By: Kathy S. Magee
Successful entrepreneurs are often described as tenacious, passionate, flexible, and natural risk-takers. They are visionary thinkers, confident, and tolerate ambiguity. Even if an entrepreneur possesses all of these character qualities, a successful business venture requires a viable business concept and a realistic plan.
Student attorneys in the Entrepreneurship Clinic meet many clients who possess the characteristics of successful entrepreneurs but who lack a viable business concept or realistic plan to implement the concept into a working small business. Clients, though passionate about their business idea, often do not think about the costs associated with starting and maintaining a business, marketing their business to consumers, state and city compliance and regulation issues, or the time investment that a small business requires. As attorneys are bound by ethical rules in advising clients, attorneys should encourage clients to complete a feasibility study and business plan before assisting client in their small business venture.
A feasibility study serves “as a filter, screening out ideas that lack potential for building a successful business, before an entrepreneur commits the necessary resources to building a business plan.” A business plan, on the other hand, is a “planning tool for transforming an idea into reality. It builds on the foundation of the feasibility study but provides a more comprehensive analysis of the business.” While a feasibility study and a business plan overlap in some information and insight that they provide to the entrepreneur about his or her business concept, they each serve an important but separate purpose in the business start-up process. Both can also serve to assist the entrepreneur with information gathering to assess the business concept, including legal compliance requirements, costs, and marketing.
For example, a potential client comes to the Entrepreneurship Clinic with a creative business concept for an ice cream sandwich business using a push-cart. After reviewing compliance requirements for this type of business, it would be determined that the business idea is not viable because of state and city regulations of ice cream businesses. Had the client created a feasibility study, the client would have learned that regulations prevent ice cream from being stored in a home, and that push-cart businesses are only allowed to sell pre-packed items. Luckily, she had not made purchases for her business idea or invested other financial resources into the business that does not meet compliance requirements. However, this is not typical of entrepreneurs who often make purchases for their business before determining viability through a feasibility study, then move forward solely based on their business idea.
Feasibility studies should be encouraged—even required—for entrepreneurs because they help determine the workability and profitability of a business venture. A feasibility study that determines a business is not viable could save an entrepreneurship client money, time, effort, and resources of a failed business venture. However, if a feasibility study determines that a business concept is viable, the entrepreneur can be advised effectively on how to move forward to create a business plan to implement the business concept into a working business venture. As future attorneys, we can assist our clients in open discussions of feasibility of their business concepts. We can encourage clients to conduct a feasibility study and complete a business plan before advising them to expend money, time, and energy into starting a business that is not in compliance with state laws or will not produce the profits the client wants to achieve.
 Chapter 4: Conducting a Feasibility Analysis and Crafting a Winning Business Plan. http://www.prenhall.com/behindthebook/0132294389/pdf/Zimmerer_CH04.pdf at 123.
 Chapter 4: Conducting a Feasibility Analysis and Crafting a Winning Business Plan, p. 123. http://www.prenhall.com/behindthebook/0132294389/pdf/Zimmerer_CH04.pdf (Accessed October 5, 2014).