Self-Employment Steps for Vocational Rehabilitation Counselors: Helping a Consumer Start a Business


Chapter 4:

The Feasibility Study

As part of the assessment process, the feasibility study often is the first time the consumer thinks concretely about the proposed business and puts his or her ideas on paper. Similarly, it is the VR counselor's first opportunity to evaluate the business idea and the consumer's ability to articulate it. The study looks at the business's potential and how realistic the consumer is about it. Often it is the first time the consumer thinks about certain aspects of the business such as the reasons why customers would use his or her product or services over those of another business, or about the monthly sales needed to make a living and a profit. Although the feasibility study is important it is only an initial estimate of the business's likelihood of success.

There is no one acceptable format for a feasibility study. Some feasibility studies are very time consuming and complicated requiring a complete market analysis, complex calculations or projections such as monthly operating expenses, cost of goods sold, gross profit margin, and monthly sales required. Sometimes feasibility studies are conducted by an independent business consultant. Others consist of a series of questions about the business. 

We recommend conducting a feasibility study using the Beginning to Develop Your Business Plan questionnaire (Figure 3) and the Monthly Personal and Living Expenses Worksheet (Figure 4). If your state is a licensed user of the Goodman, Herzog & Associates Business Assessment Scale (discussed later in this chapter), we recommend including this in the feasibility study too. 

Completing the Monthly Personal and Living Expenses Worksheet complements the Beginning to Develop Your Business Plan questionnaire because it is an opportunity for both the consumer and counselor to evaluate the consumer's monthly expenditures in relation to the business. Additionally, this provides an opportunity for the counselor and consumer to discuss the need for a business to pay taxes and provide benefits for the owner and employees.

Many potential business owners have a difficult time answering the following Beginning to Develop Your Business Plan questions, however. So the consumers you work with may require your help. Their answers might be unclear and they might overestimate things like anticipated income or the expected number of customers. Because feasibility study is one of the main tools you will use to decide whether or not to proceed, you may ask the consumer to rethink his or her answers and conduct more research until you are satisfied. Many people do not move beyond this stage and decide not to pursue self-employment. You will need to decide the reasons for not completing this step. Is it due to the individual's disability? Could he or she complete the feasibility study with more guidance from you or another? Or is some sort of assistive technology needed? 

Because the feasibility study may be new to many people, you may want to encourage the consumer to take advantage of agencies and organizations that conduct educational programs on developing a feasibility study: Small Business Development Centers, Entrepreneurial Education Foundation's Premiere FastTrac program, the Disabled Businesspersons Association and educational programs offered by many business schools and colleges. Others such as consultants, CPAs, and accountants who focus on small businesses also may be able to assist consumers with conducting a feasibility analysis.

Figure 3: Beginning to Develop you Business Plan

Answer the following questions in writing for review by your vocational rehabilitation counselor. For some questions, you may need to talk to business owners or do some research at the library. Your answers will help both you and your counselor clarify your business idea. Your answers are the beginning of your Business Plan and may help your counselor determine whether you and Vocational Rehabilitation should work together toward the goal of self-employment.

  1. What business would you like to start?
  2. Who will use your service and/or buy your product(s)? 
  3. Where are your customers located?
  4. How many customers do you think you will have during the first year? During the second year?
  5. How much money do you think you will make during the first year? During the second year?
  6. How will you tell potential customers about your business?
  7. Is there another business like the one you want to open operating in the area you want to serve? Is it successful? Why or why not?
  8. Why do you want to start this type of business?
  9. What qualifications do you already have for running this business?
  10. What will you need to learn to be able to operate this business?
  11. Will you hire employees? What skills should they have? How much will you pay them?
  12. If you were a potential customer, why would you use this business?
  13. If you were a customer, what features would keep you coming back?
  14. Who will do the ordering, customer contact, and bookkeeping for your business?
  15. What hours and days will you operate?
  16. Where will your business be located?
  17. What equipment will you need? Do you need it right away? If not, when will you need it? Do you need to own it or can you rent it?
  18. Will your disability pose any barriers to your operating this business? If yes, what are they? What are your ideas for overcoming these barriers?
  19. How much money will you need to start the business? How much money can you contribute? Who can loan you money? What do you think are likely sources of money for starting your business?

 

 

Figure 4: Monthly Personal and Living Expenses

Enter actual expenses for the past 4 months from your records and keep track of expenses for this and the next month. Label the months in the spaces provided at the top of the table. 

Monthly Personal and Living Expenses
Month Amount Amount Amount Amount Amount Amount   Total  
Dwelling:              
Rent Payment              
House Payment              
Property Tax              
House Repair              
Miscellaneous Expenses (lawn mowing, cleaning, snow shoveling)              
Homeowner’s  Association Dues              
Insurance              
Furniture/Appliance Payments              
               
Transportation              
Car Payment(s)              
Other Vehicle Payment(s)              
Vehicle Upkeep/Repair              
Fuel              
Insurance              
License(s)              
Public Transportation              
               
Utilities              
Telephone              
Gas              
Electricity              
Water              
Trash              
               
Personal              
Groceries              
Dining Out              
Entertainment              
Tobacco Products              
Medical/Dental/Vision Insurance              
Clothing              
Laundry/Dry Cleaning              
Medical/Dental/Vision/Hospital Exp              
Prescriptions              
Education              
Credit Card Payments              
Loan Payments              
Pets              
Dues & Subscriptions              
Gifts              
Donations              
Travel              
Cable TV              
Personal              
Hobbies/Crafts              
Music              
Personal Assistant              
Assistive technology purchase, payments & maintenance              
Internet Access              
Other:              
               
               
               
Total              

 

Average Expenses per Month (Total 6 months) $_________                      

Sources of Income: 
  
Source                          Amount per Month       
________                     _______________
________                     _______________  
________                     _______________

  


Chapter 4 Self-Employment Assessment Study Guide: Feasibility Study

  1. The feasibility study gauges the business's __________ and how _______ the consumer is about it.

  2. The __________ estimates the likelihood of the business's success.

  3. __________ may provide loans on a feasibility study alone.


Study Guide Answers: Chapter 4 - The Feasibility Study


July 1998, 1st Revision June 1999, 2nd Revision February 2001