Podcast
Questions and Answers
What is a key criterion for evaluating the feasibility of a business idea?
What is a key criterion for evaluating the feasibility of a business idea?
- Financial feasibility (correct)
- Marketing strategies
- Product design
- Customer testimonials
Which of the following is NOT a source of market information for assessing business ideas?
Which of the following is NOT a source of market information for assessing business ideas?
- Social media analysis (correct)
- Negotiations with prospective customers
- Actual polls of customers
- Prior studies by agencies
What aspect does competitive strength NOT determine when evaluating a business idea's market feasibility?
What aspect does competitive strength NOT determine when evaluating a business idea's market feasibility?
- Target audience (correct)
- Promotion methods
- Product offerings
- Price
How can a business effectively gauge stable and sufficient demand?
How can a business effectively gauge stable and sufficient demand?
Which method is NOT mentioned as a means to gather market information?
Which method is NOT mentioned as a means to gather market information?
When assessing technical feasibility, which of the following is a potential concern?
When assessing technical feasibility, which of the following is a potential concern?
What is crucial for a business idea in terms of competitive strength?
What is crucial for a business idea in terms of competitive strength?
Which of the following best describes the relationship between demand and investment for a business idea?
Which of the following best describes the relationship between demand and investment for a business idea?
Which of the following is NOT a source of financing for a proposed business venture?
Which of the following is NOT a source of financing for a proposed business venture?
What does good credit standing in the community indicate for a proposed business owner?
What does good credit standing in the community indicate for a proposed business owner?
Which of the following statements about projected financial statements is true?
Which of the following statements about projected financial statements is true?
What is a projected income statement primarily used for?
What is a projected income statement primarily used for?
Which of the following scenarios describes 'zero listing' during the final selection of business ideas?
Which of the following scenarios describes 'zero listing' during the final selection of business ideas?
Which of the following would be least likely considered a financing source?
Which of the following would be least likely considered a financing source?
What is the main purpose of analyzing financial ratios derived from projected financial statements?
What is the main purpose of analyzing financial ratios derived from projected financial statements?
Which of the following sounds like a primary benefit of using projected financial statements?
Which of the following sounds like a primary benefit of using projected financial statements?
What is a potential disadvantage of using unanticipated means for idea generation?
What is a potential disadvantage of using unanticipated means for idea generation?
What is a primary purpose of search questions in business idea generation?
What is a primary purpose of search questions in business idea generation?
Which of the following is NOT part of the screening process for generated business ideas?
Which of the following is NOT part of the screening process for generated business ideas?
What might idea prompting be driven by?
What might idea prompting be driven by?
Which example of a search question seeks to understand consumer motivation?
Which example of a search question seeks to understand consumer motivation?
Why is a deliberate search for ideas conducted?
Why is a deliberate search for ideas conducted?
What is the first step taken in the search for a business idea?
What is the first step taken in the search for a business idea?
What factor is NOT considered essential before selecting a business idea?
What factor is NOT considered essential before selecting a business idea?
Study Notes
Financing Feasibility
- There are three common sources of financing for a new venture: owner's savings, relatives and friends, and financial institutions like banks.
- Financial Feasibility is determined by analyzing the financial prospects of a business idea.
- This analysis involves two steps:
- Preparing projected financial statements:
- Income statement
- Balance sheet statement
- Cash flow statement
- Deriving and analyzing financial ratios from the projected statements.
- Preparing projected financial statements:
Market Feasibility
- A business idea must demonstrate market feasibility, meaning there is:
- Stable and sufficient demand for the product or service.
- Potential for the venture to compete effectively with existing or potential competitors.
- Demand must remain constant or grow over time to justify investment.
Sources of Market Information
- Prior market studies by other companies, government agencies, and entrepreneurs.
- Actual polls of customer samples:
- Mail questionnaires
- Advertisements with feedback mechanisms
- Phone interviews
- Personal interviews
- Negotiations with prospective customers to gauge their willingness to buy.
Technical Feasibility
- Technical feasibility assesses whether the business idea is practical from a technical standpoint.
- It considers potential challenges in:
- Assembling resources
- Procurement of materials and manpower
- Production difficulties like unstable supply of materials, unpredictable power supply.
Idea Generation
- Ideas can result from chance encounters or deliberate searches.
- Chance Encounters: a casual conversation, observation of a problem, or a personal experience can spark an idea.
- Deliberate Search: A more structured approach:
- Using search questions:
- Focuses on specific needs and seeks answers.
- Examples: "How can this product be made differently?" or "What will motivate consumers to buy my product instead of a competitor’s?"
- Idea prompting:
- Utilizes cues or hints from events, customer requests, or conversations.
- For example, a customer complaint could lead to a new business idea.
- Using search questions:
Screening Business Ideas
- Screening ensures only the most promising ideas are selected and developed.
- Criteria for screening business ideas:
- Market feasibility
- Technical feasibility
- Financing feasibility
- Financial feasibility
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Description
This quiz explores the essential concepts of financial and market feasibility for new ventures. You'll learn about common sources of financing, the steps involved in financial analysis, and what makes a business idea viable in the market. Test your knowledge on preparing financial statements and understanding market demand!
