Unit 3: Business Opportunity Seeking, Screening, and

Seizing
Lesson 3: Opportunity Screening:
Pre-feasibility and Feasibility Study

Contents
Engage 1
Introduction 1
Objective 1

Explore 2

Explain and Elaborate 3

Pre-feasibility Study 3
When and Why Do Entrepreneurs Conduct a Pre-Feasibility Study? 3
Factors in Conducting a Pre-feasibility Study 4
Feasibility Study 7
Core Questions in a Feasibility Study 7
Elements of Feasibility Study 8
Steps in Conducting a Feasibility Study 9

Extend 11
Activity 11

Evaluate 12

Wrap Up 14

Bibliography 15
Unit 3.3: Opportunity Screening: Pre-feasibility and Feasibility Study

Engage

Introduction

Fig. 1. Research and Planning

There are two important components in screening opportunities: conducting pre-feasibility

and feasibility studies. These are crucial phases in the development, execution, and growth
of any business idea that will help the entrepreneur in mitigating financial and legal risks. Go
over this lesson to learn the importance of these in entrepreneurship.

Objective
In this lesson, you should be able to propose solutions in terms of products and services
that will meet the need using techniques on screening opportunities.

DepEd Competency
Propose solution/s in terms of product/s and service/s that will meet the need using
techniques on seeking, screening, and seizing opportunities. (CS_EP11/12ENTREP-0a-2)

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Unit 3.3: Opportunity Screening: Pre-feasibility and Feasibility Study

Explore

10 minutes
Guide Questions
Answer the questions below:

1. Why is it important to come up with an opportunity screening matrix when assessing

the viability of a business idea?

2. What for you is the most relevant criterion in the 12Rs of opportunity screening and
why?

3. Based on your own understanding, what is meant by the concept of the feasibility
study?

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Unit 3.3: Opportunity Screening: Pre-feasibility and Feasibility Study

Explain and Elaborate

Pre-feasibility Study
A pre-feasibility study refers to the analysis of a potential business opportunity at an early
stage. It is generally conducted to give possible investors the relevant information they need
pertaining to the implementation of a business idea. This study is considered as a crucial
aspect of opportunity screening, for it is designed to give an overview of the aspects of
logistics, required capital, key challenges, and all other details deemed significant in
pursuing an entrepreneurial decision.

Pre-feasibility studies also take into consideration various factors that may interfere with the
initial and final stages of executing a business idea. If done comprehensively, such a study
may include detailed designs and descriptions of the proposed idea, cost estimates, risks in
implementing the project, safety concerns, and other relevant details.

The main objective of a pre-feasibility study is to eradicate all uncertainties that may arise in
any business opportunity. It provides a foundation for an in-depth design and construction
of the proposed business idea by the entrepreneur.

Remember
A pre-feasibility study is designed to give an overview of the aspects
of logistics, required capital, key challenges, and all other details
deemed significant in pursuing an entrepreneurial decision.

When and Why Do Entrepreneurs Conduct a Pre-Feasibility Study?

A pre-feasibility study forms an integral component in the development stage of any
business opportunity. Entrepreneurs conduct this type of study to determine whether a full
feasibility study, which is relatively more costly, must be undertaken or not. In the aspect of
an investment, entrepreneurs also make a pre-feasibility study to collect various pieces of

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Unit 3.3: Opportunity Screening: Pre-feasibility and Feasibility Study
information before making huge investments into different tasks such as acquiring permits,
gathering resources, hiring staff, and purchasing tools and equipment.

Fig. 2. Possibility by a businessman

Factors in Conducting a Pre-feasibility Study

In evaluating the viability of a business opportunity, the ultimate aim of the entrepreneur is
to choose an opportunity that will resonate with his desired business concept. Hence, the
following factors must be taken into account when conducting a pre-feasibility study:

1. Market potential and prospects

Market potential pertains to the size of the market or consumers who will avail of the
product or service. It generally represents the upper limits of the market for a
particular product and is usually measured by the volume of sales obtained by the
entrepreneur.

Market prospects represent the potential future performance of any business in a

competitive landscape. In short, this concept refers to a business’ capability to
perform with other competitors in the industry.

In assessing the market potential of any business opportunity, it is a must for the

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Unit 3.3: Opportunity Screening: Pre-feasibility and Feasibility Study
entrepreneur to likewise evaluate the strengths and weaknesses of different
suppliers or competitors in the marketplace by taking into account the following
considerations:

● Who has more dominance in the market?

● Who has superior bargaining power?
● Which segments of the market are over-served and underserved?
● Are there market segments which the entrepreneur finds more attractive and
beneficial than the others?

Example:
Situationer:
An entrepreneur is planning to put up a photo printing shop in an area surrounded
by schools, colleges, and universities. Since photo printing services are usually
availed by students and employees, the following data were gathered from 485
respondents to determine if the number of his target market in such an area meets
the objectives of his proposed business.

Age Students Employees Neither a student

Group nor an employee

20-25 150 111 12

years

26-35 30 78 17
years

36-45 3 44 21
years

46-55 0 15 0
years

56 and 0 0 4
up

TOTAL 183 (38%) 248 (51%) 54 (11%)

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Unit 3.3: Opportunity Screening: Pre-feasibility and Feasibility Study

Conclusion: The entrepreneur was able to conclude that his proposed business
of putting up a photo printing shop in the said area is viable since 38% of the total
respondents are students, whereas 51% of them are currently employed.

2. Assessment of technology and operations viability

In the entrepreneurial aspect, technology assessment or technology evaluation takes
into account the various implications of a technology or innovation for a certain
business activity, which often involves technology selection.

Remember
Assessment of technology specifically aims to pinpoint if a technology,
along with its other application areas, can generate a successful
business in the future.

3. Investment requirement and production costs

This factor is considered as a vital component in conducting a pre-feasibility study. In
all businesses, it is important for an entrepreneur to assess the amount of money
needed to be able to start a business opportunity. This assessment process would
require the entrepreneur to shell out a sum of money for the following investments:

● pre-operating costs,
● production and servicing costs, and
● working capital.

4. Financial forecast and determination of financial feasibility

Financial forecasting is essential to achieve entrepreneurial success. Working on the
financial projections of a business opportunity is one of the most important
obligations of an entrepreneur. Its core components include the creation of an
income statement, balance sheet, cash flow statement, and funds flow statement.
But what are the reasons behind the importance of forecasting financials?

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Unit 3.3: Opportunity Screening: Pre-feasibility and Feasibility Study
● First, being able to project the finances of business would translate an
entrepreneur’s goals into specific targets.
● Second, creating a financial plan provides the entrepreneur with a
feedback-and-control tool, enabling him to determine problems or capital
issues at the outset.
● Third, having financial projections can anticipate possible problems.

Feasibility Study
A feasibility study is an in-depth report that covers many important points, including
technical, commercial, legal, and scheduling issues. Such a study aims to address questions
concerning the viability of a business opportunity, how much it will cost, and whether it is
able to follow the rules and regulations set by local and national laws.

This study is made by delving into the main aspects of the project, and it is conducted to
assist an entrepreneur in determining whether or not a business opportunity must be
pursued or not.

Remember
In a nutshell, a feasibility study can be defined as a comprehensive
analysis of the practicality of the desired business, based on several
factors such as the marketplace, industry, competition, technology,
and other financial resources.

Core Questions in a Feasibility Study

Take note that a feasible idea is one that has a greater potential of being introduced to the
market. At its very core, successful entrepreneurship consists of three vital elements: the
market, industry, and the entrepreneurial team. In evaluating the feasibility of a business
opportunity, the following questions must be considered:

● Are both markets and industries attractive?

● Does the chosen business opportunity offer convincing benefits or advantages

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Unit 3.3: Opportunity Screening: Pre-feasibility and Feasibility Study
compared to other potential ideas?
● Will the team be able to produce the results they seek to deliver to others?

Elements of Feasibility Study

The following elements are essential in conducting a feasibility study:

1. Technical feasibility
Under this element, the entrepreneur is required to analyze the products and/or
services that he intends to offer to the market. He must be able to evaluate the
technical possibility of producing such products and/or services. The purpose of this
element of feasibility is to assess whether such a product or service is capable of
being created and released in the market. It can be created through designs,
drawings or sketches, or prototypes.

2. Commercial feasibility
When making this assessment, the following actions must be undertaken by the
entrepreneur:
● ask potential customers regarding their burning needs or wants;
● conduct a proper market segmentation in order to fully understand
the needs of the customers;
● conduct thorough research that will provide answers to the needs of
the customers;
● identify the target market; and
● collate all necessary information gathered, including the competition.

Tip
In writing a feasibility study, not all elements must be included. Only
those elements pertinent to the business must be taken into
account.

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Unit 3.3: Opportunity Screening: Pre-feasibility and Feasibility Study

3. Resource feasibility
This factor should be able to state the time required for completing the proposed
business and the resources needed for such completion. Well-detailed contingency
plans must likewise be provided to help the entrepreneur in case of future business
dilemmas.

4. Legal feasibility
A proposed business must adhere to the laws, rules, and regulations governing the
country. This element of feasibility must be able to tackle legal implications, ethical
concerns, permits and authorizations, political issues, and environmental matters.

5. Operational feasibility
This element of feasibility focuses on the level to which the desired business
resonates with the existing entrepreneurial environment and objectives, especially
with regard to the development schedule, delivery time, corporate culture, and other
existing business processes.

What other elements can you include in

conducting a feasibility study?

Steps in Conducting a Feasibility Study

After examining the core elements of feasibility, an entrepreneur must carefully follow the
steps below when conducting a feasibility study:

1. Create a brief preliminary analysis

This step is generally a pre-screening of your proposed business opportunity. Ask
this question: “Is this opportunity attainable or not?” If the answer is no, then there is
no reason any more to continue with the feasibility study.

2. Outline the scope of your project

After assessing the overall attainability of your proposed business, an entrepreneur

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Unit 3.3: Opportunity Screening: Pre-feasibility and Feasibility Study
must properly outline the objectives of this study. Another important aspect is to
analyze the current situation prior to executing the idea or opportunity. This action
will prevent the entrepreneur from incurring a lot of unnecessary expenses he may
encounter in the future.

3. Understand the financial and operational costs

A crucial step in conducting a feasibility study is calculating the financial and
operational costs of the desired business. In all instances, the entrepreneur must be
able to consider the cost of acquiring resources, the financial risks associated with
such business opportunities, and the financial cost of failure.

4. Review and analyze the data

An entrepreneur must re-examine the previous steps in conducting the feasibility
study. Basically, this step requires looking back and reflecting one more time. Given
all the expenses and liabilities laid down, does the income statement still represent
realistic expectations?

Tip
In writing a compelling feasibility study, the main challenge is to
keep it as brief as possible. Eliminate wishful thinking when you are
assessing the current market and your competition, and be precise
with your sales projections. While the elements provided above are
all necessary, you might just want to focus on a single element or a
combination of them in some cases.

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Unit 3.3: Opportunity Screening: Pre-feasibility and Feasibility Study

Extend

Activity
In relation to the topics discussed above, list down at least five differences between a
pre-feasibility and feasibility study. Provide your answers in the table provided below.

Pre-feasibility study Feasibility study

Guide
● Your answers must be based on your understanding of the lesson discussed in this
study guide.

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Unit 3.3: Opportunity Screening: Pre-feasibility and Feasibility Study

Evaluate

A. Answer the following questions based on your

understanding of the lesson, as discussed above.

1. How would you define the concept of pre-feasibility study?

2. What is the main difference between a pre-feasibility and feasibility study?

3. What is the relevance of conducting a feasibility study in entrepreneurship?

4. What information would you need to be able to forecast the financials needed by
your proposed business?

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Unit 3.3: Opportunity Screening: Pre-feasibility and Feasibility Study

5. What does preliminary analysis in a feasibility study entail?

B. Answer the following questions based on your

understanding of the lesson, as discussed above.

1. How are pre-feasibility and feasibility studies connected to entrepreneurship?

2. Discuss at least three advantages of conducting a feasibility study.

3. What do you think is the reason why some businesses do not conduct their own
pre-feasibility and feasibility study?

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Unit 3.3: Opportunity Screening: Pre-feasibility and Feasibility Study

4. What suggestion will you give in order to successfully conduct a feasibility study?

5. Between pre-feasibility and feasibility study, which for you is more vital in
entrepreneurship? Cite the reason for your answer.

Wrap Up
___________________________________________________________________________________________

● A pre-feasibility study is designed to give an overview of the aspects of logistics,

required capital, key challenges, and all other details deemed significant in pursuing
an entrepreneurial decision.
● A feasibility study is an in-depth report that covers many important points,
including technical, commercial, legal, and scheduling matters. Such a study aims to
address questions concerning the viability of a business opportunity, how much it
will cost, and whether it is able to follow the rules and regulations set by local and
national laws.

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Unit 3.3: Opportunity Screening: Pre-feasibility and Feasibility Study

___________________________________________________________________________________________

Bibliography
Dollingner, Marc. Entrepreneurship: Strategies and Resources 3rd Edition. New Jersey: Prentice
Hall, 2003.

Guide to Preparing a Pre-Feasibility Study. Bridgewater Management Consulting Group, 2014.

Kotler, Philip & Gordon McDougall. Marketing Essentials. Prentice-Hall Canada Inc., 1985.

Nadal, Jordi. Technology Evaluation For Entrepreneurs. United Kingdom: Bookboon, 2018.

Peters, Michael & Robert Hisrich. Entrepreneurship 4th Edition. McGraw-Hill Book Co.,
1999.

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