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Feasibility Study PR

The document outlines the key components of a feasibility study, which assesses the viability of a proposed business project or venture. It discusses evaluating market potential and competition, required facilities, production processes, costs, financing needs, management skills, and risks. The conclusions section synthesizes this analysis to identify viable alternatives, compare them against goals and criteria, and help determine whether the project should proceed. The feasibility study aims to answer whether a new business idea has reasonable prospects for success.

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princess1129
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700 views

Feasibility Study PR

The document outlines the key components of a feasibility study, which assesses the viability of a proposed business project or venture. It discusses evaluating market potential and competition, required facilities, production processes, costs, financing needs, management skills, and risks. The conclusions section synthesizes this analysis to identify viable alternatives, compare them against goals and criteria, and help determine whether the project should proceed. The feasibility study aims to answer whether a new business idea has reasonable prospects for success.

Uploaded by

princess1129
Copyright
© Attribution Non-Commercial (BY-NC)
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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FEASIBILITY STUDY

What is feasibility
study?
• As the name implies, a feasibility
study is an analysis of the viability of
an idea. The feasibility study focuses
on helping answer the essential
question of “should we proceed with
the proposed project idea?” All
activities of the study are directed
toward helping answer this question.
What is a feasible business
venture?
• A feasible business venture is one where the
business will generate adequate cash-flow and
profits, withstand the risks it will encounter,
remain viable in the long-term and meet the
goals of the founders. The venture can be a new
start-up business, the purchase of an existing
business, an expansion of current business
operations or a new enterprise for an existing
business
Steps in Making a Feasibility
study
• A feasibility study is an important step in
business development. The success of a
feasibility study is based on the careful
identification and assessment of all of the
important issues for business success. 
Depending on the business project, additional
items may also be important.  Remember, the
basic premise of a feasibility study is to
determine the potential for success of a
proposed business venture.
Description of the Project
Identification and exploration of
business scenarios.
• Identify alternative scenarios or business models
of what the project may entail and how it might be
organized.  These may come from the idea
assessment or market assessment that you may
have already completed.
• Eliminate scenarios and business models that don’t
make sense.
• Flesh-out the scenario(s) and model(s) that appear
to have potential for further exploration.
Description of the Project
Definition of the project and alternative
scenarios and models.
• List the type and quality of product(s) or
service(s) to be marketed.
• Outline the general business model (ie. how the
business will make money).
• Include the technical processes, size, location,
kind of inputs
• Specify the time horizon from the time the
project is initiated until it is up and running at
capacity.
Description of the Project
Relationship to the surrounding
geographical area. 
• Identify economic and social impact
on local communities.
• Identify environmental impact on the
surrounding area.   
Market Feasibility
Industry description.
• Describe the size and scope of the industry, market and/or
market segment(s).
• Estimate the future direction of the industry, market
and/or market segment(s).
• Describe the nature of the industry, market and/or market
segment(s) (stable or going through rapid change and
restructuring).
• Identify the life-cycle of the industry, market and/or
market segment(s) (emerging, mature)
Market Feasibility
Industry competitiveness.
• Investigate industry concentration (few large
producers or many small producers).
• Analyze major competitors.
• Explore barriers/ease of entry of competitors into
the market or industry.
• Determine concentration and competitiveness of
input suppliers and product/service buyers.
• Identify price competitiveness of product/service.
Market Feasibility
Market potential.
• Will the product be sold into a commodity or
differentiated product/service market?
• Identify the demand and usage trends of the market
or market segment in which the proposed product or
service will participate.
• Examine the potential for emerging, niche or
segmented market opportunities.
• Explore the opportunity and potential for a "branded
product".
• Assess estimated market usage and potential share
of the market or market segment.
Market Feasibility
Sales projection.
• Estimate sales or usage. 
• Identify and assess the accuracy of
the underlying assumptions in the
sales projection.
• Project sales under various
assumptions (ie. selling prices,
services provided).
Market Feasibility
Access to market outlets.
• Identify the potential buyers of the
product/service and the associated
marketing costs.
• Investigate the product/service
distribution system and the costs
involved.
Technical Feasibility
Determine facility
needs.
• Estimate the size and
type of production
facilities.
• Investigate the need for
related buildings,
equipment, rolling-stock
Technical Feasibility
Suitability of production
technology.
• Investigate and compare
technology providers.
• Determine reliability and
competitiveness of technology
(proven or unproven, state-of-the-
art).
• Identify limitations or constraints of
technology
Technical Feasibility
Availability and suitability of site.
• Access to markets.
• Access to raw materials.
• Access to transportation.
• Access to a qualified labor pool.
• Access to production inputs
(electricity, natural gas, water, etc.).
Technical Feasibility
Availability and suitability of site.
• Investigate emissions potential.
• Analyze environmental impact.
• Identify regulatory requirements.
• Explore economic development incentives.
• Explore community receptiveness to
having the business located there.
Technical Feasibility
Raw materials.
• Estimate the amount of raw
materials needed.
• Investigate the current and
future availability and access to
raw materials.
• Assess the quality and cost of
raw materials and markets of
easily substituted inputs.
Technical Feasibility
Other inputs.
• Investigate the availability of
labor including wage rates,
skill level, etc.
• Assess the potential to access
and attract qualified
management personnel.
• Financial Feasibility

• Estimate the total capital


requirements.
• Assess the "seed capital" needs of the
business project and how these needs
will be met.
• Estimate capital requirements for
facilities, equipment and inventories.
• Determine replacement capital
requirements and timing for facilities
and equipment.
• Estimate other capital needs.
• Financial Feasibility

• Estimate the total capital


requirements.
• Estimate start-up capital needs
until revenues are realized at full
capacity.
• Estimate contingency capital needs
(construction delays, technology
malfunction, market access delays,
etc.
• Estimate other capital needs.
• Financial Feasibility
• Estimate equity and credit needs.
• Identify alternative equity sources and
capital availability -- producers, local
investors, angel investors, venture
capitalists, etc.
• Identify and assess alternative credit
sources -- banks, government (ie. direct
loans or loan guarantees), grants, local and
state economic development incentives.
• Financial Feasibility

• Estimate equity and credit


needs.
• Assess expected financing
needs and alternative sources
-- interest rates, terms,
conditions, covenants, liens,
etc.
• Establish debt-to-equity levels.
• Financial Feasibility

• Budget expected costs and


returns of various
alternatives.
• Estimate expected costs and
revenue.
• Estimate the profit margin and
expected net profit.
• Estimate the sales or usage
needed to break-even.
• Financial Feasibility

• Budget expected costs and


returns of various
alternatives.
• Estimate the returns under
various production, price and
sales levels.  This may involve
identifying "best case", "typical",
and "worst case" scenarios or
more sophisticated analysis like
a Monte Carlo simulation.
• Financial Feasibility
• Budget expected costs and returns of
various alternatives.
• Assess the reliability of the underlying
assumptions of the financial analysis
(prices, production, efficiencies, market
access, market penetration, etc.)
• Create a benchmark against industry
averages and/or competitors (cost, margin,
profits, ROI, etc.).
• Financial Feasibility
• Budget expected costs and returns of
various alternatives.
• Identify limitations or constraints of the
economic analysis.
• Determine project expected cash flow during
the start-up period.
• Identify project an expected income
statement, balance sheet, etc. when
reaching full operation.
Organizational/Managerial
Feasibility
• Business structure.
• Outline alternative business
model(s) (how the business
will make money).
• Identify the proposed legal
structure of the business.
• Identify any potential joint
venture partners, alliances or
other important stakeholders.
Organizational/Managerial
Feasibility
• Business structure.
• Identify availability of skilled and
experienced business managers.
• Identify availability of consultants and
service providers with the skills needed to
realize the project, including legal,
accounting, industry experts, etc.
• Outline the governance, lines of authority
and decision making structure.
Organizational/Managerial
Feasibility
• Business founders.
• Are the people involved of
outstanding character?
• Do the founders have the "fire
in the belly" required to take
the project to completion?
• Do the founders have the skills
and ability to complete the
project?
Organizational/Managerial
Feasibility
• Business founders.
• What key individuals will lead
the project?
• Is there a reward system for
the founders?  Is it based on
business performance?
• Have the founders organized
other successful businesses?
Study Conclusions
• The study conclusions contain
the information you will use for
deciding whether to proceed
with creating the business. 
The major categories this
section should include are:
• Identify and describe
alternative business scenarios
and models.
Study Conclusions
• Compare and contrast the
alternatives based on their
business viability.
• Compare and contrast the
alternatives based on the
goals of the producer group.
• Outline criteria for decision
making among alternatives.
Study Conclusions
• Compare and contrast the
alternatives based on their
business viability.
• Compare and contrast the
alternatives based on the
goals of the producer group.
• Outline criteria for decision
making among alternatives.

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