Will It Work? Tips for Determining the Feasibility of a Business or Project

Entrepreneurs are often faced with answering the question “Will it work?” Lenders, investors, perhaps

suppliers and others involved in the project should also ask that question or scan the business plan to see if

“will it work” is addressed. Whatever the specific project—starting a new business, expanding an existing one, or even selling or buying a business—the basic issue is feasibility.  Can it be implemented successfully?

Here at the Small Business Development Center (SBDC) we work with entrepreneurs on a variety of projects, and most of them involve feasibility. Here are some tips on feasibility that we’ve found work in most situations.

Do A Rough Analysis First

A good starting point is what we call “back of the napkin” analysis. In a short amount of time and with little data, you can often get a rough idea of the feasibility of a project. The results of this rough analysis may quickly decide if you need to spend more time on the detailed analysis, alter your idea a bit, or move on to

another idea.

For example, say you are thinking of making cookies to sell to stores, cafes, espresso stands, and restaurants. In a short amount of time you can gather some basic data:

• The cost of ingredients of a batch of cookies, and how many cookies a batch makes.

• The time it will take you to bake them.

• How much rent will be to use a commercial kitchen (assuming you will lease space until you are established).

• The price of competing cookies (the price to your customer—the store, café, espresso stand or restaurant, that is).

• How much money you need at a minimum to take out of this business for yourself for the time you spend in it.

Although you will have other costs (insurance for example), you can quickly calculate using the above data, what your capacity is (how many you can make in the time you have in your leased commercial kitchen), and what your gross profit (sales less cost of ingredients) per cookie will be. You can then calculate how many cookies you need to sell per month to pay the rent, and provide you with the income you have decided is the minimum you need. You can then see if at this very basic level of analysis if it seems feasible enough to continue.

If the rough analysis seems feasible, you can gather more detailed costs and refine the analysis. Then you can start your market research to determine the level of demand. While our example is a simple one, this approach can apply to any type of business: starting a commercial fishing business, expanding a manufacturing business to add a new product, or starting a service business, such as bookkeeping services.

The tasks are the same:

• Gather rough estimates of your basic and largest costs, including profit for the owner(s)

• Figure out how many of your product you need to sell to cover these basic costs.

• Ask yourself if the resulting sales figure seems reasonable. Calculate how many different customers you might need.

• If your rough results are encouraging, proceed to next steps.

• Refine your cost estimates and redo the analysis.

• Start your marketing research to determine demand

What happens, though, if the rough analysis is not encouraging? Rework your idea — explore various options for parts of your plan. Being successful in starting a business or expanding an existing one involves determining if the venture is feasible — will it work. Start your analysis and contact the SBDC if you need assistance.

Social Media Marketing Featuring You Tube.

Here is an article that is a quick read on social media marketing plan featuring you tube. http://www.fastcompany.com/1761504/how-to-make-youtube-part-of-your-social-media-marketing

Taking Your Business to the Next Level

“How can I evaluate new business opportunities?” “How can I determine whether to sell one of my three businesses?” “How can I better plan for future contingencies?” “Will I be able to sell my business in ten years and afford to retire?” These questions and others like them are ones that small business owners should be  asking themselves. As often happens, we become complacent when all is going well. We can breathe--and even take a vacation! However, businesses often take on a life of their own and may be headed down a path that is different from what the owner envisions. The owner just hasn’t told the business of his or her vision. Taking your business to the next level is that type of planning. It asks: “Where is my business going? Where do I want it to go? How can I get there?”

The First Step—Your Current Reality

To begin this type of planning, you need to know where you are—what is your current reality? This involves some data gathering and analysis. While this will be different for each business, there are four main areas you’ll typically need to look at to assess your current situation: finances; marketing; employees; and facilities. Let’s briefly look at some of the issues in each of these areas.

• Finances: Do you prepare monthly financial statements? If not, then this is the place to start. If you do, do you analyze them? What do you see when you look at trends in revenues and major expense categories? Are they changing? Is the change positive or negative? By calculating a few standard financial ratios, you can better understand what’s going on. You will also gain an idea of how your business compares with others in your industry.

• Marketing: How much do you know about your customers? Who are they? Where do they live? What other demographic data do you know about them? What influences their buying decisions? Has your customer base changed over the years? Is one type of customer more profitable than other ones? Who are your competitors? What are their strengths and weaknesses? What is your competitive advantage—why should customers come to your business and not the competition? What about your prices—are they too high or too low?

• Employees: Do your employees know what you expect of them? How do you communicate this? Can they take over for one another when necessary? Do they know what values your business is run on? What is your employee turnover rate? And why do employees leave?

• Facilities: Is your space adequate? Can you expand? How would your customers and employees evaluate your location and facilities?

The Next Step—Creating a Vision and a Plan

Where do you want to go and what do you want your business to accomplish? Now that you know where you are—what the current reality is—you can begin creating a vision of what you’d like to see as a future reality. Your vision can be broad in scope, including personal goals and goals for your community. Now ask yourself what part you want your business to play in fulfilling that vision. Your answer to that question becomes your mission statement. Armed with a firm understanding of your current Taking Your Business to

the Next Level  reality and what you’d like to create as your future reality, you can prepare an action plan that will help you to realize your vision.

How the SBDC Can Help

At the SBDC, we work with small business owners to help them gain an understanding of their current situation, create a vision, and develop a plan to get there. For example, a few years ago we worked with an entrepreneur who owned three businesses. He had a good understanding of his current situation and he had some components of a vision: he wanted more personal flexibility to enjoy life as he got older, and he wanted to be able to take advantage of opportunities to sell one or more of his businesses. We worked with him to fine-tune that vision, and we helped him to develop not only an action plan, but also a series of analytical tools for decision-making.

Businesses are never standing still, they are either moving forward or backward. By using the approach outlined above, you can move your business forward to the next level of success. Let us know if we can help you with this.

Kathleen Purdy is the Center Director of the Olympic Peninsula Small Business Development Center (SBDC),  This article was first published in Olympic Business Journal

Can You Increase Sales by Exporting?

The Washington Small Business Development Center Export Program focuses on working with new-to-export and new-to-market companies with little or no expertise in international trade. The program has set an ambitious goal of establishing a “Culture of Exporting” across the state within the next two years.

The Washington SBDC recently opened two Export Centers to assist Washington businesses to prepare for or expand their export capabilities. Located in South Seattle and Spokane, each center is staffed with two seasoned trade specialists. These new centers join a statewide network of 24 small business development centers and 26 certified business advisors who provide no-cost small business advising services.

The four trade specialists bring to their work assisting new-to-market businesses several decades of experience in international markets, unique skill sets and many years of living and working abroad. In addition, a group of WSU interns are conducting targeted export market research that will assist SBDC clients as they develop business plans that ensure successful and long-term export activities.

The Export Centers:

• Provide no-cost confidential, in-depth, and long-term one-on-one export advice

• Assist in preparing market and trade research

• Help clients assess their export readiness and determine next steps

• Collaborate with clients to develop a plan that ensures short and long-term exporting success

• Provide or locate additional resources as needed

The Export Web Portal at export.wsbdc.org is also available, featuring the following:

• Extensive research resources that are categorized and link to specific web pages not just websites.

• Export process “mind map” that outlines the process of preparing and executing an export plan. The process includes links to information, outlines, resource documents and partner resources.

• Frequently asked questions “mind map” that leads to specific resources that have the needed information.  

Join the Online Revolution -- Engage in Radical Self-Promotion

The Goal of Social Media is to Increase Sales. Really?

Social media provides the tools that enable us to have online conversations. I know, the big advice out there today about social media is don’t try to sell anything to anyone. The idea of social media is to be part of the conversation to build relationships over time. Of course, our goal in business is to sell more stuff to more people.

The new revolution in business is social media marketing. If done right, it can be your key to radically improving sales. The question is how do you increase sales by using social media? Sun Tzu in the Art of War explains that strategy is determined by the terrain. Here is an overview of the social media terrain.

Your Word-of-Mouth Marketing Just Got a Megaphone

There are three ways your customers eventually find you online:

1 Search engines

2 Browsing

3 Recommendation

Susan Boyle, chances are you have heard of her, the Britain’s Got Talent superstar already has just under 40,000,000 views on one YouTube video in just 11 days. She is listed on the second page of most viewed videos of all time for YouTube. Most of us heard about her because her performance was recommended to us. The idea is you want your business, your products and your services to be recommended as well.

Social media gives your word-of-mouth marketing a megaphone. You have a good business, your customers love you. You just need more customers. Here is an important rule of social media marketing . . .

You Must Be Present to Win

Out of sight is out of mind. There is a saying in business, “You must win mind share before you can win market share.” Social media is where conversations and recommendations are happening. By joining the conversation you become visible and good things can happen from there.

Here are some ways to be present to win:

1 Listening to the conversations you are interested in

2 Participating in those conversations

3 Publishing information

4 Facilitating a conversation

Listening

Ask your customers which social media they use. Twitter, Facebook, forums, YouTube, Yelp, others? You can also search topics that relate to your business to find where relevant conversations are occurring online. You can use Google alerts and www.search.twitter.com to  find articles, blogs, newsletters, and other online content that will help you gain insights into your customers, your industry, and discover a whole new world of ideas.

Participating

By participating on social media websites like Biznik.com, Linkedin.com, Twitter.com and hundreds more just like them you can create a profile that will show up on the front page of search engines. (I was surprised today to find I was on the front page of Google when I searched my name.) Participating in social media increases the likelihood that you will show up on the front page of search engines when customers are looking for you.

Here are some interesting ways to participate. You can start a blog, comment on other people’s blogs, comment on relevant news articles, comment on published online articles, and link to interesting information on your website and other people’s websites on Twitter.

Publishing

You can publish (for free) pictures, videos, articles and announcements. Your new customers will find your published materials and those materials will link back to your website. There are hundreds of places to publish your information.

Facilitating

Websites like Biznik.com, Linkedin.com, Facebook, Ning.com, and others like them allow you to create social networking groups for free, for your customers. You can facilitate your own conversations that will meet the specific needs of your existing and new customers.

Social Media is More like Customer Service than Sales and Marketing

There is a buying process customers go through when they are deciding to do business with you:

1 Awareness

2 Consideration

3 Purchase

4 Loyalty

Social media helps with the awareness, consideration, and loyalty aspects of the buying process. Think of social media marketing as a customer service outreach. Chances are, you are already good at customer service and social media gives you exposure to new people very quickly.

“Give Them Something to Talk About”

You know what I mean. Believe me; we are all learning how to use and how to win customers with social media. I’ve talked to several social media experts and they admit they are stilling learning and discovering. No one has all of the answers. So don’t feel bad as you feel your way through this new terrain. The best advice I have heard about social media marketing is to spend no more than one hour per day working on it. You are already busy enough. What you put online stays online and works for you 24/7. So giving it an hour a day allows you to build slowly and get better as you go.

You may not get results over night; however momentum will build as you give them something to talk about.

Radical Self-Promotion - Crawl, Walk, Run

People do business with people they know, trust, and like. Social media gets you out there. You are the face of the company. As you participate and publish you build credibility and trust. That’s why we call it “radical self-promotion.” We want to get know you. Start small. Crawl, then walk, and then run. Do one social networking site at time and then add more as you go. The good news is, you become visible, your search engine ranking improves, you encourage raving fans, you get recommendations, you get to know your customers better, you get to meet new people, and yes social media will result in more sales. I highly recommend it.

Social Media Action Plan:

1 Search online for information about your industry or line of business

2 Join and check out several online communities as you have time

3 Pick one social media website at a time and learn how to use it

4 Spend one hour a day listening, participating, publishing, and/or facilitating

5 Track website traffic, search page rank, and increased sales for effectiveness

This article was written by Kirk Davis, an SBDC Certified Business Advisor with the Kent Small Business Development Center, which is part of the 24 statewide offices of the Washington Small Business Development Center network(WSBDC).