Feasibility
Before you invest time and money in any business idea you must be sure that what you’re proposing is feasible.
Later we’ll look at what’s involved in working out cash flow and profit and loss forecasts for your business. We’ll also look at formulas for calculating how much you need to charge for your products or services.
Conducting a Simple Feasibility Study
When you’re working through your ideas get into the habit of having a calculator to hand and working out very quick, rounded-off figures. Test your idea on a best scenario basis followed by a worse case scenario.
Let’s say you’re planning to run walking holidays.
So you work out very roughly what you’re hoping to charge your customers, taking into account all the costs you’re going to incur. Your basic costs should include provisions for:
- Marketing
- stationery, brochures etc
- public liability insurance
- salary costs, including a provision for hiring in additional staff if you think you’ll need them
- stock if applicable.
I stress you’re making rough calculations here. You don’t need to work in the cost of every nut and bolt. Just try to be as realistic as you can, being generous with your allowances for expenditure.
Tips:
One of the things I’ve learnt from running my own businesses is that things always seem to cost far more than I initially think they will.
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