The Truth About Feasibility Studies and Business Plans: How to avoid wasting your money on worthless figures!
As an aspiring entrepreneur, you wouldn’t be blamed to approach a management consultancy firm to help you prepare a feasibility study or a business plan to make sure that your idea is viable. In fact, some would argue that it is the wise thing to do. The truth of the matter however, all of these studies and plans are based on assumptions made by management consultants who have little to no practical experience in the area at hand. Even if they were experts in the field, the variables affecting your business are never the same as other businesses rendering the consultants’ experiences as useless. After all, no two businesses are created equal. It is for that reason that we find that most of the new business startups never abide to their pre-set business plans. However, this is not to say that you shouldn’t test the feasibility of your idea before investing your hard-earned money into it – quite the contrary. All entrepreneurs should conduct some sort of feasibility study for their new ventures; however, it is their expectations out of such studies that should be calibrated.
As explained earlier, no two businesses are created equal. That is why you find some businesses flourishing while others struggle, even if they are both providing the same exact product or service. There are a great number of variables affecting any business plan. Some, such as rent, salaries, pricing, and cost, are obvious. Others, such as the speed in which management decisions are taken, quality control measures, and customer satisfaction, are harder to determine and quantify. For that reason, feasibility studies will never ensure the success of a business idea. Indeed, they shouldn’t. The true objective of a feasibility study is to ensure that the entrepreneur is well informed before venturing into unchartered territories. To achieve this objective, the entrepreneur will need to be part of the development of his study.
If you have commissioned a management consultant to conduct a feasibility study on your behalf, don’t simply take his assumptions for granted – challenge them! Management consultants may be experts with numbers and statistics; however, you will find that if you dig deep enough, there is always an underlying assumption to any figure that they will state in your feasibility study. To ensure that your feasibility study gives a higher level of assurance to the viability of your idea, it is your mission to challenge those underlying assumptions and make sure that they make sense to you.
The objective of the feasibility study or business plan for you should not simply be a yes or no verdict to go ahead with the idea. You will benefit the most by being part of the model preparation stage in which all the assumptions and calculations are set. That is where you will be able to think about and put all the intricate details of your idea onto paper and discover challenges that might have previously been hidden from you. It is your management consultant’s job to help you uncover these challenges and quantify them.
Finally, always approach your business plan with a practical mindset. For instance, if the assumption was made to sell your product or service to 10% of the population of the area in which you will operate, think of how will you reach that market segment. Is it going to be through social media ads, conventional marketing, or some other marketing method? Who will manage the marketing campaign? What would be the approach? How often will you need to conduct such campaigns? And most importantly, how will you measure the effectiveness and when would be the time to change your approach?
The same applies to any assumption made within your study and this is the approach we encourage our clients to follow when we are conducting a feasibility study on their behalf. To learn more about our feasibility study and business plan services, contact us on https://www.haconsultancies.com/book-a-meeting/
Leave a ReplyWant to join the discussion?
Feel free to contribute!