Entrepreneurship Feasibility Re-Analysis

Entrepreneurship Feasibility Re-Analysis

The goal of this exercise is begin to learn how to evaluate business opportunities; specifically, to understand how to determine the feasibility of a venture, including:
Solving a problem and creating value that capitalizes on a real business opportunity,
Adapting your product idea to a specific target market, and a compelling case that these people will actually buy the product,
The likelihood of sustainable sales (based on the business plan), and the potential for margins and costs that leave you with a little profit each year,
The expertise of the team to actually deliver on their value proposition, i.e. can they do the activities necessary to make customers happy,
The resources that the team currently has  including access to partnerships and social networks  which would allow them to pursue the business, and
The overall cost structure, including the investments needed to maintain positive cash flow during the start-up of the business.

Each student will choose one of ten business plans to analyze  these have been written by teams of students from one of my recent Entrepreneurship courses (MBA and undergrad in 2015/2016). Each plan includes a Word file and an Excel spreadsheet (although some teams incorporated the spreadsheets right into their text file). All cases are loaded on Blackboard.

Your goal is to determine the viability of their ideato literally re-analyze their proposal using the concepts youve learned in class. This is a tricky assignment, because the students themselves have already aimed to prove the feasibility of the opportunity and business idea. Some were more successful than others. Your job is to look at the case objectively, and consider all the elements that we discussed in class, from the Gartner book, and elsewhere. In effect you are doing a due diligence analysis of this business plan, to make YOUR assessment as to its feasibility, given everything you see. In addition, youll make some tangible recommendations  what you would do to improve the feasibility of the venture, and/or what next steps you would take in organizing the venture. In other words, the good assignments will identify an opportunity/business model that would be successful.

Start by reading the plan, and carefully review the numbers in the spreadsheet. Do some of your own research: Is this a unique business idea Have they identified a real need, or compelling opportunity Do the numbers of potential customers make sense Can you believe everything they say In your analysis be sure to incorporate these elements. [Italics refer to the recommendations you might make.]

1) Examine the assumptions, including the number of potential customers, the rate of sales, and the projected earnings for each month. Do these assumptions make sense, given what youve read and researched on your own If not, experiment with making changes to their projections based on your own assumptions.
2) Take another look at their marketing plan. Will their approach be effective at reaching their target market, both now and into the future Have they put together a smart combination of outreach, advertising and promotions in order to get the kinds of sales theyre projecting What other sales methods should they pursue
3) Look at the cost of goods sold. Are those numbers realistic How are they sourcing their materials Do they already have networks in place, or are they hoping to figure it out as they go How would you re-design their supplies
4) What about the rate of growth  what are they projecting Does this follow from their assumptions, and their analysis of the potential market If they grow slower than they say, what happens to their cash flow and overall viability of the business What changes would you make in this area
5) Consider the start-up costs, and the entire amount of capital theyll need. Most businesses need around $20,000 to $50,000 to get started. Some require more than $100,000. Whatever they need, ask how feasible this amount is What is their plan to get the money Do you believe they can do it How might they restructure the plan so they theyd need less money How could they do it will less start-up costs
6) Take a step back and ask: Who are the founders Look at their resumes or bios. Does one of them have expertise in the industry theyre entering Does anyone on the team have experience working in a small business or a start-up Given their skills and experience, do you think they can pull this off If not, how might you augment their expertise  who would you bring on to help, or how would you alter the plan to take advantage of the experience they do have

Alternatively, you can use the Eight Cs from the Gartner text as the basis for your analysis  the categories we went through, and which are in the updated Feasibility powerpoint, and summarized on the next page. These categories essentially cover the same issues as Im suggesting above.

Overall your goal is to (1) analyze the feasibility of this plan and the business it describes, and (2) offer concrete suggestions for how to improve the feasibility and/or take the next steps in enacting the plan.
Gartners Feasibility Framework (The Eight Cs)
1. Consideration  Value Creation
Does the business solve a real problem or need
How much value is created, i.e. how valuable is the solution

2. Customers  Market Analysis
Has your Ideal Customer been clearly defined Does this ideal customer exist
Are you convinced about a continued growth of this customer segment

3. Competition Industry Analysis
Can a new venture actually enter this industry (Factors in favor and against).
What is the potential (or a pathway) toward sustainable competitive advantage

4. Concept  How will the business make money
a) Revenue Model: How many streams How realistic Can these expand over time
b) Cost Drivers: Cost of revenues Fixed cost structure Start-up Costs
c) Investment/ Economics: Cash flow needs Gross Margins Operating Margins
d) Critical Success Factors: Clear plans for solving the big hurdles

5. Connections  Distribution Channels; Supply Chains
Can you reach your customers in a cost-effective way For both Marketing & Sales.
What relationships do you currently have with your potential suppliers

6. Capital  Access and Cost of Key Resources
Human Capital: Does the team have the experience and expertise
Social Capital: Are your networks strong and diverse enough to solve key problems
Financial Capital: Whats the minimum necessary Can you access this $$
Resources in general: Do you have access to the most important resources you need

7. Commitment
Is there a clear fit between your interests/aspirations and this business idea
Is the team positioned to go the distance

8. Conclusion Overall Assessment
Taking everything into account, do you believe its feasible to start this business
How can the feasibility be improved Provide very specific suggestions

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