What is financial feasibility

Financial feasibility is a process that tests your idea's viability. It helps you to get a
handle on whether your idea will fly or if it's likely to flop.

1
Parts of financial feasibility

A typical financial feasibility covers the following key areas:

● Pricing
● Revenue
● Expenses
● Feasibility test
Part 1: Pricing

Decide what price you are going to charge your customers.

Aspects to consider:
● Cost of production
● Market prices of similar products
● Targeted customer segments
Part 2: Revenue

Revenue is the amount of money generated from the sale of your products or
service.

Quiz:
Determine an average of how many products or services you can sell in a month
and how much revenue you can generate form the sale of your products or
services

4
Part 3: Expenses
Fixed expenses are those expenses that are independent of your level of
production.
Example: Rent and Salary
Variable expenses are those expenses that are dependent on your level of
production
Example: raw materials.
Capital expenses are those one time expenses you need to start and operate your
business successfully
Example: Laptops
5
 Part 4: Feasibility test
Determine if your business idea will generate more revenues than costs

1. How much money will you make or lose each month?

Step 1: Determine average revenue made:
Step 2: Determine your total costs
Total costs = Fixed costs + Variable costs
Monthly profit = Revenue - Total costs

2. How long will it take me to pay back my initial investment?

Determine your payback period:
Payback period = Total capital investments / Net profit