Feasibility Study

Study of Possibility. My objective is to start a small business selling electrical devices, and doing a feasibility study will help me determine whether the business will be successful. For my business to succeed, I need to make enough sales to cover all of my expenses and make a profit. The first phase in my feasibility study process is to determine who else is in the same business as me and whether there is a notion that my competitors are adept at running an electronics firm. When I compare my company to the competitors’, I can easily see the differences between them. However, despite the likelihood of the features being similar, customers buy benefits as opposed to features, and therefore I would focus on benefitting the customers (Stam, 2010).

It is also important to consider that older businesses always have some advantages over new ones due to the track records that old businesses have. I, therefore, have to create my own perception of how my business will meet the existing needs of the customers. Another aspect of my feasibility study involves determining if there is a market for my business. One of the ways I would use to get customers is by creating them from individuals who are not loyal to my competitors (Tervo, 2014). Additionally, I would create customers from people who have not been customers before. Besides, I have to identify individuals that are likely to develop an interest in my products, as well as how to reach them. I, therefore, have to consider their occupation, age, household income, marital status, lifestyle, as well as where I can place my adverts for them to see and react. As part of my feasibility study, I also have to consider the market share that my business requires to be profitable, the amount of stock it needs, as well as whether my customers would need education on the use of my products (Stam, 2010).

Criteria for Identifying and Evaluating Investment Opportunities

The criteria for the identification and evaluation of investment opportunities involve the consideration of market factors, competitive advantage, and economics among others.

Market factors. The consideration of market factors contributes significantly to the planning process of a small business. Considering market factors helps in determining who else is supplying the same market, as well as what they do to meet the needs of the customers. Additionally, it helps in determining whether there exist other entrepreneurs who supply the same market with similar products or substitutes for the new business. It, therefore, provides a new entrepreneur with an opportunity to concentrate on the feature and price points that can allow differentiation of the new products from those for the existing market players (Tervo, 2014).

Competitive advantage. The consideration of competitive advantage in identifying and evaluating investment opportunities help startups to determine various advantages over their competitors such as agility, less bureaucracy, teamwork, personality, and competitive pricing among others. Evaluating competitiveness enable the startups to develop agility to their businesses, thereby making them stay confined within the strategies of the new venture (Stam, 2014). As opposed to large corporations, small businesses are likely to have fewer cases of bureaucracy, a situation which could give startups an advantage over the established businesses. Additionally, the consideration of competitive pricing is vital when planning for a small business and startups can have a significant advantage over the established businesses, which usually set relatively higher prices for their products and services. Another important aspect of competitive advantage when planning for a new small business is personality. Since startups have fewer customers within their reach, they tend to have friendlier and much better brand personality (Stam, 2010).

Economics. Economics also forms a critical factor to consider during the identification and evaluation of investment opportunities. The first economic factor that requires consideration is the access to credit or finance. While most funding originates from owner’s savings, the use of credit usually forms a more viable source of capital for investing in new business opportunities. The access to resources is another economic factor that requires consideration when evaluating new investment opportunities (Tervo, 2014). Resources include a broad range of materials that would be necessary for the operation of the new business, and the business owners should identify investment opportunities that require easily available inputs at affordable prices. Another economic factor that requires consideration when evaluating new investment opportunities is the demand for the products and services. The demand for new entrepreneurs’ goods or services plays a critical role in determining the future of the new investment. It is, therefore, essential for startups to consider various factors that are likely to affect the demand for their products or services before making the actual investment (Stam, 2010).

Regarding Management, there exists a good fit between the entrepreneur and the opportunity. That is because entrepreneurship is a practice that involves the identification, assessment, and exploitation of investment opportunities so as to introduce new products and services, as well as markets, raw materials, and processes through various organizing efforts that did not exist previously (Tervo, 2014). From such a definition, the academic perspective of entrepreneurship greatly incorporates explanations relating to when, how, and why various entrepreneurial opportunities exist; resource acquisition for the exploration of such opportunities; and the sources and the forms taken by such opportunities. It also incorporates the process of discovering and evaluating such opportunities; as well as how or why some people and not others identify, collect resources, evaluate, and exploit such opportunities (Tervo, 2014). That implies the strategies used in pursuing entrepreneurial opportunities have a direct correlation with an individual’s entrepreneurial skills, and therefore there exists a good fit between the entrepreneur and the opportunity.

Part II

In entrepreneurship, to be a risk taker is more important than to being analytical. That is because for people to achieve their business dreams, it is necessary that they take positive calculated risks (Tervo, 2014). Additionally, risk taking comes with a huge stake of benefits including the ability to learn new skills, getting empowered to break through various self-imposed limits, becoming more creative, as well as the growth of self-confidence (Tervo, 2014). Other benefits that come with risk taking include getting the courage to overcome the fear of failure, learning to trust more, as well as uncovering unforeseen opportunities, and recognizing that dreams are not achieved by playing safe. Besides, Risk taking gives people the capacity and courage to take initiatives as opposed to focusing on what might go wrong, thereby leading people to higher levels of entrepreneurial success (Stam, 2010).

Therefore, between being analytical and being a risk taker, I prefer being a risk taker, and it would significantly help me in creating my new venture of the electronics business. That is because taking risk would expose me to great opportunities that would otherwise be unforeseen (Tervo, 2014). People tend to view risk-taking negatively, and often considering it an unwise and dangerous aspect of entrepreneurship. However, while some risks certainly do not pay off, it is always important for every entrepreneur to remember that most business risks do pay off. It is, therefore, advisable to consider risk-taking as an opportunity for entrepreneurial success as opposed to a path to business failures (Stam, 2014). Additionally, taking risks in my entrepreneurial venture would instill confidence in me and assist me to stand out in my business. Risk-taking, therefore, presents great opportunities for entrepreneurs to stand out and consider themselves as leaders as opposed to followers who are contented with the status quo (Tervo, 2014).

Part III

The various resources (in order of their importance to my new venture) that I would need internally to get my business up-and-running include the following:

Business Start-up Funds

Funding is the most critical element needed for my new business venture since I expect my new venture to incur huge startup costs, including costs relating to the business name registration, acquisition of a reliable telephone line, acquisition of enough stock, as well as maintenance related costs. I, therefore, intend to consider exploring various options to obtain adequate financial resources that would allow my business to operate effectively according to my business strategy (Tervo, 2014).

Labor

The success of my new venture is significantly dependent on my strengths, talents, skills, and knowledge. I, therefore, have to embrace professionalism when performing various operations within the context of my new business so as to ensure that my business goals, objectives, and mission are carried out with competence and efficiency. Additionally, I intend to ensure that any employee within my business meets various qualifications that would enable them to perform the operations of the business effectively, and with professionalism (Stam, 2010).

Business Knowledge and Skills

As an entrepreneur, one of the greatest things I need to do when creating a new business is to ensure that I gain as much education or knowledge as possible regarding the various products that I intend to bring to the market. By understanding my competitors and acquiring an in-depth knowledge relating to the industry within which my business falls, I will have the required preparedness to make smarter and more informed decisions regarding the future of my business. One of the best ways of acquiring educational resource would be through attending workshops organized by various professional trade organizations that fall within my business industry (Tervo, 2014).

Physical Resource

Regardless of the size of a new business, it is advisable for every business to have an appropriate physical resource, in the form of structures, for the business to survive. I would, therefore, consider securing various suitable structures for my electronics business such as a proper workplace, adequate information systems, working and reliable telephone line, as well as adequate marketing materials. The physical resource can be the costliest aspect of small business planning, and it would, therefore, be essential for me, as an entrepreneur, to realistically evaluate the need for various physical resources before making any purchases (Tervo, 2014).

Business Support

The process of starting a new business and getting it running can be a very stressful experience for new entrepreneurs. Therefore, to maintain my sanity and remain motivated when performing various business operations, I would consider identifying a support team so as to gain guidance and inspirations from them when necessary. The support team may include various professional groups, family members, mentors, as well as friends (Stam, 2010).

Part IV

Political, Economic, Social, and Technological (PEST) Analysis

Conducting PEST Analysis would help me understand the various changes that may occur within the market. Market changes can have a significant influence on the sales of my products, as well as the relationships that my business may have worked so hard to develop. Additionally, conducting PEST analysis is essential in helping me predict the market changes that are likely to occur so as to make more informed business decisions (Stam, 2010).

Political factors. One of the political factors that I would consider in my strategic plan is the time of the country’s next elections, either at the national, state or local level, as well as how such elections could change various government policies that relate to my business. Additionally, I would consider the nature of the country’s rule of law and property rights, as well as the widespread of cases relating to organized crime and corruption so as to determine how such situations are likely to affect my business (Tervo, 2014).

Economic factors. The first economic factor I would consider is the stability of the current economy and how it is likely to affect my business. I would also consider the stability of the key exchange rates, the level of the customers’ disposable income, and the country’s unemployment rate, as well as how they are likely to impact my new business (Tervo, 2014).

Social Factors. Some of the social factors that I would consider in my strategic plan include the population growth in the area where I plan to establish my business, age profile, shifting generational attitudes towards my products, level of social mobility, and various cultural beliefs that might affect my business. I would, therefore, evaluate such factors to determine how they are likely to affect my new venture (Stam, 2010).

Technological Factors. One of the technological factors I would consider is whether there exist new technologies which could be beneficial to my business. Additionally, I would consider the existence of any technology within the horizon which could negatively affect my business, as well as whether my competitors have access to new technologies which could give them more advantages (Stam, 2010).

Environmental Analysis

Conducting environmental analysis as part of my strategic plan would help me identify all the internal and external elements of the business environment which are likely to affect my business. One of the environmental factors I would consider in my strategic plan is the location of the business. The business locations would help me identify the most appropriate site for my business that is easily accessible to the customers (Tervo, 2014). Additionally, I would consider the climate changes that are likely to affect my business, as well as waste disposal laws, customers’ attitude towards the environment, and the energy consumption regulations that are likely to affect my business. I would, therefore, ensure that I understand all such factors before the actual implementation of the business plan (Stam, 2010).

6-Step Sequential Process of Strategic Planning

The six essential steps involved in the sequential process of strategic planning include identifying the core mission; defining organizational mission; Assessing the Situation; Development of strategies, objectives, and goals; implementing plans; and monitoring outcomes.

Identifying the core mission. The identification the core mission of the business involves the development of a mission statement or evaluating the current mission statement. Mission statement forms the foundation of the strategic plan and gives the overall picture of the business. It should, therefore, describe the operations of the business, as well as provide an insight of the value created by the business (Stam, 2010).

Defining organizational mission. A mission statement gives the definition of the primary purpose of the organization’s existence, and it must, therefore, communicate the importance of the business. A mission statement usually describes an organization in the form of its purpose and values. As opposed to a vision statement, which presents an image of the likely organization’s success, a mission statement gives a summary of why, what, and how the organization operates (Tervo, 2014).

Assessing the situation. After the commitment of an organization to its purpose and values, the organization has to evaluate its current situation to acquire the information regarding the organization’s strengths, its weaknesses, as well as performance, and address them appropriately (Tervo, 2010).

Development of strategies, objectives, and goals. After the affirmation of the organization’s mission and identification of its critical issues, the next step involves considering what needs to be done about them. Besides, it entails considering the expected specific and general results (objectives and goals), as well as the broad approaches that need to be taken (strategies).

Implementing plans. After the formulation of the strategies, the next step is to implement them so as to see their expected results (Stam, 2010).

Monitoring outcomes. Ensuring that the strategic plan works as expected requires continuous reviews of the processes involved, as well as making appropriate adjustments when necessary. Such reviews should take place at least quarterly, or even monthly depending on the type of organization (Stam, 2010).

References

Stam, E. (2010). Growth beyond Gibrat: firm growth processes and strategies. Small Business Economics, 35(2), 129-135. http://dx.doi.org/10.1007/s11187-010-9294-3

Tervo, H. (2014). Starting a new business later in life. Journal Of Small Business & Entrepreneurship, 27(2), 171-190. http://dx.doi.org/10.1080/08276331.2014.1000148