Course Title

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Conducting a Feasibility Study and Crafting a Business Plan

Module 004 – Conducting a Feasibility

Study and Crafting a Business Plan

At the end of this module you are expected to:

1. Understand the elements of Feasibility Study
2. Determine how attractive an industry is overall as a home for a new
business.
3. Identify the possible niches a small business can occupy profitability.

Introduction
Feasibility Analysis,
The process of determining whether an entrepreneur’s idea is a viable
foundation for creating a successful business.
Elements of a Feasibility Analysis:
Financial Feasibility
Industry and Market Feasibility
Product or Service Feasibility
Five Forces Model
Rivalry
Number of competitors is large or few (less than 5)
Competitors are not similar in size or capability
The industry is growing at a fast pace
The opportunity to sell a differentiated product or service is present
Suppliers
Many suppliers sell a commodity product to the companies in it
Substitute products are available for the items suppliers provide
Companies in the industry find it eas to switch from one supplier to
another
The items suppliers provide account for a relatively small portion of the
cost of finished products
Buyers

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Conducting a Feasibility Study and Crafting a Business Plan

Switching costs to competitors is high

Number of buyers is large
Customers demand differentiated products
Customers find it difficult to gather info on suppliers costs etc
The items account for a relatively small portion of the customers’
finished products
New Entrants
Advantages of economic scale are not present
Capital requirements to enter are low
Cost advantages are not related to company size
Buyers are brand-loyal
Governments do not restrict entry
Substitute Products
Quality substitute products are not readily available
Prices of substitute products are not lower
Buyers’ cost of switching to substitute products is high
Product or Service Feasibility Analysis
Are customers wiling to purchase our goods and services?
Can we provide the product or service to our customers at a profit?
Research
Primary research Customer surveys and questionnaires
Focus groups
Secondary research
Trials
Prototypes: an original, functional model of a new product that
entrepreneurs can put into the hands of potential customers so they can
see it, test it and use it
In-home trials: a research technique that involves sending researchers
into customers’ homes to observe them as they use the company’s product
or service
Financial Feasibility Analysis
Capital Requirements
Estimated Earnings
Return on Investment
Course Module
 Course Title
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Conducting a Feasibility Study and Crafting a Business Plan

A Business Plan
A written summary of an entrepreneur’s proposed business venture, its
operational and financial details, its marketing opportunities and strategy,
and its managers’ skills and abilities
3 Functions
Guides an entrepreneur
Attracts lenders and investors Reality Test
Competitive Test
Value Test
Represents/reflects its creator
Elements of a Business Plan
Title Page and Contents
Executive Summary
Vision and Mission Statement
Company History
Business and Industry Profile
Business Strategy
Description of the Firm’s Product or Service
Marketing Strategy
Competitor Analysis
Description of Management Team
Plan of Operation
Pro Forma Financial Statements
The Loan or Investment Proposal
What Lenders and Investors Look for in a Business Plan?
Capital
Capacity
Collateral
Character
Conditions
Executive Summary
The company’s business model and basis for competitive edge

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Conducting a Feasibility Study and Crafting a Business Plan

The company’s target markets and the benefits its product or service
will provide
The qualification of the founders and/or key employees
The key financial highlights
Business and Industry Profile
Overview of industry or market segment
Existing or anticipated profitability of the industry
Company’s general business goals
Company’s immediate objectives
Business Strategy
How to gain competitive edge
How to achieve the goals and objectives
Methods to satisfy KSFs of the industry
Description of Product or Service
Overview of how customers will use it
Any patents, trademarks or copyright
Honest comparison with competition
Feature (descriptive fact about a product or service) vs Benefit (what a
customer gains from the product or service)
Description of production process, strategic raw materials, sources,
costs.
Marketing Strategy
Defining the target market
Who? Where? How many? Why?
Proving that a profitable market exists
Showing customer interest
Documenting market claims
Advertising
Market Size and trend
Location
Pricing
Distribution
Competitor Analysis

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Conducting a Feasibility Study and Crafting a Business Plan

Each significant competitor

has an advantage over each other
Description of Management Team
Qualifications of those with at least 20% ownership
Resumes
How to avoid primary reasons for business failures
Pro Forma Financial
Monthly for 3 years by quarter
3 sets: pessimistic, most likely, optimistic
Statement of assumptions
Loan or Investment Proposal
Purpose of financing
Amount requested
Plans for repayment/exit strategy
Timetable for implementation
Evaluation of risks

References and Supplementary Materials

Books and Journals
1. Basics of Technoprenuership: Frederico Gonzales, President-PESO Inc; M. Barcelon, UPATBI
2. Mankani, D. (2003) Technopreneurship : The Successful Entrepreneur in the New Economy.
Prentice Hall.

Online Supplementary Reading Materials

1. https://www.slideshare.net/omarelhagar93/conducting-a-feasibility-study-and-craft
ing-a-business-47582777
2. https://www.slideshare.net/afzaalali14/chapter-3-entrepreneurship-lecture-4-5

Online Instructional Videos

1. https://www.youtube.com/watch?v=WI6_snOjlm0
2. https://www.youtube.com/watch?v=TKNU2fRt1Gg

Course Module