Organizational Feasibility analysis

Organizational  feasibility  analysis is conducted to determine whether a proposed business has sufficient management expertise, organizational com-petence, and resources to successfully launch.7 There are two primary issues to consider in this area: management prowess and resource sufficiency.

1. Management prowess

A proposed business should evaluate the prowess, or ability, of its initial man- agement team, whether it is a sole entrepreneur or a larger group.8 This task requires the individuals starting the firm to be honest and candid in their self- assessments. Two of the most important factors in this area are the passion that the solo entrepreneur or the management team has for the business idea and the extent to which the management team or solo entrepreneur under- stands the markets in which the firm will participate.9 There are no practical substitutes for strengths in these areas.10

A collection of additional factors help define management prowess. Managers with extensive professional and social networks have an advantage in that they are able to reach out to colleagues and friends to help them plug experience or knowledge gaps. In addition, a potential new venture should have an idea of the type of new-venture team that it can assemble. A new-venture team is the group of founders, key employees, and advisers that either manage or help manage a new business in its start-up years. If the founder or founders of a new venture have identified several individuals they believe will join the firm after it is launched and these individuals are highly capable, that knowledge lends credibility to the organizational feasibility of the potential venture. The same ra- tionale applies for highly capable people a new venture believes would be willing to join its board of directors or board of advisers.

One thing that many potential business founders find while assessing management prowess is that they may benefit from finding one or more part- ners to help them launch their business. Tips for finding an appropriate busi- ness partner are provided in the “Partnering for Success” feature.

2. Resource Sufficiency

The second area of organizational feasibility analysis is to determine whether the proposed venture has or is capable of obtaining sufficient resources to move forward. The focus in organizational feasibility analysis is on nonfinancial resources. The objective is to identify the most important nonfinancial re- sources and assess their availability. An example is a start-up that will require employees with specialized skills. If a firm launches in a community that does not have a labor pool that includes people with the skill sets the firm needs, a serious resources sufficiency problem exists.

Another key resource sufficiency issue is the ability to obtain intellectual property protection on key aspects of the business. This issue doesn’t apply to all start-ups; but, it is critical for companies that have invented a new product or are introducing a new business process that adds value to the way a product is manufactured or a service is delivered. One quick test a start-up can adminis- ter is to see if a patent has already been filed for its product or business process idea. Google Patents (www.google.com/patents) is a user-friendly way to search for patents. Although it isn’t a substitute for utilizing a patent attorney, this ap- proach can give a start-up a quick assessment of whether someone has beaten them to the punch regarding a particular product or business process idea.

To test resource sufficiency, a firm should list the 6 to 12 most critical nonfinancial resources that it will need to move its business idea forward and determine if those resources are available. Table 3.5 provides a list of the types of nonfinancial resources that are critical to many start-ups’ success.

Source: Barringer Bruce R, Ireland R Duane (2015), Entrepreneurship: successfully launching new ventures, Pearson; 5th edition.