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Summary

This business planning session focuses on two key stages: the 'Test of Possibility' and the 'Test of Feasibility.' The speaker guides students through testing a minimum viable product (MVP) to gather feedback before finalizing their business ideas. The feasibility phase examines four key areas: technical, financial, market, and organizational feasibility. The business plan structure includes sections like the executive summary, environmental analysis, financial plan, and operational strategy. Emphasis is placed on understanding liabilities, market positioning, and crafting a reasonable financial projection. This session offers essential insights into refining a business plan for success.

Takeaways

• 😀 The first test in business planning is the 'test of possibility,' which involves creating a Minimum Viable Product (MVP) and gathering feedback before the full product launch.
• 😀 The 'test of viability' comes after refining the MVP, and it assesses whether the business is feasible across four areas: technical, financial, market, and organizational feasibility.
• 😀 Minimum Viable Product (MVP) allows entrepreneurs to test their product with potential consumers and receive valuable feedback to improve the product before a full-scale launch.
• 😀 Technical feasibility checks the resources required for production, technology, transportation, and manpower to ensure the business can be operated smoothly.
• 😀 Financial feasibility assesses the financial structure, including startup capital, investment, and return on investment (ROI), which is crucial for convincing potential investors.
• 😀 Market feasibility involves analyzing target markets, competitors, market growth, and sales projections to determine the product's potential success in the market.
• 😀 Organizational feasibility looks at the business structure, the skills and competencies of employees, and the overall capacity of the organization to run the business efficiently.
• 😀 A business plan's key components include: the introduction (business name, address, ownership, and roles), an executive summary (business model and value proposition), and an environmental analysis (market and global trends).
• 😀 The financial plan in a business plan includes projected income statements, based on product pricing and costing, covering a period of three years.
• 😀 Assets in a business are classified as current (to be used within a year) and non-current (long-term assets), while liabilities are classified as current (due within a year) and non-current (long-term obligations).
• 😀 Limited liability means the owner's risk is confined to their investment in the company, while unlimited liability means the owner is personally liable for the company's debts.

Q & A

What is the Test of Possibility in business planning?

The Test of Possibility involves testing a product idea before launching it. It is done by creating a Minimum Viable Product (MVP) and distributing samples to potential customers for feedback. This phase helps identify flaws and improvements before a full market launch.

Why is it important to modify the product even after creating a proposal?

It is important to modify the product because the business is still in the planning stage. Feedback from MVP testing and consumer reactions may reveal areas for improvement that were overlooked during the initial product development.

What are the four key tests in the Test of Viability?

The four key tests in the Test of Viability are: 1) Technical Feasibility (assessing site, technology, and manpower), 2) Financial Feasibility (evaluating investments and returns), 3) Market Feasibility (understanding target market and competition), and 4) Organizational Feasibility (assessing the structure and competencies of the team).

What is the importance of feedback during the Test of Possibility phase?

Feedback during the Test of Possibility phase is crucial because it provides insights into how the product performs in real-world conditions, highlights potential issues, and guides necessary changes before finalizing the product for market launch.

What is the role of financial feasibility in business planning?

Financial feasibility assesses whether the business can generate sufficient profit and sustain operations. It includes evaluating initial investments, resource capital, and projected returns, which are critical for attracting investors and ensuring business sustainability.

How does market feasibility influence business decisions?

Market feasibility helps determine if there is a demand for the product by evaluating the target market, market growth, competitors, and sales projections. It ensures the business can reach its target audience and remain competitive in the market.

What should be included in the executive summary of a business plan?

The executive summary should include a concise description of the business, including the business model, value proposition, target market, cost structure, revenue model, and pricing strategy. It serves as a quick overview for investors and stakeholders.

What does the environmental analysis section of a business plan cover?

The environmental analysis covers three areas: global analysis (trends in the industry and market), societal analysis (political, economic, and legal factors), and industry analysis (consumer behavior, competitors, and market forecasts).

Why is organizational feasibility critical in business planning?

Organizational feasibility is critical because it ensures the business has the right structure, skilled employees, and the ability to manage operations effectively. It examines the competencies of the team and the roles necessary for success.

What is the difference between limited and unlimited liability in business ownership?

Limited liability means the owner’s personal assets are protected, and their financial responsibility is limited to the amount they invested in the company. Unlimited liability means the owner is personally liable for all business debts, putting their personal assets at risk.