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Entrepreneurship
Lecture 4
Mr. Ibrahim Mohamed Ali
BBA,MBA (HRM)
Human Resource Director
Hormuud University
Mogadishu-Somalia.
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 Section 4
Conducting a feasibility Analysis and

Designing Business Model.

 Idea Assessment
Idea assessment:

The process of examining a particular

need in the market, developing a
solution for that need, and
determining the entrepreneur’s
ability to successfully chance the
idea into a business.
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 Feasibility Analysis
 Is a particular idea a possible foundation
for creating a successful business?

 Feasibility study addresses the question:

“Should we continue with this business
idea?”

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There are basically six parts to effective
Feasibility Study

1. The Project Scope

2. The Current Analysis

 
3. Requirements 

4. The Approach 

5. Evaluation 

6. Review 
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Environmental Forces
and New Ventures

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 Industry and Market Feasibility
Analysis
Evaluate industry attractiveness using six
macro forces:
1. Sociocultural
2. Technological
3. Demographic
4. Economic
5. Political and legal
6. Global
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Elements of a Feasibility Analysis

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 Product or Service
Feasibility Analysis
Determines the point to which a product or service
idea demands to possible customers and identifies the
resources necessary to produce it.
Two questions:
1. Are customers willing to purchase our product
or service?
2. Can we provide the product or
service to customers at a profit?

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 Marketing Research
Marketing research: is the systematic gathering,
recording and analyzing of data about problems
relating to the marketing of goods and services.

Market research will give you the data you need to

identify and reach your target market at a price
customers are willing to pay.
Marketing research focuses and organizes marketing
information to:
current and upcoming problems in the current market
Reduce business risks
Identify sales opportunities
Improve plans of action
 • Market research will identify movements that affect
sales and profitability.
• Population shifts
• Legal developments
• The local economic situation should be monitored to
quickly to identify problems and opportunities

• Keeping up with competitors' market strategies also is

important.
• Every small business owner must ask
the following questions to plan
effective marketing strategies:

Who are my loyal customers and

potential customers?
What kind of people are they?
Where do they live?
Can and will they buy?
 Why do market research?
To Know the People will not buy products or services they do not
want.
Learning what customers want and how to present it drives the
need for marketing research.

• Small business has an control over larger businesses in this regard.

• Small business owners have a sense of their customers' needs
from years of experience, but this informal information may not
be timely or relevant to the current market.
 How to do market research
• Analyze returned items.

• Ask former customers why they moved.

• Look at competitors’ prices.

• Formal marketing research simply makes this familiar process logical. It

provides a framework to organize market information.
 Market Research

Primary research:
Collect data firsthand and analyze it.

Secondary research:
Gather data that already has been compiled and
analyze it.

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Primary & Secondary Research Techniques
Primary Research
 Customer surveys and questionnaires
 Focus groups
Secondary research:
 Market research
 Forecasts
 “Articles
 Local data
 Internet
 Trade associations and business directories
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Financial Feasibility Analysis
 Capital requirements: an estimate of how much start-
up capital is required to the business.
 Estimated earnings: forecasted income statements.
 Time out of cash: the total cash it will take to sustain
the business until the business achieves break-even
cash flow.
 Return on investment: combining the previous two
estimates to determine how much investors can
expect their investments to return.

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 Entrepreneur Feasibility
Is this idea right for me?
Evaluate entrepreneurial willingness: knowledge,
experience, and skills necessary for
entrepreneurs to be successful.
Evaluate whether the business will be able to
generate enough profit to support everyone’s
income needs.

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What is a Business Model
Business model – A plan for the
successful operation of a business,
identifying sources of revenue, the
future customer base, products, and
details of financing.
Business model – set of planned
activities designed to result in a profit in
a marketplace.
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 Measurement of the design process
Product Quality – How good is the product.
Product Cost – What is the manufacturing cost.
Development Time – How quickly was the product
developed.
Development Cost – How much was spent to develop the
product.
Development Capability – can the team be better able to
develop future products.

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Five Forces of Business Model
Potential
Entrants

Threat of new entrants

Competition among Bargaining

Bargaining Buyers
existing firms Power of
Power of
suppliers buyers

Substitutes

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  Thank You For

Attending

This Section

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