Discounted Feasibility

Here's a little more on feasibility. Feasible means stuff like practical, doable, realistic, appropriate. But feasible with regard to what? Here are some things to think about.

Personal feasibility. Are you the right person to do this? Do you have the necessary skills, money, connections, etc.?

Economic feasibility. Does the expected financial gain from whatever you want to do outweigh the total costs of doing it? Remember you won't be able to anticipate all the costs; there will be some unintended consequences for you to deal with; and you are going too put too rosy a view on the benefits because you are passionate (as you should be) about what you want to do. So be sure to discount your estimate of its economic benefit by half and inflate the anticipated costs by a factor of 3 to correct for your bias in favor of a positive outcome and to try to estimate unanticipated costs.

Schedule feasibility. Taking into account all the steps needed between planning, start up, getting to market, getting to generate positive cash flow, getting to profitability and exiting, can your project be done while the window of opportunity is still open? That is, if you have only 2 years to get the thing up and running, and you estimate the window of opportunity at only 6 months, maybe you better think again. Also, inflate the time you estimate because everything always takes longer and discount for the time the window will be open.

Remember, everything is always more difficult, is more expensive, takes longer than you think and often is not quite as cool as you think it will be. Include those factors in your calculations. You can't always estimate them exactly, but try to account for them as much as possible.

If the answer to any of these questions is "no," you should rethink things and figure out what reasonable attempts you can make to turn them into "yes," or maybe think about a different project where the answer is "yes" to all of these questions.

Entrepreneurship is the lifeblood of my professional activities. For entrepreneurial real estate, go to www.yourstopforrealestate.com/blog and for entrepreneurial writing to www.kearneymusicschoolmurders.blogspot.com.