Most people want to have their own small business. Unfortunately, we can see that many of them are failing. The failures of small businesses are caused by many different things. One of the things that can cause a small business to fail is the lack of feasibility analysis.
Before starting their own small business, people need to perform a simple feasibility analysis. The main objective of the analysis is to see whether the business idea is worth pursuing.
The following are several things that people should do when doing their feasibility analysis:
- People need to check whether they have all the resources and knowledge needed to pursue the business idea. When someone is going to open a dry cleaner for example, he or she must have good knowledge about dry cleaning.
- Before setting up a small business, people need to observe the market. Observing the market would involve checking the competitors, estimating the number of potential customers, etc.
- The financial aspect is another important thing that people need to consider before setting up a business. They need to estimate the fixed and variable costs, potential sales revenue, and calculate the break-even figures.
- To avoid pitfalls, people need to identify them right from the start. They need to foresee what kind of problems may arise, and how to deal with them.
After they have done all the steps above, people should be able to see whether their business idea is feasible or not.