Small Business Feasibility Analysis
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Business Entreprise Sales Ventes market marché New Nouveau Analysis Une analyse Small Petit Feasibility Analysis Analyse de faisabilité
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M O N T G U I D E MT 9510 Human Resource Development Starting a Small Business: The Feasibility Analysis by Michael D.. • Assess the market for your new business idea • Estimate the basic financial feasibility of your business, including potential sales revenues, fixed and variable costs, and break-even figures • Identify the pitfalls many new small businesses encounter—and study how you can avoid them and • Finally, make an informed choice about whether or not your idea is still attractive and practical.. Review these examples: Example 1: Toy Manufacturer Example 2: Clothing Store If you were to make toys that sell for 5 each and your variable costs (most likely materials and labor) average 3 per toy, your contribution margin is: The break-even calculation works a little differently when a wide variety of items are sold, all with approximately the same percentage markup.. Potential Pitfalls If your market assessment and financial analysis lead you to believe that your new business idea has potential, you next need to 500 150 200 200 600 100 1,750 Break-even Sales in Dollars = Total Fixed Costs Gross Margin = 1,750/.40 = 4,375 per month avoid the pitfalls that frequently capture the unwary small business person.. Beginners often underestimate the amount of money needed to begin, and they do not allow for working capital, (i.e., the money you need to finance your inventory and maybe your finished product between the time you buy it as raw 5 materials, pay the laborers to assemble it, ship it to the destination and finally get paid.) Most people try to borrow the minimum amount of money possible and forget about working capital..
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