Bond & Pecaro develops feasibility studies for clients looking to develop new opportunities in the media and technology industries. The purpose of a feasibility study is to determine the viability and future potential of a product, service, or business. Feasibility studies are undertaken to examine start-up opportunities, expand existing product or service lines, introduce new products and services, expand into new market segments or geographic areas, or acquire new businesses.
A feasibility study is an important step for any owner or company that is interested in starting or growing their business. It helps to clarify the business opportunity, simplify decision-making, and provide the foundation for a detailed business plan should a decision be made to go forward with the opportunity. The study can also help attract funding from venture capital, private equity, or banks. Most of all, it will save companies capital in the long-run through a careful assessment of the market before any significant capital or internal resources are committed.
The feasibility study will consist of a study to research, analyze, and address several key economic areas to assess the potential of a business opportunity. A good feasibility analysis will clearly define the product or service, market size, target demographic or market segment, and describe the proposed business model including the organizational, technological, operational, sales and marketing, and financial requirements of the business or product line.
The initial section of the study will define the product or service, and how it will benefit the consumer or client. The utility and unique features of the product or the specific level of service that will be delivered will be disclosed. The section will also show how the product or service will be used, what advantages it holds over the competition, and why a customer should buy this product or service.
The market section of the analysis will investigate the size of the market and test the demand for the product or service. Do the demand and supply trends in the market benefit the proposed product or service? Other key questions include how large is the market demand, who are the target customers, and what are their demographic profiles? Are there different ways to measure the size of the market? A realistic assessment of the company’s potential market share or number of units sold will be addressed. An understanding of industry characteristics is another important component of this section. What are the barriers to entry in this industry? A careful competitive company analysis examining the size, strengths, and weaknesses of competitors will be conducted. Can the proposed business realistically take market share from entrenched competitors and how will they react to a new company or product line?
The business model section will address the organizational, technological, operational, sales, and marketing requirements. Key executives and managers will be identified and their responsibilities will be outlined in the organizational structure component of the analysis. Any special hardware or software technology required for the business or product will be identified. Does the business or product depend upon intellectual property such as a patents, copyrights, or IP licenses? The business process section will outline how the product or service is created and the resources required. Finally, how will the product be sold? What sales and marketing efforts are needed to effectively enter the market and generate repeat customers? What is the ideal mix of media advertising? Does it make sense to have an in-house sales force or should the task be outsourced?
Finally, the financial segment will summarize and analyze the start-up costs and provide financial projections including capital expenditure and funding requirements, and test the revenue and profitability potential of the undertaking. The start-up and organizational costs will be quantified. Pro-forma financial statements will be constructed based upon the resources required and revenue and expense forecasts. A breakeven analysis will determine how long it will take for the company to cover its startup costs and sensitivity analyses will provide the owners or shareholders an insight into the potential risks involved under various operating scenarios.
In a recent feasibility study assignment, Bond & Pecaro examined various operating scenarios for a large diversified media company holding FCC licenses covering 25% of the U.S. population. The company needed to determine the feasibility of an investment strategy for the licenses based upon several technological options in a market with rapidly changing demographic, economic, competitive, and regulatory factors. Bond & Pecaro was able to provide the company with an analysis of the investment risks associated with the subject licenses. The results of the feasibility analysis were ultimately validated by the market.
Bond & Pecaro has the experience and resources to conduct thorough feasibility analyses for business opportunities in media and technology industries. We possess unique and proprietary resources to analyze its markets, competitors, business models, and financial benchmarks and to help refine and advise clients regarding potential new opportunities.