1. Introduction to Feasibility Analyses Modified from Barringer and Ireland (2006)

2. What Is Feasibility Analysis? Feasibility Analysis – Preliminary evaluation of idea to determining if it’s worth pursuing – Provides more secure notion that a business idea is viable Did analysis, feasible business: Intuit (Quicken, Quickbooks, etc.) – Personal experience, observed others, surveyed customers Did analysis, not feasible: Retailing Insights (grocery cart) – Determined not a sufficient scale for advertising, needed large proportion of grocery stores – Dropped idea, focused on core competency, developed Trakus No analysis, failed firm: Iridium (satellite phones) – Too complex technology, too long to develop, new technology took over, line of sight to satellite, large phone, low battery power

3. Prior to Feasibility Analysis Prepare a Concept Statement Concept Statement – One page description of a business (not just the offering) that includes Description of the product or service Description of target market Benefits of the product or service (value proposition) Description of product/service differentiators Description of how product/service sold/distributed Description of the founder(s) of the firm – Given to people who provide feedback on the potential of the idea Give sense of the viability of the business idea Suggestions for how the idea can be strengthened or altered before proceeding

4. When To Conduct a Feasibility Analysis Timing of Feasibility Analysis – After concept statement evaluation – After opportunity recognition, before business plan – Before a lot of resources are invested Four Components of Full Feasibility Analysis – Product/Service Feasibility – Industry/Market Feasibility – Organizational Feasibility – Financial Feasibility Must pass all feasibility analyses to proceed to full business plan development

5. Product/Service Feasibility Product/Service Feasibility Analysis – Assessment of overall appeal of proposed product/service – Main idea: before rushing to development, be sure product/service is what prospective customers want Two components of product/service feasibility analysis: 1. Concept testing Purpose: Gauge customer interest, desirability, purchase intentions Involves showing a representation of product/service to prospective users – Occurs before the prototype stage – Websites and graphic designs are taking this to a new level Concept test ≠ concept statement 2. Usability testing – Purpose: determine ease-of-use and user’s perceptions of using product Iterative process that involves creating a physical prototype (basic, elaborate, or hybrid prototypes) and giving it to users, measuring usage results, and making modifications as necessary – Also called: user tests, beta tests, or field trials Example: http://scholar.google.comhttp://scholar.google.com

6. Industry/Market Feasibility Analysis – Purpose: assess overall appeal of the market – 3 primary issues to consider: 1. Industry attractiveness: attractive industry characteristics include but are not limited to—is the industry large and growing? Is the industry important to consumers (e.g., needs vs. wants)? Stage of the industry life cycle? Industry not crowded with competitors? 2. Market timeliness: asks if the market will be receptive to the product/service—is the WoO open? Are customers buying? Are competitors making money? Can we gain a first- or second-mover advantage? 3. Identification of a niche market: Are we able to compete in a niche market—a place in a larger market segment that represent narrower groups of customers

7. Organizational Feasibility Analysis – Purpose: determine if business has sufficient skills/resources to bring product/service to market successfully – Non-financial factors are what is assessed here – 2 primary issues to consider: 1. Management prowess: must evaluate the ability of the management team to determine if the firm has or is able to recruit human resources with the required areas of expertise 2. Resource sufficiency: must assess adequacy of other resources necessary for successfully venture launch, development, and competition – Focus is on nonfinancial resources like: Availability of affordable office or lab space, Labor pool quality, Proximity to key suppliers, customers, and similar firms (clusters) Likelihood of strategic partnerships, Likelihood of attaining IP

8. Product/Service Feasibility Analysis Studies Diane M. Sullivan (2007)

9. 1. Prepare a Concept Statement Preliminary description of the entire business that includes – Description of the product or service – Description of target market – Benefits of the product or service (value proposition) – Description of product/service differentiators – Description of how product/service sold/distributed – Description of the founder(s) of the firm Purpose: – Have relevant others (e.g., investors, target market members, suppliers, R&D experts, etc.) provide feedback as to their perceived potential of the business based on their area(s) of expertise – Change components of the business model components prior to investing many resources into the concept

10. Concept Statement – Super Slick Shower Doors® (SSSD) Product/Service Description Super Slick Shower Doors® (SSSD) will sell decorative Plexiglas “artwork” that will enhance the appearance of glass shower doors and stalls within existing homes. SSSD’s products work much like the panels that are magnetized onto kitchen appliances like refrigerators and dishwashers to create a uniformed cabinet look in the kitchen. Do-it-yourselfers (DYI) will visit retailers selling SSSD products to purchase standard-sized shower door/ stall artwork and SSSD’s website or stores for customized sizes. Target Market Description SSSD’s target market consists of homeowners who want to improve their homes by doing-it-themselves. SSSD specifically targets owners of existing homes who want to create a customized and aesthetically appealing look in their bathrooms without full renovation costs or decreasing the value of the home to future potential home buyers. Value Proposition The DYI market within the US is estimated at $5.9 billion annually and it is projected to grow at 5.1% annually for the next several years (freedoniagroup.com, 2007). This trend, coupled with sociocultural trends supporting consumer’s increasing desires for luxury and customized products/services and the transient-nature of the US population (BrainReserve, 2002) suggests that the window of opportunity is open for a venture offering affordable, customized, and non-permanent home improvement products. Differentiators SSSD’s production machinery and processes are patented. Further, the artwork designs offered for the glass are copyrighted and only available through the SSSD website, storefronts, and approved retailers. SSSD has secured a contract with the master artist Daniel Stone to produce the art designs for the glass. Further, SSSD artwork designs are produced in limited quantities, ensuring consumers that their bathrooms will look uniquely customized. How Sold/Distributed SSSD’s products will be sold and distributed via two primary channels. Industry standard sized shower door panels with standard designs (e.g., tropical theme, tile mosaic look, etc.) will be distribute to and sold through large home-improvement stores such as Home Depot and Lowe’s. Customers requiring customized sizes and custom-made designs can shop at an SSSD brick-and-mortar store or via SSSD’s website (www.SSSD.com) Description of Founder(s) SSSD is lead by Diane M. Sullivan, Ph.D.. Dr. Sullivan has 12 years of management experience, 6 years of entrepreneurship- related experience, and grew up in a family-owned business within the construction industry that operated for more than 20 years before the business successfully achieved a liquidity event.

11. 2. Conduct a Concept Test Traditionally entails showing a representation of the firm’s offering (e.g., sketch, website, computer-generated design) to prospective users in hopes of gaining feedback and insight as to their preferences, likelihood of purchase, etc. – Ideally a random, representative, sample of the target market would provide feedback about the offerings – Can show the representation and solicit feedback via survey, focus group, interviews (see next three slides) For the class assignment, required to show prospective users or other relevant network partners (at least 5) your Concept Statement, and solicit their feedback via a survey, focus group, or interviews – Discuss the method used to solicit feedback (e.g., survey, focus group, or interview(s)) – Discuss the feedback received (e.g., if focus groups or interviews were used, what are some transcribed quotes of feedback? What are the tabulated results/quoted comments provided on surveys if used?) and any concept changes made

12. BeforeAfter

15. 3. Study the Marketability of the Offering Deals with the value proposition relative to the customer Discuss how the business offering either: 1. Solves a problem/serves a need; 2. Makes someone’s life/business more efficient; 3. Makes someone’s life/business more effective Note: The offering may address more than one of these. If it does, discuss all applicable This step requires an understanding of the industry, competitor’s offerings, consumers’ wants/needs/trends. To find this information, study industry and firm publications and discuss these issues with potential users – Hint: You will likely be able gather some of this information during the concept test – Be sure to address if the business concept needs to be modified to more effectively address one or more of these customer-related value propositions based on what was learned in studying the marketability of the offering(s)

16. 4. Study the Target Customer (TC) This is the point where 1) the profile of the target customer and/or 2) changes to the business offering should start to become solidified Determine and study who the venture’s customers are and what their needs are – Based on your initial conceptions of who the TC are, construct a survey so you can develop a more detailed understanding of their profile (e.g., demographic data, socioeconomic data, etc.) – Assess the TC’s perceptions of the offering, their purchase intentions, and any suggestions for changes to the offering(s) – If the offering(s) need to be changed to address the TC’s needs, discuss modifications – If your initial conception of who the TC are was off, determine a more appropriate TC and assess their perceptions of the offering(s). Where possible, use a random selection procedure to gain the most accurate and generalizable information regarding the TC and their preferences

17. 5. Study the Usability of the Business Offering Involves creating a prototype of the offering(s) – Services can involve “practice rounds” Google Scholar – Products can be physical representations (see example basic prototype) American Inventor Gym class exercise mat Show the prototype to potential users (e.g., a beta test) – Obtain feedback from customers based on their “user experience” Was it easy to use? Was anything frustrating? Would other features make the offering more desirable? Are there any complementary offerings that might enhance the initial offering? – Example: iPod and cell phone accessories – Integrate feedback into the final form of the business offering For class project, if cannot conduct an actual usability test, describe what you would do to conduct one and what you would expect to learn

18. 6. Determine the Intellectual Property (IP) Potential Is the business offering a candidate for intellectual property protection? – Patents – Copyrights – Trademarks Are there pending or existing patents for the same type(s) of offerings that might hinder the business concept’s development? – Search the US Patent and Trademark Office at: http://www.uspto.gov/patft/index.html http://www.uspto.gov/patft/index.html

19. 7. Study the likelihood and Impact of First- and/or Second- mover Advantages Can you capture a first-mover advantage by 1) Being a technology leader (e.g., Microsoft), 2) Obtaining strategically valuable assets (e.g., favorable access to raw materials, favorable geographic locations, and/or valuable product/market positions), and/or 3) Creating customer switching costs? OR, if you can’t do the above, Will you suffer from a second-mover advantage? – Second-mover advantages may occur where imitators can duplicate the first movers’ patents—research shows imitators can do this for 65% of the cost of the first-mover Example: IBM vs. Dell in personal computer retailing If you cannot gain a first- or second-mover advantage, will that hurt you? – Is the window of opportunity open? – Are customers buying? – Are competitors making money?