Are you sitting on a hot business idea, but don't know if it's a winner? This can be one of the most agonizing parts of the business start-up process. Those of us with tight budgets or no budgets simply do not have the option of tossing a few thousand dollars into the gaping bank account of a consultant to give us the magic answers.



Let's imagine that you have scrimped and tucked away a small investment fund of $9,850 and you have a growing passion to own and operate a small shop that sells candles.

This feasibility process might just be the tool you need to make the critical go/no-go decision. It doesn't have to cost anything more than your own time and if you approach it in a thoughtful, inquisitive way you should be able to produce believable results.

The feasibility study is a process that will enable you to answer these two important questions:

1. Is the business idea workable?

2. If the idea is workable, will it be profitable?

Before launching, here are a few points about feasibility studies:

* A feasibility study precedes the business plan.

* You might do feasibility studies for several different businesses before arriving at your decision to move on to the business planning stage.

* The information you gather for your feasibility study will be useful should you decide to proceed with a business plan.

* Some feasibility studies can be very quick and inexpensive and some can take months, or even years, and cost thousands of dollars.

* It's ok to use round numbers and approximations - just be sure to err on the high side for your expenses.

* If you feel like you are guessing too much, you're probably right. Do more research until you trust your numbers.

Here are the nine steps:

1. Determine the total market potential. This is the total number of people that buy a product or service.

2. Determine your share of the market. Market share is the total number of people who will buy YOUR product or service.

3. Calculate the cost of your buildings, fixtures and equipment. This includes all costs related to your building or facility, such as fixtures, shelves, renovations, counters, display cases, etc.

4. Calculate the cost of your merchandise. This is the wholesale cost of the products or services you sell to your customers. In financial statements, it is referred to as Cost of Goods Sold (COGS).

5. Calculate your cash operating expenses. This consists of all costs to operate the business, including utilities, rent, wages, insurance, advertising and more.

6. Determine your budget for other expenses. Have you missed any miscellaneous costs that don't fit in the other categories? This might include items like trade shows, refunds, donations, sponsorship, warranties, travel/meals.

7. Subtract your total expenses from your total sales. First, add together your totals from steps 3, 4, 5 and 6. This will give you total expenses. Then subtract your total expenses from your total sales. The formula looks like this: Step 2 minus (Steps 3 + 4 + 5 + 6) = answer.

8. Calculate the return on your investment. Simply put, you can place your investment in a no-risk savings account, avoid all the risk and fuss of going into business, and collect a very meager interest. If you place $100 into a savings account and it earns you $5 for year one, you got a 5% return on your investment (ROI).

9. Make your go/no-go decision. The information above and everything you learn about your business by going through the process, should prepare you to make this decision.