Ever got an idea for a startup and wanted to know if it would work? Then what you are doing is estimating the feasibility of the idea. Estimating the feasibility of an idea is one of the most important phases when making a startup so that you can avoid losing your money in a bad startup.
Feasibility is usually done when starting your startup in a new or unexploited market due to there not being many previous examples by which to gain confidence in the startup. To determine feasibility, you must carry out a feasibility study. This is a study that will help you measure whether the startup will be able to be profitable or whether there is a large chance of it failing. Feasibility plans focus on points that are well known in older startups and businesses, like supermarkets and fast food shops.
To make a feasibility plan there are several questions that must be answered. You must know exactly what the problem that you are aiming to solve is. For example, if you want to make a startup that improves transportation you must know where the problem is. Is it in the price of transportation, or is it in its safety, or even how convenient it is. Next, you want to know which type of customers you are addressing. It’s impossible to start a startup without knowing the customers you are targeting as different items appeal to different people and attempting to generalize your output may lead to your startup losing its uniqueness which will make it harder to attract customers. However, another important point is how profitable this startup will be. To estimate profitability, several factors must be observed including the many different costs. How much will it cost to attract a customer? How much will you earn from every customer?
Finally, you must know what resources are available to you so you can decide which direction the startup will take to grow. Do you have enough capital to support the business until it becomes profitable? Or will you face a lack of funds before profit is made? These are extremely important questions that must be asked so that the startup doesn’t collapse before it becomes profitable. To avoid mismanagement of capital it is best to create a roadmap detailing how the money will be spent till the business makes a profit.
All in all, you must judge the feasibility of a startup before setting it up, to avoid the failure of the startup and to know how profitable it can potentially be.