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A feasibility study is a systematic gathering of relevant data. A thorough analysis of

such data guides the decision maker whether the project should push through or not. You can
make a feasibility study not only for new ventures, but also for existing ones, when identifying
new opportunities, either for expansion or diversification.

There are a number of formats in the preparation of a project feasibility study. Different
companies may have different needs or purpose for a study that will entail different formats in
the preparation of a project feasibility study. If you intend to have your project financed, and a
specific format is not required, do not concern yourself with too many details. Your purpose is
to establish the viability of the project. The details will be required only after your investors or
financiers have accepted your study.

However, regardless of format and purpose, your study must at least cover:
marketability of the product or service, technical aspect of producing or making the product or
technology required, financial requirement of your business or capital needed to start the
project, management during the pre-operations and on the actual operation of your business
or the required personnel, and social desirability of the project.

The table of contents below will guide you in writing your FS in its final form- Your
Business Plan.

Table of Contents

Page

Cover Page i

Approval Sheet ii

Acknowledgment iii

Table of Contents iv

List of Exhibits v

List of Tables vi

List of Schedules vii

CHAPTER I Executive Summary

A. Introduction 3

B. Name of Your Company and the Nature of Business 5

C. Company Vision/Mission Statements 8
D. Objective(s) of your Company 9

E. Feasibility Criteria

◼ Market Aspect 10
◼ Technical Aspect
◼ Management Aspect
◼ Financial Aspect - don’t forget
F. Limitations of the Project your page number-
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Page
CHAPTER II Market Information

A. Industry Background 16

B. Demand and Supply Analysis 18

C. Competition Analysis

D. Sales/Revenue Projection

E. Marketing Program

CHAPTER III Management Information

A. Form of Business Ownership --don’t forget

B. Capitalization and Pre-operating activities your page number--

C. Table of Organization and Staffing Requirements

D. Project Timetable

CHAPTER IV Technical Information

A. Production or Manufacturing or Service Process

B. Production or Service Facilities

C. Raw Materials/Costs/Sources

D. Waste Disposal Program

CHAPTER 5 Financial Information

A. Total Project Cost -- don’t forget

B. Financial Assumptions your page number --

C. Financial Statements

D. Financial Analyses

CHAPTER 6 Social Desirability Aspect

Bibliography (found after Chapter 6 is a separate page for the list of reading

materials/books, journals, etc. you had in relation to your project)

Appendices (the documents referring to these are placed at the end of your

business plan; however, the description is typed hereunder, and with page

number)

Appendix

“A” SEC Registration Form (example only)

“B” -------- identify document --------

---- and so on ------

Be reminded that identification or description of your appendices is typed immediately

below Appendices under the Table of Contents, with identified page number.
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   After your table of contents, another page each or separate page each for your

List of Tables, List of Exhibits or Figures, and List of Schedules.

Follow the format of appendices and don’t forget its page number.

   You may start your Chapter 1 on another page and so on.

Again, the sequence presented is not universal. The sequence is given to facilitate the
preparation of your business plan for your course requirement and not to present the same to
your investors or would be partner. Basically, you have all information needed and
modifications of your business plan to suit your goal will not be difficult.

More Notes

 Marketability of the Product or Service

Think of a product or service that has a ready market. Move around, observe, and ask
questions. Remember when we were kids playing outside the house and would stop to buy
“fish ball” or buy the dirty ice cream from our “suki?” Years ago, you will not find “fish ball” or
dirty ice cream inside the malls or inside a supermarket but now, it has become a trend.
Whoever gave the idea of selling “fish ball” inside the malls is an entrepreneur by heart.

The example might be that simple – but, think again. Sometimes, we do not see the
obvious. Look at “Zagu!” Isn’t our local ‘sago’ tastier and cheaper?

 Technology Requirement

When you have identified the product or the service with a ready market, the next thing
to consider is the manufacturing or the ‘producing’ aspect. Ask yourself if you can produce the
product or deliver the service with the least cost. For janitorial services, for example, do you
have the manpower to provide the service? Were they trained to do janitorial services or do
you have to train them? If machinery is needed, how much will it cost and can you or someone
you know, operate the required machine or equipment? Will you need a spacious area for the
production? Corollary to the area required, don’t forget the product’s raw materials. Are these
raw materials readily available? It is very important for you to know the prices and costs of the
primary raw materials and the substitute materials, the different sources and alternative
sources of your product’s materials.

 Financial Requirement

You have to sit down and do some serious calculations to determine whether you can
finance your own venture or not. Your calculations should include the initial project costs
(working capital and capital investments) and your market projection. This way, you can
initially determine the rate of return or the profitability level of your venture. If your savings are
not enough to start your project, you have your calculations to show to convince your lender or
financier that your project is feasible.

 Management Requirement

Since you will be the entrepreneur, you should be able to manage your business,
especially during its initial stage. Allowing or hiring somebody to manage your new venture is
not a sound judgment. Unless, of course that someone is your business partner. Be ready to
answer some important questions, like: What form of business ownership will you consider
with your new venture? How much initial capital do you need to have on hand to start? Will
you have a partner? If so, be sure to discuss with your partner/s not only the role each of you
will have in your venture, but also the sharing of profit and loss. Have you identified the
required duties, activities, functions, and responsibilities for each position? Do you need a big
space or a building? Will you rent a building or renovate your house to be your office? How
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many personnel will you hire? How much will you spend for your registration and licenses? If
training is needed, who will train the employees?

 Social Desirability

As an entrepreneur of the 21 st century, the economic contribution of your project to the

community should be taken into consideration. Will your venture uplift not only the quality of
your life but also that of the people involved? Will the community, where your business is
situated, benefit from your venture?

More Notes

Ideally, the process of conducting a feasibility study involves making rational decisions
about a number of enduring characteristics of a project, including:

 What exactly the project is;

 Current market segments;

 Projected growth in each market segment;

 A review of what is currently in the market;

 Customer profile;

 Determination of competitive advantage;

 Vision/Mission statement of the company;

 Definition of proposed operations, management structure

and managerial methods; and

 Source/s of financing and financial statements for at least three years.

To be realistic and for you not to be overwhelmed with the different activities that you have to
do, start setting a timetable once you know what type of business interests you. Below are the
tasks that you have to accomplish within the first few months of your venture:

 Have a business name

 Be legal. Apply for a license and/or have a permit from:

➢ Department of Trade and Industry (DTI) for sole proprietorship

➢ Securities and Exchange Commission (SEC) for partnership

and corporation

➢ Bureau of Internal Revenue (BIR)

➢ Social Security System (SSS)

➢ Philippine Health Insurance (PhilHealth)

➢ City, Municipality or Barangay

 Open a business bank account.

 Consult a lawyer for legal requirements.

 Hire an accountant for your financial statements.

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In writing your business plan, remember that no two business plans are exactly the
same. Your type of business, your target market, your management style, and the reasons for
writing the plan, will make the difference. There are basic components common to most plans
and one is the Executive Summary.

The executive summary will show in a nutshell what your project is all about. Your
summary should be prepared with utmost care for it will act as guideposts for you and for the
readers of your project. For your ‘interested’ readers, this portion will tell them the viability of
your project without going into details.

Generally, the executive summary includes the major findings or the results of your feasibility
studies and assumptions on the following:

A. Name of Your Company and the nature of your business

B. Location/Address of Your Office(s) and/or your Factory or Plant site

C. Your Company Objectives (short- and long-range)

D. Market Information (who/where/how many customers and sales projection)

E. Technical/Production Information (technical expertise; cost of machineries)

F. Management Information (form of ownership, capitalization, pre-operating expense)

G. Financial Information (total project cost and ROI or break-even)

The executive summary is the business plan in its most concise form. Although the summary
is found at the beginning of your business plan, this part is the last that you will make. It covers
all the key points. A draft can be prepared in advance as a guide to a more detailed writing of
the full plan, but the summary should be re-written when the full plan is complete to make
certain it covers all the relevant points. Suggested length is not more than three (3) pages.

NOTES:

A. Name of your company and your product (brand name)

Discuss briefly where you got or how you arrived at your company’s name
and/or your product (brand) name. Do you want to have exclusive rights to your
trademark, logo and/or product process? Be reminded that your company and/or your
business should be registered with the appropriate government agency/ies, discussed
in details under your Management Information.

 Department of Trade and Industry (DTI)

 Securities and Exchange Commission (SEC)

 Bureau of Internal Revenue (BIR)

 Social Security System (SSS)

 Philippine Health Insurance (PhilHealth)

 Municipal office and/or Barangay Center, if needed.

B. Your office address and/or your factory/plant location

Depending on the type of business, your site or location must have your population base
to support your company. Will there be enough people who could be your customers? If
the answer is negative, it means that no matter how scenic the site is, you have to move
on and scout for a place that will have your target market. Consider a sympathetic and
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supportive environment in the choice of your location. Describe your facility and the
reasons for choosing your location. Include whether you will lease or buy your own facility.
Do you have enough parking spaces? Is your office or showroom accessible to the
physically handicapped? Specify your office floor area and the flow of traffic in the vicinity
of your site. In addition to your mobility, the following factors should be taken into account
in the choice of your location:

 proximity to your target market

 availability of your raw materials

 transportation accessibility

 cost of space/building/rental/alterations

 cost of labor and/or land

 local government rules and regulations.

C. Company Objectives

Objectives or goals of your business are ends toward which your planned activities are
directed. Profit is the measure of business success; although profit will only be one of your
long-term objectives. From your long-range objectives, set your business short-term
objectives for these will guide you in your yearly planning. Example of a short-range
objective: “To sell 500 pieces of (name your product) before the end of the third quarter of
the year.” Another can be “To be able to come up with 20 designs for (identify your target
market) before the end of the year,” or “To launch the product in Metro Manila before the
end of the 2nd quarter.”

For your long-range objectives, formulation of strategies is in order. Your business strategy
will provide direction in the attainment of your objectives. Your objectives should be clearly
stated for some measurable results within a time schedule. Plan your long- and short-
range objectives in relation to your time and money limitations. Be reminded that if you are
committed to your business objectives, your priorities can easily be established.

D. Market Information

Industry Background. Briefly discuss the industry background of your business or

project, its status, size, and its potential for future growth. Discuss how the industry has
changed through the years (its trends) and the factors (social, economical, political or
cultural) that contributed to the change. You can size up industry trends by reading
business and industry trade publications, and even by watching television. Examples of
industry are: banking, insurance, transportation, communication, manufacturing, trading,
and others.

Does your project support government programs? Describe your business in relation to the
industry. Analyze and interpret historical data of the industry. Secondary data about the
industry can be obtained either from the government agencies, from trade associations or
organizations, or from the existing business owners.

Specifically pinpoint who and where is/are your target market/s, their preferences and their
profile. Are they the young executives or the middle-aged working mothers, or the students
(identify age range, sex, public or private institution)? Include how your market will benefit
from your product/service. State how many customers (estimate) will you have. Mention
and justify the price of your product and your projected sales/income for the next three
(3) to five (5) years of operation.

Your marketing program on how you intend to launch your business/product, what
positioning strategy to adopt, what medium or media to use, channel of distribution and
your estimated expenses on such activities, should be indicated.
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E. Technical Information

Describe the technology that you will use in making your product. Include the specifications
and properties. Discuss briefly the uses of your product or how your product works. Identify
(this is critical in your business) the type of, or required machines or equipment or special
skills needed in the production of your product and service. Are these machines or
equipment available locally? State whether you will be selling your product/service on a
regular basis to the same customers. Include your product’s/service’s competitive edge
over your competitors.

Compute how much will be the expense (cost) of each product that you will produce.

When will you “break-even,” no gain, no loss, in terms of volume or sales?

F. Management Information

In this section, you have to identify your legal form of business organization. Will you opt
to be a sole proprietor? Or go into partnership or corporation? Mention whether you have
purchased a franchise or an existing business. Initial capital/investment you will have.
Name the other project proponents, your investors or financiers, if any, and the people who
will be running your business, and their expertise. How many personnel will you initially
hire? Will your personnel be on a contractual, seasonal, or permanent status? Or will you
sub-contract? Don’t forget to note your business hours of operation. For existing business,
state the number of years the business is in existence.

➔ pre-operating costs - for business registrations and permits, licenses, transportation
and reproduction of documents.

Identify the source/s of your capital. Will you borrow from your relatives or friends or will
you use your savings? Will you borrow from the banks or other financial institutions,
whether public or private? Will you classify your business as small - (assets of Php
250,000 up to 2.5 million) or medium - (assets of over Php 2.5 million up to 10 million)
scale? If you borrow, what will be the interest rate? How long will it take to repay the
interest and the capital/principal? Include the profit you intend to have for the next three
(3) or five (5) years in order to pay your loan/s.

G. Financial Information

This is an important aspect of your plan that should be handled carefully. The information
you will provide can make or break your business venture, so seek professional
assistance. Stated under this portion is the amount of money you need initially to start your
business. It includes the following:

➔ capital expenditures - purchase of machines, equipment, renovation or alterations

of business facility; and,

➔ needed working capital - one to three months’ salaries of your personnel, utilities’
bills, etc.
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H. Social Desirability Information

Stated under this section is a brief discussion of your project’s or company’s contribution
specifically to the community, and generally to the economy of the country. Is your
business beneficial? Are you willing to share some of your profits with your customers?
How? Are you willing to hire physically impaired but competent personnel? Is your
company willing and able to sponsor medical, sports, or any community project/s? Can
your project contribute to the existing government thrusts and programs?

More Notes

The market study is the lifeblood of any business venture. Target market refers to
people who will be your customers or clients, people who will consume or purchase the
product or service that you intend to produce. Knowing who and where your customers are will
facilitate your decision to pursue your business passion. The market study will determine
whether your product or service matches with your potential customers’ wants and needs. This
study can validate the existence of a gap between the demand and the supply of the product
or service.

Initial questions for you to answer before you go to register your business will be: How
will I price my product or service? And where will be the ideal location for my business? These
simple questions are very important for you to consider.

As to the marketability of your product or service, the questions you have to ask
are: Is there a demand or a need for the product or service, if there is none, can the
demand or the need be created?” The answer to either of these two critical questions
should be in the affirmative, otherwise, abandon or change your project.

In the event that there is a demand for your product or service, you must identify or
pinpoint who your consumers or buyers will be. You must know their location. Where are they
stationed? Do they live in Metro Manila? Are they in the province? Specifically, where in Metro
Manila, or what province? Are they male or female? How old or young is your intended
market? Who will buy and who will consume – husband or wife or children? Who are the
existing suppliers or your competitors of the demand? Continue answering the following
questions to help you identify your consumers/buyers and eventually, pinpoint your
competitors:

 What is the consumption pattern or trend (demand)

of your probable buyers? What is the pattern of

the existing demand for the last five (5) years?

 What are the characteristics of your target market?

 Who is/are supplying the buyers’ demand? What is

the supply pattern for the last five (5) years?

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a. Market Size - Who and where is the market for your product or service? How big or
small is your market (market size)? Do not forget your population base and the
bulk of your sales. What are the characteristics of your market (i.e., habits, income,
education, sex, profession, life style, etc.)? What are their unmet needs? Knowing
you have customers for your product or service is not good enough. You have to
determine how many (quantify) will be your possible customers.

Differentiate the buyer from the consumer. Not all buyers of your products are also
consumers. Examples are babies’ formula, children’s school needs, teenagers’
undergarments, the husbands’ undershirts, and the like.

b. Market Demand - What was the annual volume of demand or the pattern of
consumption for the product or service for the last five (5) years? Secondary data
like your competitors’ financial statements, information from government agencies,
statistics from trade associations, and the like, can assist you on the demand
analysis of your product or service. That is, with the assumption that similar product
or service exists. If secondary data cannot be obtained, discreetly ask your direct
competitors. Be a client of your competitor and be observant when you are inside
their store or office. You have to ‘invest’ for the information you need.

c. Market Forecast - What is the projected annual demand for your product or service
for the next five (5) years? You can only make a realistic projection when you can
quantify your customers and when you can estimate the volume of their demand.
Your projected demand or your forecast must agree with letters a) and b) above.
Your sales/income projection will support your volume of production.

d. Read and read and read.

Enjoy making and completing your feasibility study.

Remember “no pain no gain”.

Good luck.