Unit III: Feasibility Study and Business Plan

Nursing Entrepreneurship (CN 103)

Course Content:
A. Feasibility Study
1. Definition and importance
2. Difference of feasibility study and business plan
B. Writing a Business Plan
1. Definition and importance
2. Parts of a business plan
3. Filling up the proforma business plan

Learning Outcome:
At the end of the unit, the student must have:
1. defined feasibility study;
2. defined business plan;
3. listed the requirements in funding the venture; and
4. prepared a business plan using a proforma.

DEFINITION OF FEASIBILITY STUDY

Feasibility Study. It evaluates the potential of a business opportunity by studying five

primary areas in depth: the overall business idea, the product/service,
the industry and market, financial projections (profitability), and the plan
for future action. (Katz & Green, 2018)
● Feasible - the extent to which an idea is viable and realistic and the extent to which
you are aware of internal (to your business) and external (industry, market and
regulatory environment) forces that could affect your business
● Possible – involves the availability of skills, technology, hardware and infrastructure
to set up the business

A feasible business will:

✔ generate adequate cash flow and profits
✔ withstand risks
✔ remain viable in the long-term
✔ meet the goals of the founders

IMPORTANCE OF FEASIBILITY STUDY

1. List in detail all the things you need to make the business work.
2. Identify logistical and other business-related problems and solutions
3. Develop marketing strategies to convince a bank or investor that your business is worth
considering as an investment
4. Serve as a solid foundation for developing your business plan.

DEFINITION OF BUSINESS PLAN

Business Plan. A document designed to detail the major characteristics of a firm – its
product or service, its industry, its market, its manner of operating
(production, marketing, management), and its financial outcomes on the
firm’s present and future. (Katz & Green, 2018)
IMPORTANCE OF BUSINESS PLAN
For the writer and reader:
• funding start-up enterprises
• attracting investors
• entrepreneurs’ blueprint
• constant motivator

Similarities of FS and BP
Both have common areas of coverage:
• Market potentials: whether or not the business can sell its products and services
• Technical feasibility: whether or not the enterprise can produce what intends to sell
and at what cost.
• Financial viability: which estimates how much is needed to start the business and
when it can make money

Difference of FS and BP

Feasibility Study Business Plan

1. prepared during the conceptualization
and deliberation phase of the project
2. covers different scenarios
3. applies only to the development stage
of the project
 
1. prepared after the FS has shown the
feasibility of the business
2. focuses on the most promising
scenarios on the FS
3. can be done during development
stage and can be revised during the
implementation phase as the need
arises

HOW TO PREPARE THE PREFORMATTED BUSINESS PLAN?

Description of the Industry

• industry – the general name for the line of product or service being sold, or the firms in
that line of business
• Name of the industry, size (in number of firms and sales), status of the industry (growing,
stable, or in decline)

Opportunity to Take Advantage

• Describe how the business will fill or satisfy the need/s or solve the problems of the
target customers.
• A product or business is usually a result of business opportunity seeking exercise or
some form of market survey

Business Name
Tips for Naming your Business:
• It should be simple. Easy to say, spell, pronounce and remember. It should sound
good. Make it short and memorable.
 • It should be distinctive. Do not be a copycat.
• Use a name that has meaning to it and conveys a benefit. Adopt a business name
that provides some information about what the business does.
• Use initials.
• It can be registered and legally protected.
• It is extendable. Avoid names that limit your business to add to its product lines.
• Translate well into other languages.
• Portray your values and vision. It portrays the persona, feeling and meaning of the
business.

Vision
• states what the organization is and what it stands for, what the business is all about and
what the values of the business are
• To (provide, give, create, make, etc…) a (healthy, happy, productive, safe, etc…) (world,
place, dream, reality, existence, etc…) for (the group of people you want to help).
Worksheets that can help you refine your vision statement:
• https://www.khorus.com/wp-content/uploads/2019/06/Mission-vision-values-
worksheet.pdf
• https://www.smartsheet.com/sites/default/files/IC-Vision-Statement-Worksheet-
9469_PDF.pdf
• https://www.digglescreative.com/resources-downloads/worksheet-brand-vision.pdf
• https://www.projectmanager.com/blog/guide-writing-perfect-vision-statement-examples
•
Mission
• declares the company’s purpose for being and what it aims to accomplish as an
enterprise
Goals
• broad, long-term desires that an organization seeks to accomplish
Objectives
• more specific targets of performance that everyone undertakes to accomplish the goals
https://www.dummies.com/business/start-a-business/business-plans/set-goals-and-objectives-
in-your-business-plan/

✔ Keep each goal clear and simple.

✔ Be specific.
✔ Be realistic.
✔ Don’t be afraid to push yourself and think big.
✔ Make sure that your goals are in sync with your mission.

Competitive Advantage
• Unique Selling Proposition (USP) – refers to the proposed business’ competitive
advantage, what sets it apart from the competition

What should you bear in mind when trying to create your own USP?
✔ What does your perfect customer really want?
✔ How can your product or service solve their problem(s)?
✔ What factors motivate their buying decisions?
✔ Why do your existing customers choose your business over your competitors?
Legal Forms of Business Organization
• Single Proprietorship – owned and manage by one individual
• Partnerships - 2 or more people who co-own the entity for making money
• Corporation – formed by at least 5 parties; considered a “legal person” which allows it
to conduct business acts that a natural person can do
• Cooperative – formed by at least 15 members working together to achieve social and
economic goals

Business Requirements
• Barangay Clearance
• Tax Identification Number
• Business Name Certificate (for single proprietorship)
• Mayor’s Permit
• Invoice and Book of Journal

Personnel Requirement
Consider the following questions:
• List the people who are (or will be) running the business
• Describe their responsibilities and abilities
• Project their salaries
• How many employees will there be in what positions?
• What are the necessary qualifications?

Types of Organizational Chart

• Flat or horizontal – there are few or no levels; managers and workers; for
small/individual unit organizations

• Hierarchical – organization is divided and aligned into different levels where the line of
command moves downwards from the top level to the next lower level, down to the
bottom
• Matrix – organization is divided and aligned in such a way that same-skilled people are
pooled together in a group reporting to a group manager

Target Market
• A specific group of people you have decided to target with your products or services
• Differentiate between business-to-business markets and business-to-consumer markets
• Describe demographics of the target market such as age range, gender, educational
level, income level, etc.
• Specify the benefit the selected market will derive from the product

Marketing Mix
 • Product – description of the product/service or product mix
• Price – determine price levels
• Place/Distribution - how to distribute the products
• Promotion – promotional activities

Locating the Business

Basic Aspects of Selecting a Location for a Business:
• Decide on a particular community
• Selecting a particular site within that community

Lay-out
• Description of the store lay-out or production lay-out

Input Requirements
• Materials checklist and other supplies - present a detailed breakdown using a
checklist in a tabulated format specifying the description and specification, quantity, unit
cost, total amount and sources
• Packaging and labeling - consider the materials needed, designs, availability of
suppliers, specifications and sustainability to the product

Process
• For processing or manufacturing of food and non-food products, prepare a flowchart or
flow of diagram to detail the step-by-step manufacturing process
• For services, identify the appropriate procedure in delivering the right services to the
target customers and present a service process flowchart

Policies
• Business policies establish the rules of conduct for a company. They not only describe
the responsibilities for the employer and the employees, they also create a frame of
reference for handling the countless issues that arise in an organization.

Characteristics:
✔ Must be clear, specific and easily understood
✔ Specify company rules
✔ Explain their purpose
✔ State when policy should be applied
✔ Who it covers
✔ Method of enforcement
✔ Describe consequences of non-compliance

Production Plan and Sales Forecast

• Describe the projected scale of production. The input requirements will depend on the
production schedule and size.
• Describe the projected sales based on the projected production

Estimating the Start-up Capital

Pre-operating expenses
+ Fixed capital investment
+ Initial working capital
+ Contingency
Start-up Capital Requirement
Pre-operating Expenses
• Cash expenses that the business incurs prior to the actual start of operations
• Fees for permits, licenses, clearances, registration fees, initial promotional expenses,
consultancy fees, cost of personnel recruitment and training, initial franchise cost, one-
time deposit fees with utility companies, research and technical studies

Fixed Capital Investments

• Assets needed by the business for it to operate and do business
• Land, buildings, building improvements, furniture and fixtures, vehicles, tools, machinery
and equipment, etc.

Working Capital
• To keep the business going for the first few cycles of operation
• Enables to pay for raw materials, salaries, supplies, rent, utilities, inventories,
receivables and other business-related expenses even before the regular streams of
revenue start to come in

Sources of Funding
• Personal funds or parent’s cash support or contributions from team members or from
relatives and friends
• Debt or loan financing
• Equity financing
• Venture capital firms
• Angel investors
• Alternative sources of funding – government agencies and non-profit organizations

Financial Statements
• Income Statement or Profit and Loss Statement – shows the profitability of the
business during the period covered by the statement
• Balance Sheet – presents the financial position of a company at a specified date
1. Assets – shows what the business owns
2. Liabilities – how much it owes other entities
3. Owner’s Equity – net worth of the business; represents the excess of all assets
of the business over all liabilities
✔ Statement of Cash Flows - presents how the changes in the balance sheet and income
statement accounts affect the company’s cash balance

Illustration of an Income Statement of a service company

Reyes Shoes and Bags Repair

Income Statement
For the year ended January 31, 200A

Shoes repair income P 24,100

Bags repair income 20,800
Total income P 44,900
Less Expenses:
Salaries and wages P7,500
Rent 4,000
Taxes and permits 1,650
Delivery expense 3,350
Electricity 3,100
Telephone 1,900
Miscellaneous 2,750
Interest expense 350 24,600
Net Income P 20,300
 Illustration of an income statement for a merchandising company

Balleza Merchandising
Income Statement
For the month ended January 31, 200A

Sales P 215,800
Less: Sales returns P2,000
Sales discounts 1,590 3,590
Net Sales P 212,210
Less: Cost of Sales
Purchases P149,000
Less:Purchase returns P3,000
Purchase disc. 1,200 4,200
Net Purchases P144,800
Freight-in 6,000
Total available for sale P150,800
Inventory end 45,000 105,800
Gross profit P 106,410

Less: Operating expenses

Selling expenses:
Salesman’s salaries P15,000
Salesman’s commission 11,000
Advertising 7,200
Total P33,200

Administrative expenses:
Office salaries P16,300
Rent 10,000
Transpo and gasoline 10,200
Electricity 4,100
Telephone 2,800
Repair and maintenance 2,700
Misc. expense 3,400
Total P49,500
Total operating expenses P 82,700
Net Income P 23,710

Socio-economic Plan
• Determine what are the social, economic and environmental implications of your
business
• Benefits that society can generally derive from your business

“Be concise when writing your business plan.”

REFERENCES:
Books
Small Enterprises Research and Development Foundation. (2013). Windows to
Entrepreneurship: A Teaching Guide. Small Enterprises Research and Development
Foundation: Author

Web
Peterson, Steven D., Jaret, Peter E., & Schenck, Barbara Findlay. (n.d.) Set Goals and
Objectives in Your Business Plan. Retrieved from
https://www.dummies.com/business/start-a-business/business-plans/set-goals-and-
objectives-in-your-business-plan/

https://www.digglescreative.com/resources-downloads/worksheet-brand-vision.pdf