First screen at assessing the feasibility of a business idea
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall First Screen From “Preparing Effective Business Plans” by Bruce R. Barringer Part 1: Strength of Business Idea For each item, circle the most appropriate answer and make note of the (-1), (0), or (+1) score. Low Potential (-1) Moderate Potential (0) High Potential (+1) 1. Extent to which the idea:
• Takes advantage of an environmental trend • Solves a problem • Addresses an unfilled gap in the marketplace Weak Moderate Strong 2. Timeliness of entry to market Not timely Moderately timely Very timely 3. Extent to which the idea “adds value” for its buyer or end user Low Medium High 4. Extent to which the customer is satisfied by competing products that are already available Very satisfied Moderately satisfied Not very satisfied or ambivalent 5. Degree to which the idea requires customers to change their basic practices or behaviors Substantial changes required Moderate changes required Small to no changes required Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Part 2: Industry-Related Issues Low Potential (-1) Moderate Potential (0) High Potential (+1) 1. Number of competitors Many Few None 2. Stage of industry life cycle Maturity phase or decline phase Growth phase Emergence phase 3. Growth rate of industry Little or no growth Moderate growth Strong growth 4. Importance of industry’s products and/or services to customers “Ambivalent” “Would like to have” “Must have” 5. Industry operating margins Low Moderate High Part 3: Target Market and Customer-Related Issues Low Potential (-1) Moderate Potential (0) High Potential (+1) 1. Identification of target market for the proposed new venture Difficult to identify May be able to identify Identified 2. Ability to create “barriers to entry” for potential competitors Unable to create May or may not be able to create Can create 3. Purchasing power of customers Low Moderate High 4. Ease of making customers aware of the new product or service Low Moderate High 5. Growth potential of target market Low Moderate High Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Part 4: Founder- (or Founders-) Related Issues Low Potential (-1) Moderate Potential (0) High Potential (+1) 1. Founder or founders experience in the industry No experience Moderate experience Experienced 2. Founder or founders skills as they relate to the proposed new venture’s product or service No skills Moderate skills Skilled 3. Extent of the founder or founders professional and social networks in the relevant industry None Moderate Extensive 4. Extent to which the proposed new venture meets the founder or founders personal goals and aspirations Weak Moderate Strong 5. Likelihood that a team can be put together to launch and grow the new venture Unlikely Moderately likely Very likely Part 5: Financial Issues Low Potential (-1) Moderate Potential (0) High Potential (+1) 1. Initial capital investment High Moderate Low 2. Number of revenue drivers (ways in which the company makes money) One Two to three More than three 3. Time to break even More than two years One to two years Less than one year 4. Financial performance of similar businesses Weak Modest Strong 5. Ability to fund initial product (or service) development and/or initial startup expenses from personal funds or via bootstrapping Low Moderate High Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Overall Potential Each part has five items. Scores will range from -5 to +5 for each part. The score is a guide—there is no established rule-of-thumb for the numerical score that equates to high potential, moderate potential, or low potenti al for each part. The ranking is a judgment call. Score (-5 to +1) Overall Potential of the Business Idea Based on Each Part Suggestions for Improving the Potential Part 1:
Strength of Business Idea High potential Moderate potential Low potential Part 2:
Industry-Related Issues High potential Moderate potential Low potential Part 3:
Target Market and Customer-Related Issues High potential Moderate potential Low potential Part 4:
Founder- (or Founders-) Related Issues High potential Moderate potential Low potential Part 5: Financial Issues High potential Moderate potential Low potential Overall Assessment High potential Moderate potential Low potential Summary —briefly summarize your justificati on for your overall assessment:
