FEASIBILITY STUDY

Prepared by

Mr T.P Mushayavanhu
 What is Feasibility S t u d y ?
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
• Provides the big picture
• Gives new alternative solutions
• Helps to evaluate alternatives
• Identifies reasons not to proceed/ proceed.
• Enhances the probability of success by addressing and
mitigating factors earlier 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 A N OPPORTUNITY

D E V E L O P I N G A BUSINESS C O N C E P T
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 channels and the
concept. management team.
Its purpose is to focus your
thinking.
 BUSINESS C O N C E P T ST AT E M E N T
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
 D E V E L O P I N G A BUSINESS C O N C E P T 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
• Retail, wholesales, mail order,
Benefits and Features Internet, door-to-door?
• Benefit- promotes or enhances the value of product.
• 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 O r 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. Due 3 March 2023

• 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 successful. 16
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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 Business Concept Statement Recap
• The concept statement should be concise and include
the following:

1. Product service to be offered

2. Product features and benefits
3. Target market
4. Management team and their relevant skills,
experience
5. Delivery/distribution channel
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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
19
Components of a Feasibility Report Cont.’
d) Organisational Feasibility
• 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

20
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
Office: S14