Teaching the Business Model & Feasibility Analysis: Precursors

to the Business Plan

Dianne H.B. Welsh, Ph.D.

Steve Cramer, M.S.

University of North Carolina at Greensboro

• Part 1: Introduction to the Business Model and Feasibility Analysis (Dianne)

• Part 2: Core strategies and sources for the market, industry, competitive, and financial research of feasibility analysis (Steve)

Part 1: What is a Business Model?

• A business model is a simplified analysis or a detailed outline that shows the different major aspects of a proposed business that work together.

• Beginning step or simpler step than a Feasibility Analysis.

• Allows to bring the business idea together in one place with details so the entrepreneur can think it through (Welsh)

Part 1: What Is a Feasibility Analysis?

• Feasibility analysis is the process of determining whether a business idea is viable.

• It is the preliminary evaluation of a business idea, conducted for the purpose of determining whether the idea is worth pursuing.

Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall Barringer & Ireland, Entrepreneurship: Successfully Launching New

Ventures (4th ed.)

3-4

Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall Barringer & Ireland, Entrepreneurship: Successfully Launching New

Ventures (4th ed.)

Feasibility Analysis Process

Business Model Format

You are presenting to a group of your peers.  Each of you has the same objective:

1. You are preparing to make a pitch to a major group of investors.

2. Your intention is to persuade the group of investors that you have a great business idea that they MUST invest in.

3. You will have 10 - 12 minutes to explain the business concept & use the Business Model as part of the presentation.

     a. What is the business?

     b. Who are the customers?

     c. Why will your business succeed?  What is your Competitive Advantage?

     d. Where will it work?  Describe the demographics of your proposed location(s).

     e. Demonstrate the ROI for the investors.  When can they expect to receive the return on their investment?

4.  Be well organized (you have plenty of time) & you MUST be PROFESSIONAL in you delivery.

Upon completion of your presentation you will answer pertinent questions and accept constructive criticism.

Business Model Format - Continued

The body of the plan must not exceed 3 pages. This does not include financials or other appendices-no be more than 2 additional pages.

I. Business Overview

•Describe your idea and business model: Who does what with whom how; who pays for it?

• Financial value proposition: Why is this great idea from a monetary standpoint-for the people investing in the service or product; consumers?

• Value proposition: What is your niche? Who are you selling to and why are they buying your product of service?

• Vision: What is the ultimate objective of your plan?

II. The Market• Customer Identification: who’s paying for good or service; e.g.

private consumer.• Market size, analysis and forecast: What is the need? • Industry analysis and forecast: Who else is delivering this service

already? What is the outlook on this type of activity? SWOT analysis.

• Your competitive advantage: What makes your business the best qualified/positioned to deliver the good or service you are proposing?

III. Financial Analysis• Funding sources: Where will the money actually come from for the

activity? What funding already exists or is committed?• Budget with detailed projections through Year 1.• Discuss assumptions and capital requirements.  IV. Funding/next steps•How much funding/time does your plan require to get off the

ground?

Outline for a Comprehensive Feasibility Analysis

Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall Barringer & Ireland, Entrepreneurship: Successfully Launching New

Ventures (4th ed.)

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Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall Barringer & Ireland, Entrepreneurship: Successfully Launching New

Ventures (4th ed.)

• Product/Service Demand

There are two steps to assessing product/service

demand.

– Step 1: Administer a Buying Intentions Survey– Step 2: Conduct Library, Internet, and Gumshoe

research

Fasttrac-Kauffman Foundation

Summary

– Venture description– Product/service– Market– Start-up costs– Price & profitability

• Product/Service

– Purpose of the Product/Service– Stage of Development– Product/Service Limitations– Proprietary Rights– Governmental Approvals– Product/Service Liability– Related Products/Services and Spin-Offs– Production

• The Market

– Current Industry Size– Growth Potential of the Industry– Industry Trends– Competition Profile– Customer Profile– Customer Benefits– Target Markets– Market Penetration

• Price & Profitability

– Price List– Sales Estimate– Cost of Product/Service– Gross Margin– Financial Projections

Plan for further action

• Needed Capital• Entrepreneur’s Role• Business Plan• License Potential• Corporate Partners• Proprietary Rights• Infrastructure Members

References

• Carraher, S.M., & Welsh, D.H.B. (2014). Global Entrepreneurship (2nd ed.). Des Moines, IA: Kendall Hunt Publishing.

• Welsh, D.H.B. (2014). Cross-Disciplinary Entrepreneurship: A Practical Guide for a Campus Wide Program. New York: Palgrave MacMillan.

Part 2: the Research

1. Introduction2. Industries3. Markets 4. Competitors5. Financials6. Concluding case study

1. Introduction

Goals:• What kinds of research students should be

including• Core research concepts and strategies• Free authoritative resources v.

subscription databases • See http://uncg.libguides.com/coleman for

details and links.

2. Industries continued

• Sectors v. NAICS-level• Example:

2. Industries continued:What do we need to know

about our industry?

Current Performance

OutlookLife-cycle statusLevel of

competitionMajor playersCost structure

benchmarks

Supply chainKey external

drivers & success factors

Product/service shares

Barriers to entryLevel of regulation

3. Markets

• B2B v. consumer• How can we segment a consumer

market?– Let’s make a list…

https://www.flickr.com/photos/yourdon/5330125572/ (CC)

3. Markets continued

• How can we segment a consumer market?– Demographics (Census +)– Spending (BLS +)– Psychographics (proprietary sources)

• Important concepts:– Households v. families– Latino/Hispanic– Decennial Census v. American Community

Survey

4. Competitors

• Who, where, how much, hold old?• Direct v. indirect (example)• Database searching using NAICS &

location• Primary research needed

too

https://www.flickr.com/photos/jhecking/2842429147/ (CC)

5. Financials

• Benchmarking for the income statement & balance sheet

• Profit margins (gross, operating, net)

o Usually based on industry averages (NAICS-level, ideally)

o Much primary research for the financial section needed too – most challenging type of research

6. Case study (final exercise)

• Sketch a business model and feasibility idea relevant for the students in their academic backgrounds.

• We will ask a few folks to share their ideas