Entrepreneurship has to do with discovering, evaluating, and exploiting opportunities and the people who find, evaluate, and control them. It does not require but may include the creation of new organizations. It is often confused with companies’ start-up process, and that is how we will use it in these reflections. But it must be clear that the entrepreneurial culture is inextricably linked to initiative and action. People with an entrepreneurial spirit have the ability to innovate; they are willing to try new things or do things differently.
Therefore, the entrepreneurial spirit should not be confused with the so-called entrepreneurial spirit. This consists of identifying opportunities and gathering sufficient resources of varied nature to transform them into a company.
However, what we call an entrepreneurial spirit carries a much broader aspect of positive attitudes. It supposes wanting to develop capacities for change, experiment with one’s ideas and react with greater openness and flexibility. In addition, the entrepreneurial spirit has a double facet. On the one hand, it means learning how to launch new projects with autonomy, take risks, responsibility, intuition, and the ability to project abroad and react and solve problems. On the other hand, it also means learning how to carry out projects for others with the same spirit of innovation, responsibility and autonomy.
But, whatever meaning we choose, I would like to point out that we are talking about innovation and not creativity. Creativity is thinking of new and appropriate ideas, something difficult to measure, while innovation is the successful application of ideas within an organization. In other words, creativity is the concept, and innovation is the process. Creativity refers to ideas, to new ways of seeing things. Innovation focuses on getting things done.
A picture is only truly innovative if it enters a market and survives; the test is the time of life in the market or, better, the permanence of customer loyalty. In short, to innovate – to undertake – is to worry about making an idea viable, about choosing the best path that leads us to the greatest – measurable – chances of making a statement successful.
The study that attempts to predict the eventual success or failure of a project is known as a feasibility analysis. Any assignment or company that you want to start up must have a viability plan as its primary tool that clarifies the chances of success that those initiatives may have. It is not a simple bureaucratic formality, but it is a necessary tool for strategic decision making; it is a way of thinking. It is essential to carry out a complete investigation that leads to the knowledge of whether the project will bring the expected benefits and will be able to survive for a reasonable time.
To achieve this, part of an analysis of the situation with empirical data (which can be contrasted) to access various types of research (surveys, statistics, etc.) serves to identify the strengths and weaknesses of the approach current. In other words, it begins with an analysis of the specific reality in which it is to be developed to minimize the margin of error.
The project is the instrument that gives meaning, defines, specifies, and structures the different activities that we want to develop, framing them within the management plan’s goals and strategic planning. And the feasibility study consists of something as obvious as seeing if it is possible to execute the project and give it the continuity it needs.
To do this, we will have to consider the resources we have, those we need and our ability to obtain them and continue generating them in the future. If we have these resources, the project is viable, and we can start it; If there are not enough resources or we are not sure that we will be able to generate them in the future, the most intelligent decision is to discard them or postpone it.
The viability of a company is conditioned to the fulfilment of the following four aspects:
- Technical viability.
- Commercial viability.
- Economic viability.
- Financial viability.
Technical feasibility refers to that which attends to the technological and natural characteristics involved in a project. The study of technical feasibility is usually linked to security and control of what we are going to do; that is, its characteristics, functionalities and physical properties and how we are going to do it. We will have to know what the manufacturing/realization process is, the necessary technical means, the human resources that will intervene and their qualifications, the necessary materials, quality control, waste management, etc. The technical feasibility study involves solving whether it is possible to develop our products/services efficiently from a technological point of view.
Commercial viability: A project is commercially viable if it justifies the existence of a market for the expected product/service and the expected sales are realistic with the company’s approach.
Economic viability: The project is viable, from a financial point of view, if, with the resources that we can obtain, it is capable of generating profits and having sufficient profitability to compensate for the risks that are going to be incurred.
Financial viability: The project is viable from the economic point of view if it does not pose treasury problems and has a balanced financial structure in terms of indebtedness, solvency and liquidity. If with the money generated (initially, with contributions from partners and indebtedness, and later with the collections for the sales derived from our activity), it is possible to face the payments punctually.
Profitability: The project’s promoters will not take a risk if they do not get enough reward to take risks or dedicate their time to it. We do not necessarily talk about money (in a business company, it will be apparent that we do), but always about achieving the objective that justifies our efforts (e.g., a social company). Therefore, its measurement will always be given by a relationship: What I obtain (I usually have to sell) concerning what I apply (applied resources).
Solvency: If it is not paid on time (money outflow), the company disappears. And to pay, you first have to collect (money entry). Consequently, its measurement will be given by the relationship between collections (usually, you have to sell) and payments over time.
It is easy, then, to draw a first and fundamental conclusion: you have to sell or, at least, have enough chances that those sales (and collections) will take place. In another way, perhaps too drastic: if you still don’t have sales, don’t go looking for investors; look for clients. An investor prefers to invest his money in a company instead of putting it in government bonds or the bank, and in doing so, he assumes a significant risk. They often lose their money, and they expect to make a much higher return on successful investments than they would on a safer investment.
In addition to the common-sense approach that the feasibility study of a project brings to its planning, many other reasons drive companies and entrepreneurs to commit to its development. Conducting such a study is good practice, and its application can be seen in all successful businesses. The organizations with the lowest project failure rates have in common that they have dedicated the time and resources necessary to thoroughly examine all the issues and assess their probability of success before starting the next project. In addition to minimizing risk, the feasibility study helps them.
Please focus on the project itself and get a complete perspective of the different alternatives. It is common to present different scenarios (optimistic and pessimistic, better yet, realistic) in any feasibility study.
Detect the signs that warn that it is better not to continue and the reasons that justify this caution. Properly detect the different types of risks and the possible responsibilities incurred.
Increase the probability of success by discovering the different factors and circumstances that, from the beginning, could affect the project and harm its results. It is essential to time (the time factor is vital) and checks over time (it is not something closed or to be done only once). To increase its usability, it must contain enough details to allow you to continue with the next phase in the project.
Have quality information to carry out decision-making based on objective and reliable data. In addition, having complete documentation, the result of the in-depth research that the company has carried out in different areas justifies the rigour and precision of the forecasts and calculations made.
It also attracts investment, one of the most applauded benefits of a project feasibility study, from new partners, credit institutions, and other monetary sources.
If you want to get money from an investor (if you are going to risk your own money), you must be very clear that you will not typically invest only in ideas, power points or technology that have come out of the laboratory, with rare exceptions. Above all, you will need to know that there is a growing number of people willing to pay for what you offer, or at least that there are many, many people interested in it. This is called market traction. “No traction, no money”.