Case Study on the Feasibility of a new venture Essay

Case Study on the Feasibility of a new venture - Essay Example The initial success of the Cool Moose Creamery in Ontario should be studied for comparison purposes prior to the financial commitment of a franchise investment. Of considerable interest is the notion of whether the initial location of the first business contributed to its success? Moreover, what were the location factors that contributed to the success of the first business? A common refrain in real estate is location, location and location again. This maxim, of course, is not only limited to home prices. Consideration must be given to visibility and accessibility. Obviously, a highly visible location along an extremely busy thoroughfare where the eyes of all passer-bys will be drawn to your sign, thus, making business almost ideal. In a highly competitive business environment, start-ups may find these prime locations already long occupied by established players. There are still options for the establishment of a new business or franchise: buying out an unsuccessful business in an ot herwise useful location or appropriating a property as close as one can get to prime real estate, yet on the fringes. In this case a choice made here could prove to be influential with respect to every other subsequent factor. If a prime location for your franchise of Cool Moose Creamery can be determined, and is theoretically available then, as with most other material decisions, the cost/benefit analysis must come into play. It may be possible to purchase or lease a property in a highly visible location, but this cost must be weighed against future earnings. There must be a sense of the likely revenue within a particular time frame, as well as one should realize how high the benefits of visibility might be depending on a prime location. Even if the money does not come directly out of pocket, such as it is in the case with the $20,000 bank loan that must be sought, too much capital invested in the initial start up could lead to more debt, or more complex financing arrangements that could make the business more trouble than profit. These factors are never easy to predict, but the small business owner must do the best he can while examining – whenever possible examples of similar businesses, and the local operations in similar situations as guides for cost and profitability. Other factors that will influence the success of any franchise may be forces less visible and tangible than location or the initial equipment that must be purchased. Local zoning ordinances must also be taken into account, with respect to both above board and clandestine forces. Even if the zoning regulations and requirements are obeyed with precision, investigation is warranted concerning under-the-table problems or restrictions. Have other business owners complained about a particular individual in city government with control over regulatory decisions that might impede small businesses? Could there be zoning ordinances that have unusual sub-clauses or interpretations that are not obvious at cursory examination but which prove surprisingly problematic after an investment has begun? Question such as these can only be addressed through word-of-mouth, largely from anecdotal accounts, and of course – prior personal experience. This leads the small business owner into the complex question of a financial 'cushion'. One must consider whether it is possible, or feasible to determine minimum initial start up money, and then wait until it is possible to acquire extra funding held in reserve