FIT Analysis Framework


A useful strategy framework that was used in one of my entrepreneurship courses.



  • Right people with the right skill sets and attitudes?
  • Do they understand the commitments and risks they are facing?
  • What are their motivations and track record (stable, committed, reputable, etc.)?
  • Do they have industry knowledge or contacts?

Opportunity and context:

  • What? Who will buy? How will it be delivered? When will industry react and how?
  • How much does it cost (time and resource) to acquire customers?
  • To deliver the product?
  • Is now the right time?
  • How much cash is needed and what is the break even point?
  • Is the industry structurally attractive or can it become that way?
  • What is the competitive environment like?
  • How is it changing?
  • Is the plan cognizant of risks at hand and has it addressed them realistically?
  • How much time and money will be necessary to make a decision on future of business?
  • Is the exit strategy?


  • Do the incentives for the people involved = CSF’s?
  • Who is providing the financial data, other data, and why?
  • Have they tried to raise money from potential customers?
  • What is the harvest potential of the business?
  • Is the deal fair to all parties involved?

Other General Questions:

  • What is the economic life of the opportunity?
  • What should be the time span for analysis of the opportunity?
  • What are the CSF’s (critical success factors) for this business?
  • What must be done to satisfy the customer?
  • What must be done to erect barriers?
  • What must be done to lower costs and/or improve quality?
  • What can go right?
  • What can go wrong?
  • Has the plan established checkpoints to aid in guidance of the business?
  • What actions can we take to shift the odds in our favor?


  • Who supplied the data and why?
  • Which assumptions about the numbers are critical to the problem at hand?
  • How accurate is the data?
  • How inaccurate in aggregate can it be before it changes a decision?
  • What contradictory assumptions are possible?

Find the numbers below – and also examine trends in the data to find out where things are headed:

  • Start-up costs
  • Fixed costs (for various volumes)
  • Variable costs
  • BEV
  • Burn rate/Fume date (BEV/Sales per day)
  • At what level does the firm turn positive cash flow?

Below are numbers for startups or industry:

  • Sales growth of industry:
  • Gross margin (price – COGS/price):
  • SG&A (and compared to industry):
  • COGS/Sales:

Micro Economics:

  • Marginal revenue = d(Total Revenue) = 0.5 slope of demand curve
  • Want marginal revenue = marginal cost because that is profit maximizing point.
  • This is different than the revenue maximizing point, which occurs at unitary elasticity. MR = MC somewhere in the elastic range (a lower price than the revenue max. price).
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