Expert: Leo Lingham - 7/8/2009

Question
you mentioned in a previous question answered regarding the invention process that the first step is to "Conduct the  feasibility study  to  evaluate the  commercial
viability  of the  project." What steps do I need to complete this study? Also, would you recommend creating a full business plan before ever talking with manufacturers or disclosing your idea even with a Non-Disclosure?

Answer
LUKE,
HERE  IS SOME  USEFUL  MATERIAL.
REGARDS
LEO LINGHAM
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FIRST, THE  FEASIBILITY  STUDY.
THIS  IS A   QUICK  MACRO  PICTURE  OF  THE  SITUATION
AND  IN  BROAD  TERMS--IS  THERE  GOOD  MONEY  IN  THIS  PROJECT.

A  FEASIBILITY   STUDY is a process that defines exactly what a project is and what strategic issues need to be considered to assess its feasibility, or likelihood of succeeding
If a project is seen to be feasible from the results of the study, the next logical step is to proceed with it. The research and information uncovered in the feasibility study will support the detailed planning and reduce the research time.
A well-researched and well-written feasibility study is critical when making "Go/No Go" decisions regarding entry into new businesses.
A Feasibility Study is a process which defines exactly what a project is and what strategic issues need to be considered to assess its feasibility, or likelihood of succeeding. Feasibility studies are useful both when starting a new business, and identifying a new opportunity for an existing business. Ideally, the feasibility study process involves making rational decisions about a number of enduring characteristics of a project, including:
What exactly is the project? Is it possible? Is it practicable? Can it be done?
Economic feasibility, technical feasibility, schedule feasibility, and operational feasibility - are the benefits greater than the costs?
Technical feasibility - do we 'have the technology'? If not, can we get it?
Schedule feasibility - will the system be ready on time?
Customer profile: Estimation of customers/revenues.
Determination of competitive advantage.
Operational feasibility - do we have the resources to build the system? Will the system be acceptable? Will people use it?
Current market segments: projected growth in each market segment and a review of what is currently on the market.
Vision/mission statement.
Definition of proposed operations/management structure and management method.


1.Technology and system feasibility
This involves questions such as whether the technology needed for the system exists, how difficult it will be to build, and whether the firm has enough experience using that technology. The assessment is based on an outline design of system requirements in terms of Input, Processes, Output, Fields, Programs, and Procedures. This can be quantified in terms of volumes of data, trends, frequency of updating, etc. in order to estimate whether the new system will perform adequately or not.

2.Economic feasibility
Economic analysis is the most frequently used method for evaluating the effectiveness of a candidate system. More commonly known as COST/BENEFITS   ANALYSIS , the procedure is to determine the benefits and savings that are expected from a candidate system and compare them with costs. If benefits outweigh costs, then the decision is made to design and implement the system.

3.Legal feasibility
Determines whether the proposed system conflicts with legal requirements, e.g. a Data Processing system must comply with the local Data Protection Acts. When an organization has either internal or external legal counsel, such reviews are typically standard. However, a project may face legal issues after completion if this factor is not considered at this stage.

4.Operational feasibility
Is a measure of how well a proposed system solves the problems, and takes advantages of the opportunities identified during scope definition and how it satisfies the requirements identified in the requirements analysis phase of system development.[1]

5.Schedule feasibility
A project will fail if it takes too long to be completed before it is useful. Typically this means estimating how long the system will take to develop, and if it can be completed in a given time period using some methods like payback period. Schedule feasibility is a measure of how reasonable the project timetable is. Given our technical expertise, are the project deadlines reasonable? Some projects are initiated with specific deadlines. You need to determine whether the deadlines are mandatory or desirable.

6.Market and real estate feasibility
Market Feasibility Study typically involves testing geographic locations for a real estate development project, and usually involves parcels of real estate land. Developers often conduct market studies to determine the best location within a jurisdiction, and to test alternative land uses for a given parcels. Jurisdictions often require developers to complete feasibility studies before they will approve a permit application for retail, commercial, industrial, manufacturing, housing, office or mixed-use project. Market Feasibility takes into account the importance of the business in the selected area.

7.Resource feasibility
This involves questions such as how much time is available to build the new system, when it can be built, whether it interferes with normal business operations, type and amount of resources required, dependencies, etc. Contingency and mitigation plans should also be stated here.

8.Cultural feasibility
In this stage, the project's alternatives are evaluated for their impact on the local and general culture. For example, environmental factors need to be considered and these factors are to be well known. Further an enterprise's own culture can clash with the results of the project.


A feasibility study looks at the viability of an idea with an emphasis on identifying potential problems and attempts to answer one main question: Will the idea work and should you proceed with it?
Before you begin writing your business plan you need to identify how, where, and to whom you intend to sell a service or product. You also need to assess your competition and figure out how much money you need to start your business and keep it running until it is established.
Feasibility studies address things like where and how the business will operate. They provide in-depth details about the business to determine if and how it can succeed, and serve as a valuable tool for developing a winning business plan.

Why Are Feasibility Studies so Important?
The information you gather and present in your feasibility study will help you:
List in detail all the things you need to make the business work;
Identify logistical and other business-related problems and solutions;
Develop marketing strategies to convince a bank or investor that your business is worth considering as an investment; and
Serve as a solid foundation for developing your business plan.
Even if you have a great business idea you still have to find a cost-effective way to market and sell your products and services. This is especially important for store-front retail businesses where location could make or break your business.
For example, most commercial space leases place restrictions on businesses that can have a dramatic impact on income. A lease may limit business hours/days, parking spaces, restrict the product or service you can offer, and in some cases, even limit the number of customers a business can receive each day.

Summary: Feasibility studies contain comprehensive, detailed information about your business structure, your products and services, the market, logistics of how you will actually deliver a product or service, the resources you need to make the business run efficiently, as well as other information about the business.
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SECOND ,  THE  BUSINESS  PLAN.

THE  BUSINESS  PLAN  IS A  MUST  FOR  MANY REASONS.

1.You  get  a  good knowledge of  the  financial potential of  your product.

2.You   get   a  good  picture  of your  projected  cashflow.

3.Bankers /  financiers   will  ask  for a   copy.

4.This  business  plan  will help  you  to  negotiate  with
the  suppliers/ manufacturers / distributors
from  the  position of  strength.


Also, would you recommend creating a full business plan before ever talking with manufacturers or disclosing your idea even with a Non-Disclosure?

YES, THIS  BUSINESS PLAN WILL BE  HANDY.

THE  FIRST  THING   THE  MANUFACTURERS  WILL
ASK  FOR   VOLUMES  FOR THE  NEXT  5  YEARS,  AT  LEAST.

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