This in turn enables you, as well as interested parties and potential investors to research and analyze the concept for feasibility, both from a market and financial perspective.
The Feasibility Test
Think of a feasibility test as a reality check for your big idea. According to Entrepreneurship For Dummies by Kathleen Allen, a feasibility test weighs the validity of your business concept by examining four points:
- The product your firm will offer
- The customer you will target
- Your value proposition
- How you will get the product to its intended users
The Value Proposition
In essence, your value proposition is what makes customers choose you, instead of the competition. It's part marketing, part operations and part strategy.
On a subconscious level, customers will compare the value proposition of your company against those of your competitors when deciding where to take their business. With that in mind, a few things to remember when writing your value proposition:
- Keep it short and uncluttered. Your value proposition explains why customers should buy from you. If you can't sum it up in 10 words or less, chances are you won't be able to execute it, either.
- Be precise. Your customers have specific needs; your value proposition should offer targeted solutions
- This is about your customer, not you. Your value proposition should discuss only what matters to your customers and the value you can bring to them.
- Value comes in numerous forms. Money, time, convenience and superior service are a few of the ways you can help deliver value to your customers.
The last part of the business concept is how you will deliver your product to your customers. There are several factors to consider when plotting your distribution strategy:
- Will you set up a brick-and-mortar shop or office, sell online or both?
- What unique obstacles exist for your company in these two different channels?
- If your company sells a product, will you have the space to keep enough inventory on hand, or will customers have to agree to waiting periods?
- Can you strike exclusive deals with any particular distributor or retailer? Do your competitors have any such deals that hinder your operation?