customer empathy map
  • financial analysis
  • market feasibility analysis
  • organizational feasibility analysis
  • primary research
  • secondary research
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