FEASIBILITY STUDY

Presented by

Mr T.P Mushayavanhu
 What is Feasibility Study?
An entrepreneur can use a
feasibility study in order
to decide if there is enough
demand for a product or
service.

FEASIBILITY STUDY A feasibility study can help an

the process that tests a
business concept; it allows the
entrepreneur to decide whether
a new business concept has
potential
entrepreneur determine
whether business conditions
are appropriate to go forward
with starting a business.
 Importance of Feasibility Study
• The big picture
• New alternative solutions
• Evaluate alternatives
• Identifies reasons not to proceed.
• Enhances the probability of success by addressing and 
mitigating factors early on that could affect the project. 
 Importance of Feasibility Study Cont.’
• Provides quality information for decision making.
• Provides documentation that the business venture was 
thoroughly investigated.
• Helps in securing funding from lending institutions and 
other monetary sources.
• Helps to attract equity investment.
 FEASIBILITY ANALYSIS: TESTING AN OPPORTUNITY

DEVELOPING A BUSINESS CONCEPT

Once you have an BUSINESS CONCEPT

idea for a new a clear and concise description
of a business opportunity; it
business, define it by   contains five elements: the
writing a clear and product or service, the
customer, the benefit/, the
concise business distribution and the
concept. management team.
Its purpose is to focus your
thinking.
 BUSINESS CONCEPT STATEMENT
A one page document which includes:
• A description of the product/service
• The intended target market
• The benefits of the product/ service
• Product/ service positioning relative to competitors
• A description of how the product/service will be sold
• A brief description of the company’s management team
 DEVELOPING A BUSINESS CONCEPT CONT.’
Product or Service: Management Team
• What is being offered?
• This is the solution to the problem • A brief description of the company’s
• Product/service positioning relative to management team
competitors • Key skills that can contribute to
business success
Target Market
• Who is it? They pay for the product.
Delivery/Distribution
Benefits and Features • Retail, wholesales, mail order,
• Benefit- promotes or enhances the value of product. Internet, door-to-door?
• Feature – distinctive aspect, quality, or characteristic
of a product
Testing the Concept in the
Market
customers

industry product and

service
Feasibility
value chain Study founding
Questions team

start-up needs competition

 Testing the Industry

The broadest level of

feasibility analysis
looks at the industry in
which the business will INDUSTRY
operate.
a group of businesses
with a common interest
 Talking To The Customer
The most important part
of the feasibility study is
testing customers to
measure interest and TARGET CUSTOMERS
identify the target
customers. people most likely to buy
a business’s products
and services
 Testing Product Or Service
Requirements
To consider all of the
requirements of a product
or service, create a PROTOTYPE
prototype.
a working model used by
entrepreneurs to
determine what it takes to
develop their products or
services
 Testing Product Or Service
Requirements
• You need to design prototypes.

• These types of prototypes are not physical, they are

designs, blueprints, story boards, or flowcharts that
map out the business and the processes that will take
place at the business.

• Intellectual Property – protect your prototype through

patents, trademarks, copyrights, and trade secrets.
 Studying The Competition
An easy way to evaluate
COMPETITIVE GRID
the competition is to
create a competitive a tool for organizing
important information
grid.
about a business
venture’s competition
Studying The Competition
 Analyzing The Value Chain
A business can create a
competitive advantage by
improving the value chain or
its products and services.
The value chain includes
manufacturers, distributors,
and retailers.
VALUE CHAIN
the distribution channel
through which a product
or service flows from
the producer to the
customer
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 Business Concept Statement and
Feasibility Study Assignment
• Write a business concept statement and a feasibility report for your 
proposed product/service idea. Show the concept statement to 10 to 15 
prospective customers and to at least 5 industry experts. 

• Draft and attach two different questionnaires for prospective

customers and for industry experts to the concept statement. Ask 
them to:

1. Tell things they like or dislike about your product/ service idea

2. Identify the strengths and weaknesses of the product/service and provide 
suggestions for making it better.

3. Justify whether they think that the product/service is feasible or will be 
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successful.
 Business Concept Statement and
Feasibility Study Assignment Cont.’
4. Comment on the industry attractiveness and the 
potential threats.
5. Tell whether the product/service idea is technically 
feasible.
6. Comment on the legal requirement to venture in 
the  suggested industry.
7. Tell if the management team has the necessary 
skills  to realise their vision.
8. Comment on the capital investment required to 
successfully venture into the business
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 Feasibility Report
Components of a Feasibility Study
a) Introduction

b) Product / Service Feasibility

• Is the product/ service desirable
• Is there demand for the product/service
• Are there any weaknesses involved
• Overall conclusion- is it feasible

c) Market feasibility
• Describe current market- (size, growth rate, outlook)
• Competition and ( SWOT analysis)
• Pricing strategy, Distribution Strategy
• Project future sales
• Identify potential threats and solutions
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Components of a Feasibility Report Cont.’
d) Organisational Feasibility
• List key managers, tittles, responsibilities, relevant 
background
• Management ability- skills, experience, Qualifications
• Resource sufficiency – Cost 
e) Technical Feasibility
• Expert opinion
• Cost structure
• Technology proposed - does it have risks involved
• The present technical resources of the organization 
• Evaluation of the hardware and software and how it meets the 
need of the proposed system
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Components of a Feasibility Report Cont.’
f) Legal Feasibility
• Determines whether the proposed system 
conflicts with legal requirements.

e) Financial Feasibility
• Projections- cash flow
• Estimated total earnings 
• Estimated cost 
• Payback period, Cost benefit analysis
• Risk factors 
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 The End

Email: tmushayavanhu@hit.ac.zw