The Small Business Feasibility Assessment
 
Introduction
What is a Feasibility Assessment?
Personal Feasibility
Market Feasibility
Financial Feasibility
Economic Feasibility
Technical Feasibility
Location Feasibility
Legal Feasibility
The Typical Feasibility Assessment and its Relationship with Business Planning
"In Conclusion"
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"Because nearly 40% of small businesses fail in the year they are established, and only
10% of ideas for the establishment of new businesses are feasible, considerable losses can
be avoided if a business is researched before if begins." (Coulthard et al., 1996)  This
research takes the form of a feasibility assessment.

Introduction
Robust and healthy economies, especially local economies, are dependent on the formation and development of small businesses.  Every year, over half a million Americans take up small business entrepreneurship (Burstiner, 1994).  These half a million ambitious individuals make the decision, the MAJOR decision, to try their hand at businesses of their own.  Once the commitment is made, there is no turning back.  They will be headed down a  long and winding road, blocked by many financial and psychological obstacles. Unfortunately,  the majority of entrepreneurs that travel this road do not make it very far.  The success rates for small businesses are typically very low.  Most small businesses fail within the first three years, 91.1% of them due to financial problems and/or economic factors (Burstiner, 1994).  One of the reasons that success rates for small businesses are so low is because the people starting these businesses don't bother to look at the most important question in the start-up decision:  Does the world really need this?  A feasibility assessment of your proposed idea for a small business can help answer this question.

Place yourself into this scenario:  You have a great idea; something that you really think can be developed into a successful small business.  The manner in which you could execute a plan based on this idea is subject to a myriad of forms.  Some choose to jump right into the pool without first checking the depth.  Others, the smart ones, choose to check the depth first and test the feasibility of their idea.

References
Burstiner, Irving.  (1994).  The Small Business Handbook:  A Comprehensive Guide to Starting and Running Your Own Business
    Updated and Revised.  New York, New York:  Fireside.

Hindle, Kevin, Legge, John.  (1997).  Entrepreneurship:  How Innovators Create the Future.  Melbourne, Australia:  MacMillan Education
    Australia PTY LTD.

Poteet, Dr. Howard G.  (1991).  Starting Up Your Own Business:  Expert Advice from the U.S. Small Business Administration.  Blue
    Ridge Summit, Pennsylvania:  Liberty Hall Press.

Anonymous.  (July, 1998).  "Overview - Small Business Optimism."  Small Business Economic Trends, pp 1-16.

The Small Business Administration Home Page.  http://199.171.55.3/

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What is a Feasibility Assessment?
A feasibility assessment, often referred to as a feasibility analysis or a feasibility study, can be broadly defined as a preliminary evaluation of your business idea to see if it's worth pursuing.  A feasibility study involves gathering, analyzing and evaluating information with the purpose of answering the question:  "Should I go into this business?" (www.liraz.com).    Most feasibility studies represent the first look at the enterprise in the business planning process.  If the project is deemed feasible, much of the information gained during the feasibility study phase is used in developing the business plan itself.  It is a detailed process of investigation and measurement in several areas to assess whether the project at hand will meet your expectations.

Do not be scared away by words like "investigation" and "measurement" simply because of their scientific connotation.  Feasibility studies, in fact, are quite scientific in nature, and you should be ready for that (Hindle & Legge, 1997).  Before starting a small business, it may be helpful to incorporate a different perspective which is beyond simply taking an idea
and putting it to work.  Think about the problem that this idea may be solving.  Think of it as a science experiment involving the following components:

1.  A problem
2.  A hypothesis or solution to the problem (your idea for a small business)
3.  Feasibility of this idea (Does it solve the problem?)
4.  Conclusion (Should you go into business or not?)

Take for example, a proposed project for a small business in the form of a bed and breakfast.  It could be said that the problem, in this case, would be a lack of lodging in a certain geographical area.  The solution to this problem would be the idea of developing a bed and breakfast in this area to create more lodging opportunities.  Feasibility would cover the necessity for the bed and breakfast, practicability, profitability/return on investment (ROI), and personal competence.  Based on these topics, a decision can be made regarding the justifiability of the investment.  The necessity of the project is the demand in the market indicating the possibility of the project's utilization.  Practicability would mean that development of such a project is technically practical.  Profitability is the level where the project will meet all of its operating expenses, debt servicing, depreciation and tax, and earn profit (ROI) (Pandit, 1986).  Granted, the factors tested for feasibility will vary depending on the proposed small business idea, but they will all aid in arriving at the same conclusion;  Will it work or not?

Common feasibility factors tested in most small business feasibility assessments include the following:

Personal Feasibility
Market Feasibility
Financial Feasibility
Economic Feasibility
Technical Feasibility
Location Feasibility
Legal Feasibility
Feasibility assessments do not necessarily provide definitive answers to all criteria involved in the process of evaluating a proposed small business, nor are they the remedy that most people would like them to be (Staniland, 1993).  Often times, feasibility studies are actually used to protect leaders from criticism and keep the funds flowing into bottomless pits (Stanley, 1995).  However, when used properly as genuine business plans, they can be the principal mechanism necessary to produce a comprehensive study and a range of results for a particular small business scenario (Staniland, 1993).  The effective feasibility
study will provide a series of checks and balances to determine the viability of a small business proposal, covering all or at least some of areas listed above.

Be aware of the myths that surround feasibility studies.  For instance, many believe that there are no negative feasibility studies.  This is not true.  Studies have been and will continue to be done in the future where projects are determined to be unfeasible as a result of insufficient demand, poor site location in relation to the market generators, or insufficient income generation (Angelo, 1985).  The reason these studies are not published is because of their negative insinuations and proprietary nature.  It is important to be aware of the fact that a feasibility study can produce negative results so that you are not "shocked" by the results of your own feasibility study.  If your idea is not feasible, you are going to find out.

Another common myth about feasibility studies is that "they all look alike" (Angelo, 1985).   There are certain standards and guidelines (see The Typical Feasibility Assessment and its Relationship with Business Planning)  which will facilitate in the success of a feasibility study, but in no way are you required to produce a study on someone else's terms.  The feasibility assessment of your small business idea should be a unique project that achieves the outcomes of your desires related to the feasibility topics discussed in this web page.

References
Angelo, Rocco M.  (1985).  Understanding Feasibility Studies:  A Practical Guide.  E. Lansing, Michigan:  The Education Institute of the
    American Hotel and Motel Association.

Beals, Paul.  (Spring 1994).  "Rehabilitating Hotel Feasibility Studies."  Real Estate Review, Vol 24, 1, pp 58-60.

Burstiner, Irving.  (1994).  The Small Business Handbook:  A Comprehensive Guide to Starting and Running Your Own Business
    Updated and Revised.  New York, New York:  Fireside.

Pandit, Sailendra Nath.  (1986).  Hotel Project - Feasibility Evaluation.  Wien, Austria:  Service - Fachverlag an der Wirtschaftsuniv.

Reilly, Michael D., Ph. D., Millikin, Norman L., Ph. D.  (1996).  Starting a Small Business:  The Feasibility Analysis.  Bozeman,
    Montana:  The College of Business at Montana State University - Bozeman.

Turkel, Stanley.  (November 6, 1995).  "Little Reality in the Typical Feasibility Study."  Hotel and Motel Management, Vol 210, 19, p
    56-57, 70.

Walton, Christopher.  (1997).  "Rethinking Feasibility Studies."  Fund Raising Management, Vol 28, 7, pp 14-19.

West, Staniland.  (March, 1993).  "Feasibility Analyses, an Explanation!"   Cost Engineering, Vol 35, 3, pp 35-47.

Sandhill Consultants walk you through a small business feasibility study:  http://www.sandhill.co.uk/pware/feas/ac06190.htm

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Personal Feasibility
Before making the decision to even pursue the evaluation of your idea, you should evaluate yourself.  Many entrepreneurs make the mistake of assuming that their first rate idea will take them to the top.  In reality, it is the entrepreneurs that will take their first rate idea to the top.  Certain personal characteristics can be determinants in the success of a small business enterprise (Reilly & Millikin, 1996).  Take a look at your personality characteristics.  Are they such that you can both adapt to and enjoy business ownership/management?  Go through the following list and put a check by each of the qualities that you have.  If you don't check one of these entrepreneurial qualities, work on improving your competence in this area.  Successful entrepreneurs typically:

Are decisive decision makers  ______
Enjoy taking charge and leading  ______
Want to be masters of their financial destiny  ______
Enjoy competition  ______
Always plan ahead  ______
Are organized, independent and self-confident  ______
Are hard workers  ______
Come from a small business or agricultural background  ______
Can take criticism, rejection, and advice from others  ______
Have specialized business ability from experience or education  ______
Are determined and persistent  ______
Can find people to shore-up weakness   ______
Get things done ON TIME  ______
All parts must fit together including...you need to be competent in:
Finance ____Marketing ____ Accounting ____ Bookkeeping _____ Human relations_____

The entrepreneur is the business - its originator, its motivating force, its energy.  A few hours of introspection - with a pencil and a pad of paper for recording your own self-portrait - should be enough to make this decision.  If not, the Small Business Administration also offers such checklists and pamphlets for going into business.  The text entitled The Small Business Handbook by Irving Burstiner also has some very extensive self-profile checklists.

References
Burstiner, Irving.  (1994).  The Small Business Handbook:  A Comprehensive Guide to Starting and Running Your Own Business
    Updated and Revised.  New York, New York:  Fireside.

Poteet, Dr. Howard G.  (1991).  Starting Up Your Own Business:  Expert Advice from the U.S. Small Business Administration.  Blue
    Ridge Summit, Pennsylvania:  Liberty Hall Press.

Reilly, Michael D., Ph. D., Millikin, Norman L., Ph. D.  (1996).  Starting a Small Business:  The Feasibility Analysis.  Bozeman,
    Montana:  The College of Business at Montana State University - Bozeman.

The Small Business Administration Home Page.  http://199.171.55.3/

The Small Business Know-How Resource brings you the ABC's of Small Business and Entrepreneur Success:  http://www.liraz.com

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Market Feasibility
(also see PRR 473 Topics:  Market Identification and Analysis, Competition Analysis and Strategies, and Marketing)
A market feasibility assessment asks questions such as:  Does anyone want this product or service?  Does the product or service have any features that would persuade someone to choose it ahead of currently available products?  You need to test your product or service in the market that you choose to target.  Often times, especially with small businesses, markets are very dynamic with unforeseen changes such as the addition of new businesses in the same field, or a downturn in the local economy.  Even changes in transportation patterns can have a devastating effect on a small business' future operating performance (Stephen, 1996).

Most market feasibility assessments look at the following components of the market in which the small business will be launched:

*The Market Size and Structure/Segments
    -segment size, future trends, health (wealth or capacity to buy)
*Targets should be identifiable, viable, marketable, stable.
*Potential Customers and their need for your product or service
    - who are they, how many are there, where are they located, what are their buying
    patterns, what are their reactions to our product or service offering?
*Competitors
*Government Regulations
*Political Conditions
*Social Change
*Nature (floods, blizzards, lack of snow or an abundance or snow, etc.)

When conducting market research, always remember that there are many sources of marketing data:

You need to look at all of these aspects of the marketing environment, and then perform an opportunity analysis.  An opportunity analysis is the process of defining the exact nature of the opportunities available in your suggested operating environment in terms of external and internal marketing considerations.  A good idea does not automatically ensure success.  You need to take advantage of the opportunities that you discover.  That is marketing, and your idea is not feasible unless you are able to accomplish that task.  And remember, there is no business that has no competitors.  You will have both direct and indirect competitors.  The direct competitors will be satisfying customers with a product or service similar to yours.  Indirect competitors will be satisfying customers with different types of products or services.

To learn more about a certain market, become familiar with the industry in which your idea is focused.  Go to trade shows and consumer shows, read trade journals and catalogues.  Becoming involved will familiarize you with the "movers and the shakers" in your industry (Ryder, 1995).  What are they doing right?  How are they reaching their target markets? A good way to test the marketability of your small business is to use an evaluation system similar to Udell's Preliminary Innovation Evaluation System (PIES) (Ryder, 1995).  Develop a list of the 30 to 40 most important characteristics of your small business.  Have a
ranking system where each aspect is ranked from 0 to 100, 0 meaning "it will definitely not be feasible or successful", and 100 meaning "it will be a definite success".  Survey your different segments of the market based on demographics to determine which type of consumer will be your best customer.  It's possible that you may not have any potential customers.  That is what you need to find out before you invest all of your money to start a project!

A good start to a market feasibility is the well-known SWOT analysis which helps match the organization’s internal resources and its external environment.  SWOT is an acronym for Strengths, Weaknesses, Opportunities and Threats.  Make a list of your internal strengths and weaknesses and weigh them together with your external opportunities and threats.

A VERY good text which goes into great detail to describe this type of market feasibility is entitled Market Analysis:  Assessing Your Business Opportunities.  You can learn a lot through research.

Beyond performing your own research, there are organizations that can perform this research for you.  The market feasibility can be done on your own, but there is a great deal of inexpensive to free assistance that exists.  The small business administration's Small Business Development Center (SBDC) program is an excellent source for locating evaluation centers that may be in your area as well as providing assistance with market research.  The following are three of the more well-known and reputable organizations offering marketability evaluations:
 
 
Wisconsin Innovation Service Center 
University of Wisconsin, Whitewater 
402 McCutchan 
Whitewater, WI 53190 
414-472-1365 
Washington State University 
Innovation Assessment Center 
2001 Sixth Ave., Suite 2608 
Seattle, WA 98121 
206-464-5450 
WIN Innovation Center 
College of Business Administration 
Southwest Missouri State University 
901 South National Ave. 
Springfield, MO 65804 
417-836-5667 or 417-836-5680

References
Coulthard, Max, Howell, Andrea, Clarke, Geoff.  (1996).  Business Planning:  The Key to Success.  Melbourne, Australia:  MacMillan
    Education Australia PYT LTD.

Dunn, Paul PhD, Sherwood, Philip K. EdD, Stevens, Robert E. PhD.  (1993).  Market Analysis:  Assessing Your Business Opportunities.
    Binghamton, New York:  The Haworth Press, Inc.

Mosley, Thomas E. Jr.  (1997).  Marketing Your Invention.  Chicago, Illinois:  Dearborn Financial Publishing.

Rose, Lewis.  (1993).  "Taking the Necessary Steps to get Started."  paper, Washington D.C.:  Arent Fox Kitner Plotkin & Kahn.
    retrieved from http://www.lowe.org/data, DOC #2240.

Ryder, Judy.  (1995).  Turning Your Great Idea Into A Great Success.  USA:  Peterson's/Pacesetter Books.

Stephen, Rushmore.  (October, 1996).  "Feasibility Studies:  Fact or Fiction."  Lodging Hospitality, Vol 52, 10, pp 14-15.

The Arkansas Small Business Development Center page on Inventions and Innovations:  http://www.ualr.edu/~sbdcdept/FOD/3508.htm
 

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Financial Feasibility
(also see PRR 473 Topic:  Financial Management)
Finance problems effect a wide variety of small businesses every year in countries all around the world. The financial feasibility is quite simple by definition but can become quite complicated in practice.  Basically, you want to know if your small business will make any money or not.  Obviously, entrepreneurship is pointless without profit.  That's where the financial feasibility comes in.  Always use these general principles when conducting a financial feasibility study:  Don't count on promises - estimate sales using various methods.   Be conservative with your sales projections and make a range of sales estimates.  Different types of sales estimation methods include (Reilly, 1996):

Industry or Association data:  Look in the library for the "Encyclopedia of Associations" and contact people who have businesses similar to one you are proposing to start.  Ask them how their sales have been.
Market Potential/Market Share:  Determine the total of all sales in the product or service category in which you will compete through industry data and compare your share to the smallest competitor.  How do you match up?
Customer Counts:  Calculate total potential customers and find our what their expenditure is per year.  Will your product or service fit into their expense plans?
Similar Business or Similar Location:  How they are doing?  Is this the type of business that you want to be in?
Indicator Variable:  What have retail stores estimated to be their potential sales in terms of square feet?
Cost or Break Even Analysis (Reilly, 1996):

 

Here's another way to look at financial feasibility.  Six main factors will determine whether there is going to be profit at the end of the day (Coulthard, 1996):

References
Ashley, Dr. Janelle C.  (1995).  Feasibility Checklist for Starting a Small Business.  paper, Nocogdoches, Texas.
    retrieved from http://www.lowe.org/data DOC #1852.

Coulthard, Max, Howell, Andrea, Clarke, Geoff.  (1996).  Business Planning:  The Key to Success.  Melbourne, Australia:  MacMillan
    Education Australia PYT LTD.

Hindle, Kevin, Legge, John.  (1997).  Entrepreneurship:  How Innovators Create the Future.  Melbourne, Australia:  MacMillan Education
    Australia PTY LTD.

Reilly, Michael D., Ph. D., Millikin, Norman L., Ph. D.  (1996).  Starting a Small Business:  The Feasibility Analysis.  Bozeman,
    Montana:  The College of Business at Montana State University - Bozeman.

Targett, David.  (1996).  Analytical Decision Making.  London, England:  Pitman Publishing.

Travola, John.  Can You Make Money With Your Idea or Invention.  paper Washington D.C.:  Management Publications, U.S.  Small
    Business Administration.  retrieved from http://www.lowe.org/data DOC #1910.

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Economic Feasibility
Starting a small business involves a great deal of risk.  It resembles gambling.  Capital is invested without the guarantee that you will earn this capital back.  There is a famous statistical proof known as the "gambler's ruin" which demonstrates that a gambler with a finite supply of capital playing a fair game against a strong house must, eventually, be ruined.  Ruin is certain, but the time it takes is indefinite (Hindle & Legge, 1997).  An economic and financial feasibility assessment of your small business idea can act as a risk management tool.  Pretty much any small business venture is a gamble.  You need to know how much of a gamble it is.  The feasibility study itself does not reduce the risk of entering into a small business venture.  It can, however be used as a tool for making financial and economic decisions.

Economically, there are some tests that your idea needs to pass.  Does your idea involve any economic absurdity, such as a selling price lower than the minimum cost of its components, or a service provider's income insufficient to support life (Hindle & Legge, 1997).  Do some research and determine the minimum cost it will take to launch your idea, be it a product or service.  Does this cost exceed the price for which you wish to sell your product?  If it does, it is not feasible.  Beyond economic absurdities, the economy itself is a major factor in the feasibility of small business ventures.  Most entrepreneurs do not bother to research the economy before they go into business.  The following economic checks are only a few of many that are crucial in the success of a small business.

It is important to take the time to study the economy and relate it to your small business idea.
References
Hindle, Kevin, Legge, John.  (1997).  Entrepreneurship:  How Innovators Create the Future.  Melbourne, Australia:  MacMillan Education
    Australia PTY LTD.

Ozcan, Bul Berna.  (1995).  Small Firms and Local Economic Development.  Brookfield, Vermont:  Ashgate Publishing Company.

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Technical Feasibility
The technical feasibility answers the following question:  Can a product be made, or if it is a service, delivered using currently available or at least feasible technology?  To prove the technical feasibility of a small business idea, it is necessary to first have a clear description of the product or service range to be offered.  Such a description should be sufficiently clear that a person who has no prior knowledge of the proposed enterprise will be in no doubt as to what will be offered (Coulthard et al., 1996).  This may be very difficult to do.  It's possible that you could have a great idea for a small business and at the same time,  have no background in the particular field to which that small business applies.  Learn!  Proving the technical feasibility of a small business establishes technical credibility, especially if your small business idea is based on an invention.  The following are some steps that need to be taken in a technical feasibility study:

*Can you clearly describe the BENEFITS of your small business idea, even intangibles? Customers buy benefits or solutions to needs!
*What are your resource requirements?
   - information technology
    - telecommunication systems
    - access to a particular type of technology in general
    - raw materials
    - energy
*Do you have access to people with certain skills?
*Will your small business idea be accepted according to regulations, laws, and ordinances?
*Do you know how much energy will be consumed on a daily, annual, etc. basis?
*Is there someone else out there that already has a patent on your idea?
*What is your technical basis of expertise?
    - educational qualifications
    - experience
    - development of a concept
    - acquisition, if of a concept from another party (such as in the acquisition of intellectual
    property, or in the purchase of a franchise of an existing business).

Information concerning the regulatory issues associated with most types of businesses can be obtained from the government-sponsored small business units in the various states.

If your small business idea involves something that needs to be manufactured, the project should proceed cautiously until there is some confidence that the product can actually be produced and have the appropriate performance.  Innovations involving service products can fail for similar reasons.  Your performance of a service should not be the basis for the technical feasibility of that service.  It should be proven that others can perform this service as well, others that you may hire.

A great way to answer most of these questions is to develop a prototype.  Reducing your idea to a small model is critical.  It proves the concept is workable and helps you make improvements in function or design that you might have never known were necessary.  It is far better and cheaper to find out about glitches and miscalculations while developing a model of your small business idea rather than after having had the builders excavate the site (Mosley, 1997).  Pretend you are back in elementary school and you have a project to complete which involves making a scaled-down model of your house considering space,
movement, placement of bodies, etc.  Do this with your small business and keep in mind questions such as:

The technical feasibility is often performed by a consultant.  If your idea involves a great deal of new technology or any type of complex organization and/or management, you may want to hire a consultant to assess the technical feasibility.  Various technical evaluation programs exist such as the Energy-Related Inventions Program (ERIP) implemented by the National Institute of Standards and Technology (NIST) and the U.S. Department of Energy (DOE) (Mosley, 1997).  The DOE actually awards grants and provides commercialization assistance (Mosley, 1997).
References
Foust, Linda, Husch, Tony.  (1986).  That's A Great Idea:  The New Product Handbook.  Oakland, California:  Gravity Publishing.

Mosley, Thomas E. Jr.  (1997).  Marketing Your Invention.  Chicago, Illinois:  Dearborn Financial Publishing.

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Location Feasibility
It is said that there are three things that you need to get right in order to launch a successful small business:  Location, Location, and Location!  First, you must evaluate the business site according to the nature and needs of a particular trade.  Second, you must relate the cost of premises to the overall turnover of the venture (Newell, 1995).  Is the overhead charge of maintaining a certain location feasible with the profit margin that you calculated in your financial feasibility?  As a rule of thumb, no aspiring retailer should pay more than 10% of turnover in rent or property owning costs (regardless of appreciation) (Newell, 1995).

To stress the importance of location feasibility, take a look at retail shops in your area.  For a retail operation, location is critical.  A shop can be 50 meters from another shop in the same trade, and fail.  Customers in need of the products offered by the already existing establishment may find no reason to come buy from you, simply because you established a business in the same area.  Go to a place where your product or service is scarce.  Other factors can be as trivial as being on the “wrong” side of the road, out of character with other shops in the immediate area, or unsuitable in design, decor, or function.  You need a location
where your small business will be accepted.  Other aspects of location to be considered include:

You may notice that you are seeing topics that have been previously covered in other feasibility assessments in this paper.  Technical, market, economic, and financial feasibility all tie into your location assessment.  Keep this in mind before you set up shop.
References
Newell, Malcolm.  (1995).  Secrets of Small Business Success.  Stepney, South Australia:  Swift Printing Services PTY LTD.

Chapman, Carolyn.  (1998).  “Location, Location, Location.”  Veterinary Economics, Vol 39, 5, pp 68-78.

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Legal Feasibility
(also see PRR 473 Topic:  Legal Aspects of Starting a Business and Business Forms)
So you think you are ready to start a small business?  There's just one more question that needs to be asked:  Is it legal?  The existence of rules of regulations often creates the illusion that a business opportunity is available by breaking them (Hindle & Legge, 1997).  This is the wrong way to view a small business start-up.  You cannot get around the law!  Keep in mind that safety and environmental issues are also a major concern for small businesses.  If you have any questions with regard to your specific concept of a small business, consult government agencies, attorneys, or the appropriate experts before investing too much energy or money in your project.  Here are some questions to ask them: Also, every business has a legal form of ownership and is subject to different tax and accounting regulations.  These business forms include:  the sole proprietorship, the partnership, the limited partnership, or the corporation.  Each form has its drawbacks as well as advantages.  Consider carefully the pros and cons of each.  The key is to select the one that will best fit your specific needs.   You need to research this.  The following is a customary procedure followed by many people who launch an enterprise (Burstiner, 1994):
References
Kishel, Gregory F., Kishel, Patricia Gunter.  (1993).  How to Start, Run, and Stay in Business.  New York, New York:  Wiley & Sons, Inc.

Love, John M., Messerlian, Arpi, Nowlis, Vimala, Simonian, Debra.  How to Start a Business:  What You Need to Know to Start a Business.
    retrieved from http://www.lowe.org/data DOC #2199.

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The Typical Feasibility Assessment and its Relationship with Business Planning
(also see PRR 473 Topic:  Business Planning)
A feasibility study represents the first look at the enterprise in the business planning process.  Once you have established a core business statement, your business planning process has begun, despite the fact that you have not yet tested its feasibility.  Each component of the feasibility study will help in the development of a successful business plan.  Take a look at the following table to see where information gained in the feasibility study fits into the business plan.

The process of putting together a business plan, including the thought that you put in before (feasibility assessments) beginning to write it, forces you to take an objective, critical, unemotional look at your business project in its entirety.  Keep this in mind when testing various feasibilities.  Feasibility assessments enable you to create the finished product of planning a small business, the business plan.  If done properly, the feasibility assessment and your business plan can be used as tools to later manage your business and communicate your ideas to others.  It can provide a basis for financial proposals and for building a loyal customer base.

It is said that the hierarchical process of business planning might be divided into three parts as follows (Coulthard et al., 1996):

Some feasibility studies revolve around profits (Malice, 1982):
The SCET (Scaled Comparison Evaluation Technique) concept involves 27 specific factors to be tested for feasibility in order to determine profit potential.

It may be helpful to use these guidelines adapted from Coulthard et al., 1996:



The Core Business Statement
A brief (one paragraph) statement incorporating the: Technical Feasibility (would include Location and Legal feasibility's) Market Feasibility Commercial Viability (Financial and Economic feasibilities) Conclusion

Keep in mind that a feasibility study is usually unique to the author and the project that it is subject to.  Often times, the best and most effective feasibility studies cannot be obtained to review because the information involved is proprietary and/or the business that conducted the study does not want their secrets to be known.  Other times, the feasibility study reveals problems and inadequacies that entrepreneurs and/or businesses choose not to make public.  If you would like to see some examples of actual written feasibility studies that are available to the public, please go to the following web sites: The following companies offer services related to feasibility studies: Other small business resources on-line:
References
Bangs, David H. Jr.  (1998).  The Business Planning Guide.  Chicago, Illinois:  Dearborn Financial Publishing.

Coulthard, Max, Howell, Andrea, Clarke, Geoff.  (1996).  Business Planning:  The Key to Success.  Melbourne, Australia:  MacMillan
    Education Australia PYT LTD.

Reilly, Michael D., Ph. D., Millikin, Norman L., Ph. D.  (1996).  Starting a Small Business:  The Feasibility Analysis.  Bozeman,
    Montana:  The College of Business at Montana State University - Bozeman.

Stanley, Turkel.  (1997).  "A Fresh Look at Feasibility Studies."  Lodging Hospitality, Vol 53, 1, p 16.

Maillie, J.B., Park, W.R.  (1982).  Strategic Analysis for Venture Evaluation:  The SAVE Approach to Business Decisions.  New York, New York:
    Van Nostrand Reinhold Company.

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 In Conclusion
Individuals who start small businesses generally work harder for less money but are happier than their counterparts who work for someone else.  If you would like to start a small business, you must thoroughly and objectively analyze the feasibility of your idea.  Failure to do so can have a tremendous personal cost on finances, relationships, and family ties (Reilly, 1996).
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This page was written by Michigan State University student Michael Sloan
Dept. of Park, Recreation & Tourism Resources