feasibility analysis feasibility analysis

70 PART 2 • DEVELOPING SUCCESSFUL BUSINESS IDEAS
1. Explain what a feasibility
analysis is and why it’s
important.
2. Discuss the proper
time to complete a
feasibility analysis
when developing an
entrepreneurial venture.
3. Describe the purpose
of a product/service
feasibility analysis and
the two primary issues
that a proposed
business should
consider in this area.
4. Identify three primary
purposes of concept
testing.
5. Explain a concept statement
and its contents.
6. Define the term usability
testing and explain why
it’s important.
7. Describe the purpose
of industry/market
feasibility analysis and
the three primary issues
to consider in this area.
8. Explain the difference
between primary
research and secondary
research.
9. Describe the purpose
of organizational feasibility
analysis and list the
two primary issues to
consider in this area.
10. Explain the importance
of financial feasibility
analysis and list the
most critical issues to
consider in this area.
collecting rent in a more efficient manner and by offering additional online service to
attract and retain good-quality tenants.
To take the idea beyond the thinking state, Bateman and his wife, with the
cooperation of student groups at BYU in Provo and BYU-Idaho in Rexburg, Idaho, took
three actions. First, they put together a survey and then solicited opinions from
450 apartment complex managers working in the western United States. The survey
affirmed their belief that most apartment complex managers were dissatisfied with the
way they were collecting rent and would be open to considering more efficient
solutions. In fact, not one of the 450 apartment complex managers surveyed allowed
their tenants to pay rent online. Second, they surveyed a large number of students who
were currently living in apartments to ask if they would pay their rent online if a
capability to do so was made available to them. Many students said they would take
advantage of such a capability. Finally, the Batemans and those working with them conducted
a number of focus groups with both tenants and apartment managers to explore
the types of features that both groups would like to see in an online environment for
apartment complexes.
Buoyed by the results of these tests, which affirmed the feasibility of his basic idea,
Bateman wrote a business plan, naming his business Property Solutions while doing so.
He asked two of his classmates, Benjamin Zimmer and Michael Trionfo, to join his team.
To get additional feedback on the idea, the group entered Property Solutions into the
BYU business plan competition in 2003 and later into a national business plan competition
sponsored by Fortune Small Business magazine. They won both competitions—each
of which was accompanied by a $50,000 prize including a mixture of cash and in-kind
services.
The money and notoriety that resulted from winning the competitions prompted
Bateman and his team to launch Property Solutions as a business. The group put
together an advisory board and started accepting investment dollars on a careful and
limited basis. Bateman also invested a considerable share of the money he had made
from DearElder.com. The first priority for the company was to build the software needed
to accomplish the company’s ambitions. Bateman recalls this work as being grueling
and tedious. The biggest financial commitment the firm made at the outset was to hire
trained programmers to help complete this task. Overhead was kept low, and the company
operated out of modest facilities.
Today, Property Solutions is a fully functioning company and is providing a Webbased
environment to over 1,200 apartment communities that are run by over 170 property
management companies. The company’s product allows tenants to go online and
pay rent, make maintenance requests, view community announcements, purchase
renter’s insurance, and perform other tasks. The availability of these benefits not only
helps apartment complexes collect rent and other data in a more efficient manner but
also helps them retain tenants and boost occupancy rates.
The Property Solutions case illustrates a set of activities that is fundamental to the launch
of a successful entrepreneurial venture—determining if the business idea is feasible.
In David Bateman’s case, he didn’t commit to launching Property Solutions as a business
before he had a reasonable degree of certainty that the business idea itself was feasible.
He tested the idea by conducting surveys and hosting focus groups with both apartment
complex managers and apartment tenants. He further tested the idea by entering business