First Screen
From “Preparing Effective Business Plans” by Bruce R. Barringer
Part 1: Strength of Business Idea
Name or type of business:
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)
Weak
Moderate
Strong
1.
Extent to which the
idea:
• Takes advantage of
an environmental
trend
• Solves a problem
• Addresses an
unfilled gap in the
marketplace
2.
Timeliness of entry to Not timely
market
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
Difficult to identify
target market for the
proposed new venture
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 Can create
to 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
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Part 4: Founder- (or Founders-) Related Issues
Low Potential (-1) Moderate Potential (0)
High Potential (+1)
1.
Founder or founders
experience in the
industry
Moderate experience
Experienced
2.
Founder or founders
No skills
skills as they relate to
the proposed new
venture’s product or
service
Extent of the founder None
or founders
professional and
social networks in the
relevant industry
Extent to which the
Weak
proposed new venture
meets the founder or
founders personal
goals and aspirations
Moderate skills
Skilled
Moderate
Extensive
Moderate
Strong
Likelihood that a
team can be put
together to launch
and grow the new
venture
Unlikely
Moderately likely
Very likely
Low Potential (-1)
Moderate Potential (0)
High Potential (+1)
3.
4.
5.
No experience
Part 5: Financial Issues
1.
Initial capital
investment
High
Moderate
Low
2.
Number of revenue
drivers (ways in
which the company
makes money)
Time to break even
One
Two to three
More than three
More than two
years
One to two years
Less than one year
Financial
performance of
similar businesses
Ability to fund initial
product (or service)
development and/or
initial startup
expenses from
Weak
Modest
Strong
Low
Moderate
High
3.
4.
5.
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personal funds or via
bootstrapping
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 potential for each part. The ranking is a judgment
call.
Score
(-5 to +5)
Overall Potential of the
Business Idea Based on
Each Part
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
Suggestions for
Improving the
Potential
Summary—briefly summarize your justification for your overall assessment:
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall
Full Feasibility Analysis
From “Preparing Effective Business Plans” by Bruce R. Barringer
Note: All fields can be expanded to provide additional space to respond to the questions. A
copy of this template, along with each of the assessment tools, is also available in PDF
format at the authors’ Web site at www.prenhall.com/entrepreneurship.
Introduction
A.
Name of the proposed business
B.
Name of the founder (or founders)
C.
One paragraph summary of the business
Part 1: Product/Service Feasibility
Issues Addressed in This Part
A.
Product/service desirability
B.
Product/service demand
Assessment Tools
Concept Statement Test
•
•
•
Write a concept statement for your product/service idea. Show the concept statement
to 5 to 10 people. Select people who will give you informed and candid feedback.
Attached a blank sheet to the concept statement, and ask the people who read the
statement to (1) tell you three things they like about your product/service idea, (2)
provide three suggestions for making it better, (3) tell you whether they think the
product or service idea is feasible (or will be successful), and (4) share any additional
comments or suggestions.
Summarize the information you obtain from the concept statement into the following
three categories:
*
Strengths of the product or service idea—things people who evaluated your
product or service concept said they “liked” about the idea
*
Suggestions for strengthening the idea—suggestions made by people for
strengthening or improving the idea
*
Overall feasibility of the product or service concept—report the number of
people who thing the idea is feasible, the number of people who think it isn’t
feasible, and any additional comments that were made
Other comments and suggestions
*
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall
Buying Intentions Survey
• Distribute the concept statement to 15 to 30 prospective customers (do not include
any of the people who completed the concept statement test) with the following
buying intentions survey attached. Ask each participant to read the concept statement
and complete the buying intentions survey. Record the number of people who
participated in the survey and the results of the survey here.
• Along with the raw data recorded here, report the percentage of the total number of
people you surveyed that said they would probably buy or definitely would buy your
product or service if offered. This percentage is the most important figure in gauging
potential customer interest.
• One caveat is that people who say that they intend to purchase a product do
not always follow through, so the numbers resulting from this activity are almost
always optimistic. Still, the numbers provide you with a preliminary indication of
how your most likely customers will respond to your potential product or service
offering.
How likely would you be to buy the product or service described above?
______ Definitely would buy
______ Probably would buy
______ Might or might not buy
______ Probably would not buy
______ Definitely would not buy
Additional questions may be added to the buying intentions survey.
Conclusion (expand fields and report findings, in discussion form, for each area)
A.
Product/service desirability
B.
Product/service demand
C.
Product/service feasibility (circle the correct response)
Not Feasible
Unsure
Feasible
D.
Suggestions for improving product/service feasibility.
Part 2: Industry/Market Feasibility
Issues Addressed in This Part
A.
Industry attractiveness
B.
Target market attractiveness
C.
Timeliness of entry into the target market
Assessment Tools
Industry Attractiveness
• To the extent possible, assess the industry at the five-digit NAICS code level your
potential business will be entering. Use a broader industry category (less NCICS
digits) if appropriate (http://www.census.gov/epcd/www/naicstab.htm).
• Assess the attractiveness of the industry the potential business plans to enter on each
of the following dimensions.
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall
Industry Attractiveness Assessment Tool
(used to assess the broad industry, rather than the specific target market, you plan
to enter)
Low Potential Moderate Potential High Potential
1. Number of competitors
Many
Few
None
2. Age of industry
Old
Middle aged
Young
3. Growth rate of industry
Little or no
Moderate growth
Strong growth
growth
4. Average net income for
Low
Medium
High
firms in the industry
5. Degree of industry
Concentrated Neither
Fragmented
concentration
concentrated nor
fragmented
6.
Stage of industry life
cycle
Maturity
phase or
decline phase
“Ambivalent”
Importance of industry’s
products and/or services
to customers
8. Extent to which business Low
and environmental
trends are moving in
favor of the industry
9. Number of exciting new Low
product and services
emerging from the
industry
10. Long-term prospects
Weak
7.
Growth phase
Emergence
phase
“Would like to
have”
“Must have”
Medium
High
Medium
High
Neutral
Strong
Target Market Attractiveness
• Identify the portion or specific market within your broader industry that you plan to
target.
• Assess the attractiveness of the target market on each of the following dimensions.
Target Market Attractiveness Assessment Tool
(used to assess the specific target market, rather than the broader industry, you
plan to enter)
Low Potential Moderate Potential High Potential
1. Number of competitors
Many
Few
None
in target market
2. Growth rate of firms in
Little to no
Slow growth
Rapid growth
the target market
growth
3. Average net income for
Low
Medium
High
firms in the target
market
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Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall
4.
5.
6.
7.
8.
Methods for generating
revenue in the industry
Ability to create “barriers
to entry” for potential
competitors
Degree to which
customers feel satisfied by
the current offerings in the
target market
Potential to employ low
cost guerrilla and/or buzz
marketing techniques to
promote the firm’s product
or services
Excitement surrounding
new product/service
offerings in the target
market
Low Potential
Unclear
Moderate Potential
Somewhat clear
High Potential
Clear
Unable to
create
May or may not be
able to create
Can create
Satisfied
Neither satisfied or
dissatisfied
Unsatisfied
Low
Moderate
High
Low
Medium
High
Market Timeliness
• Determine the extent to which the “window of opportunity” for the proposed business
is open or closed based on the following criteria.
• Determine the timeliness of entering a specific target market based on other criteria.
Market Timeliness Assessment Tool
Low Potential
1. Buying mood of
Customers are
customers
not in a buying
mood
2. Momentum of the market Stable to losing
momentum
3. Need for a new firm in the Low
market with your offerings
or geographic location
4. Extent to which business
Low
and environmental trends
are moving in favor of the
target market
5. Recent or planned
Large firms
entrance of large firms
entering the
into the market
market
Moderate Potential
Customers are in a
moderate buying
mood
Slowly gaining
momentum
Moderate
High Potential
Customers are
in an aggressive
buying mood
Rapidly gaining
momentum
High
Medium
High
Rumors that large
firms may be
entering the market
No larger firms
entered the
market or are
rumored to be
entering the
market
Conclusion (expand fields and report findings, in discussion form, for each area)
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall
A.
B.
C.
D.
E.
Industry attractiveness
Target market attractiveness
Market timeliness
Industry/market feasibility (circle the correct response)
Not Feasible
Unsure
Suggestions for improving industry/market feasibility.
Feasible
Part 3: Organizational Feasibility
Issues Addressed in This Part
A.
Management prowess
B.
Resource sufficiency
Assessment Tools
Management Prowess
• Use the following table to candidly and objectively rate the “prowess” of the founder
or group of founders who will be starting the proposed venture.
Management Prowess Assessment Tool
Low Potential
1. Passion for the business Low
idea
2. Relevant industry
None
experience
3. Prior entrepreneurial
None
experience
4. Depth of professional
Weak
and social networks
5. Creativity among
Low
management team
members
6. Experience and expertise None
in cash flow
management
7. College graduate
No college
education
Moderate Potential
Moderate
High Potential
High
Moderate
Extensive
Moderate
Extensive
Moderate
Strong
Moderate
High
Moderate
High
Some college
education but not
currently in college
Graduated or
are currently
in college
Resource Sufficiency
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•
•
The focus in this section is on nonfinancial resources. Use the following table to rate
your “resource sufficiency” in each category.
The list of resources is not meant to be exhaustive. A list of the 6 to 12 most critical
nonfinancial resources for your proposed business is sufficient.
An explanation of the rating system used in the first portion of the table is as follows:
1 Available
2 Likely to be available: will probably be available and will be within my budget
3 Unlikely to be available: will probably be hard to find or gain access to, and
may exceed my budget
4 Unavailable
5 NA: not applicable for my business
Resource Sufficiency Assessment Tool
Ratings
Resource Sufficiency
1 2 3 4 5
Office space
1 2 3 4 5
Lab space, manufacturing space, or space to launch a
service business
1 2 3 4 5
Contract manufacturers or outsource providers
1 2 3 4 5
Key management employees (now and in the future)
1 2 3 4 5
Key support personnel (now and in the future)
1 2 3 4 5
Key equipment needed to operate the business
(computers, machinery, delivery vehicles)
1 2 3 4 5
Ability to obtain intellectual property protection on key
aspects of the business
1 2 3 4 5
Support of local and state government if applicable for
business launch
1 2 3 4 5
Ability to form favorable business partnerships
Ratings: Strong, Neutral,
or Weak
Proximity to similar firms (for the purpose of knowledge
sharing)
Proximity to suppliers
Proximity to customers
Proximity to a major research university (if applicable)
Conclusion (expand fields and report findings, in discussion form, for each area)
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall
A.
B.
C.
D.
Management prowess
Resource sufficiency
Organizational feasibility (circle the correct response)
Not Feasible
Unsure
Suggestions for improving organizational feasibility
Feasible
Part 4: Financial Feasibility
Issues Addressed in This Part
A.
Total startup cash needed
B.
Financial performance of similar businesses
C.
Overall financial attractiveness of the proposed venture
Assessment Tools
Total Start-Up Cash Needed
•
•
•
The startup costs (which include capital investments and operating expenses) should
include all the costs necessary for the business to make its first sale. New firms
typically need money for a host of purposes, including the hiring of personnel, office
or manufacturing space, equipment, training, research and development, marketing,
and the initial product rollout.
At the feasibility analysis stage, it is not necessary for the number to be exact.
However, the number should be fairly accurate to give an entrepreneur an idea of the
dollar amount that will be needed to launch the firm. After the approximate dollar
amount is known, the entrepreneur should determine specifically where the money
will come from to cover the startup costs.
The total startup cash needed can be estimate using the following table.
Total Startup Cash Needed (to Make First Sale)
Capital Investments
Amount
Property
Furniture and fixtures
Computer equipment
Other equipment
Vehicles
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Operating Expenses
Legal, accounting, and professional services
Advertising and promotions
Deposits for utilities
Licenses and permits
Prepaid insurance
Lease payments
Salary and wages
Payroll taxes
Travel
Signs
Tools and supplies
Starting inventory
Cash (working capital)
Other expense 1
Other expense 2
Amount
Total Startup Cash Needed =
Comparison of the Financial Performance of Proposed Venture to Similar Firms
• Use the following tables to compare the proposed new venture to similar firms in
regard to annual sales (Year 1 and Year 2) and profitability (Year 1 and Year 2).
Comparison of the Financial Performance of Proposed Venture to Similar Firms
Assessment Tool
Annual Sales
Estimate of Proposed Venture’s
Annual Sales—Year 1
Estimate of Year 1 Sales __________
Explanation of How the Estimate
Was Computed
Summary: How proposed annual sales, on
average, compares to similar firms (circle one)
Below Average
Average
Above Average
Estimate of Year 2 Sales __________
Summary: How proposed annual sales, on
average, compares to similar firms (circle one)
Below Average
Average
Above Average
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Net Income
Estimate of Proposed Venture’s
Net Income—Year 1
Estimate of Year 1 Net Income __________
Explanation of How the Estimate
was Computed
Summary: How proposed net income, on
average, compares to similar firms (circle one)
Below Average
Average
Above Average
Estimate of Year 2 Net Income __________
Summary: How proposed net income, on
average, compares to similar firms (circle one)
Below Average
Average
Above Average
Overall Financial Attractiveness of the Proposed Venture
• The following factors are important in regard to the overall financial attractiveness of
the proposed business.
• Assess the strength of each factor in the following table.
Overall Financial Attractiveness of Proposed Venture Assessment Tool
Low Potential Moderate Potential High Potential
1. Steady and rapid growth in Unlikely
Moderately likely
Highly likely
sales during the first one to
three years in a clearly
defined target market
2. High percentage of
Low
Moderate
Strong
recurring income—meaning
that once you win a client,
the client will provide
recurring sources of
revenue
3. Ability to forecast income
Weak
Moderate
Strong
and expenses with a
reasonable degree of
certainty
4. Likelihood that internally
Unlikely
Moderately likely
Highly likely
generated funds will be
available within two years
to finance growth
5. Availability of exit
Unlikely to be May be available
Likely to be
opportunity for investor if
unavailable
available
applicable
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall
Conclusion (report finding for each area)
A.
Total startup cash needed
B.
Financial performance of similar businesses
C.
Financial feasibility (circle the correct response)
Not Feasible
Unsure
D.
Suggestions for improving financial feasibility
Overall Feasibility: Summary and Conclusion
Overall Feasibility of the
Business Idea Based on
Each Part
Product/Market Feasibility
Not feasible
Unsure
Feasible
Industry/Market Feasibility
Not feasible
Unsure
Feasible
Organizational Feasibility
Not feasible
Unsure
Feasible
Financial Feasibility
Not feasible
Unsure
Feasible
Overall Assessment
Not feasible
Unsure
Feasible
Feasible
Suggestions for Improving
the Feasibility
Conclusion—briefly summarize your justification for your overall assessment.
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall
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