Last time we looked at How To Validate A New Business Opportunity and carrying out a feasibility study was among the things we looked at but given the fact I didn’t really expound on it, I’ll in this post be sharing with you guys 6 easy steps on how to carry out a small business feasibility study but before we get started, let’s first look at what the definition of a feasibility study is so that we can all be on the same page.

Small Business Feasibility Study: Just What Is A Feasibility Study?

According to Investopedia, a feasibility study is:

An analysis of the ability to complete a project successfully taking into account legal, economic, technological, scheduling and other factors. Rather than just diving into a project and hoping for the best, a feasibility study allows project managers to investigate the possible negative and positive outcomes of a project before investing too much time and money.

This therefore means that a small business feasibility study is simply:

The analysis of all the factors involved in the running of a business (Both internal and external) so as to ascertain whether a particular business is profitable to invest in or not.

Given that my blogs theme is related to making money online, let me give an example of what I mean by the above and say that if one wants to venture into internet marketing, then they ought to take into account the following:

1. Recurring expense e.g. domain registration, hosting costs, advertising costs etc.
2. Risks e.g. hackers
3. Which products to promote
4. As well as which advertising channels to use just to mention a few.

Once they’re done, they’ll need to assess whether a particular niche is profitable to invest in or not.

Let’s now look at the steps involved in carrying out a small business feasibility study.

Step 1 On How To Carry out A Small Business Feasibility Study: List Your Ideas

Take time to list all your business ideas-These tips can help

Step 2 On How To Carry out A Small Business Feasibility Study: Screen The Ideas

Eliminate all the unprofitable business ideas-These tips can help

Step 3 On How To Carry out A Small Business Feasibility Study: Carry Out A Market Analysis

Carry out a research in the marketplace to establish the magnitude of demand for your chosen product or service, the age groups that best first it etc.

Step 4 On How To Carry out A Small Business Feasibility Study: Carry Out A Technical Analysis

Assess all the minor details that can prevent your business form running smoothly e.g.  If you’re into internet marketing then you need to look at how your sales pages look like, site theme, opt in forms etc.

Step 5 On How To Carry out A Small Business Feasibility Study: Carry Out A Financial Analysis

You’ll need to come up with an income statement, cash flow statement, balance sheets and other financial statements so that you can assess the:

1. Profitability-Both in the short and long term
2. Solvency-Ability to pay off creditors (Requires a balance sheet)
3. Liquidity-Ability to maintain a positive cash flow while sustaining business operations (Requires a balance sheet)
4. Stability-Ability to remain in business in the long run and without having to sustain significant losses. (Requires an income statement and a balance sheet)

Step 6 On How To Carry out A Small Business Feasibility Study: Measure The Social Profitability

You need to ask yourself what the benefits of your business will be to its immediate community

Last Word On How To Carry out A Small Business Feasibility Study

Carrying out a small business feasibility study should be top on your list if you’re serious about wanting to come up with a concrete business model that will stand the test of time.

I know the term “small business feasibility study” may sound tough at first but after looking at what it is and the steps involved in carrying out a small business feasibility study, I believe that you now have what it takes to come up with a profitable business model no matter the niche involved.

As always, feel free to share what your thoughts are on how to carry out a small business feasibility study; I’d definitely love to hear from you!