Is the estimated sales figure "normal" for your market area? Is the sales per square foot for your competitors above the normal average? Are there conditions, or trends, that could change your forecast of total sales? Do you expect to carry items in inventory from season to season, or do you plan to mark down products occasionally to eliminate inventories? If you do not carry over inventory, have you adequately considered the effect of mark-down in your pricing? (Your gross profits margin may be too low.).
Difference between a business Proposal And a feasibility Study
Do you know of any competitor's plans for expansion? Have any firms of your type gone out of business lately? Do you know the sales and market share of each competitor? Do you know whether the sales and market share of each competitor are increasing, decreasing, or stable? Do you know the profit levels of each competitor? _ e your competitors' profits increasing, decreasing, or stable? Can you compete with your competition? Determine the total sales volume in your market area. How accurate do you think your forecast of total sales is? Did you base your forecast on concrete data?for
Who are your major competitors? What are the major strengths of each? What are the major weaknesses of each? Are you familiar with the following factors concerning your competitors: Price structure? _ Product lines feasibility (quality, breadth, width)? _ sources of supply? _ Image from a consumer's viewpoint? Do you know of any new competitors?
What do you know about the population growth trend in these areas? What is the average family size? What is the age distribution? What is the per capita income? What are the consumers' attitudes toward business like yours? _.What do you know about consumer shopping and spending patterns relative to your type of business? Is the price of your product/service especially important to your target market? Can you appeal to the entire market? If you appeal to only a market segment, is it large enough to be profitable?
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What is the average cost of goods sold percentage of sales? _.What is the average inventory turnover,. E., the number of times the average inventory is sold each year? _.What is the average gross profit as a percentage of sales? What true are the average expenses as a percentage of sales? What is the average net profit as a percent of sales? take the preceding figures and work backwards using a standard income statement format and determine the level of sales necessary to support your desired income level.
From an objective, practical standpoint, is this level of sales, expenses and profit attainable? _ Small Business Set Up Market Analysis The primary objective of a market analysis is to arrive at a realistic projection of sales. After answering the following questions you will be in a better positions to answer question eight immediately above. Define the geographical areas from which you can realistically expect to draw customers. Hat is the population of these areas?
Dollars are the (actual, estimated, or industry average) amounts for income and expense categories. Operating ratios are expressed as percentages of net sales and show relationships of expenses and net sales. For instance 50,000 in net sales equals 100 of sales income (revenue). Net profit after taxes equals.14 of net sales. The hypothetical "X" industry average after tax net profit might be 5 in a given year for firms with 50,000 in net sales. First you estimate or forecast income (revenue) and expense dollars and ratios for your business.
Then compare your estimated or actual performance with your industry average. Analyze differences to see why you are doing better or worse than the competition or why your venture does or doesn't look like it will float. These basic financial statistics are generally available for most businesses from trade and industry associations, government agencies, universities and private companies and banks Forecast your own income statement. Do not be influenced by industry figures. Your estimates must be as accurate as possible or else you will have a false impression. What is the normal markup in this line of business. E., the dollar difference between the cost of goods sold and sales, expressed as a percentage of sales?
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_.What financial investment will be required for your short business? _.How much could you earn by investing this money? _.How much could you earn by working for someone else? _ d the amounts in 5 and. If lab this income is greater that what you can realistically expect from your business, are you prepared to forego this additional income just to be your own boss with the only prospects of more substantial profit/income in future years? What is the average return on investment for a business of your type? _ Small Business Set Up preliminary Income Statement Besides return on investment, you need to know the income and expenses for your business. You show profit or loss and derive operating ratios on the income statement.
E capital requirements for entry or continuing operations excessive? Is adequate financing hard to obtain? Are there potential detrimental environmental effects? Are there factors that prevent effective marketing? Starting Company guide desired Income, the following questions should remind you essay that you must seek both a return on your investment in your own business as well as a reasonable salary for the time you spend in operating that business. How much income do you desire? _ e you prepared to earn less income in the first 1-3 years? _.What minimum income do you require?
require to provide your products/services. Small Business Set Up Requirements For Success. To determine whether your idea meets the basic requirements for a successful new project, you must be able to answer at least one of the following questions with a "yes." es the product/service/business serve a presently unserved need? Does the product/service/business serve an existing market in which demand exceeds supply? Can the product/service/business successfully compete with an existing competition because of an "advantageous situation such as better price, location, etc? Major Flaws, a "Yes" response to questions such as the following would indicate that the idea has little chance for success. Are there any causes (i.e., restrictions, monopolies, shortages) that make any of the required factors of production unavailable (i.e., unreasonable cost, scare skills, energy, material, equipment, processes, technology, or personnel)?
The next three questions emphasize the point that very few people can claim expertise in all phases of eksempel a feasibility study. You should realize your personal limitations and seek appropriate assistance where necessary (i.e. Do you have the ability to perform the feasibility study? Do you have the time to perform the feasibility study? Do you have the money to pay for the feasibility study done? Briefly describe the business you want to enter. List the products and/or services you want to sell. Describe who will useyour products/services.Why would someone buy your product/service?
How to conduct a feasibility Study the right way
"Investment" Group of Companies offers professional services promoting the realization of investment projects. We offer professional advice in selecting the most appropriate model of the investment project, financing method, and perform works associated with development and support of business plans for submission to the bank financial institutions and / or potential investors. Comprehensive support of the investment process includes not only detailed study of the investment project, business plan development and feasibility study, but also conducting market research to assess situation at the project feasibility market, presentation of the project to the investor. Do you know which skills and areas of expertise are critical to the success of your project? Do you have these skills? Does your idea effectively utilize your own skills and abilities? Can you find personnel that have the expertise you lack? Do you know why you are considering this project? Will your project effectively meet your career aspirations.