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Innovation & Entrepreneurship Institute

8th Annual Feasibility Study Competition

FEASIBILITY STUDY WORKBOOK

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COMPETITION DEADLINE: FINALIST PRESENTATIONS & AWARDS CEREMONY: JANUARY 17, 2006 JANUARY 26, 2006 DRAFT REVIEWS WILL BE OFFERED DURING THE WEEK OF NOVEMBER 28 (MUST SIGN UP IN ADVANCE) AND UPON REQUEST BY IEI STAFF. FOR MORE INFORMATION, CONTACT Chris Pavlides Executive Director 201 Speakman Hall 215-204-1035 pavlides@temple.edu Michelle Eisenberg Associate Director 201 Speakman Hall 215-204-3081 michelle.eisenberg@temple.edu

Innovation & Entrepreneurship Institute

8th Annual Feasibility Study Competition

Feasibility Study Competition Guidelines


Deadline: Tuesday, January 17, 2006 Registration: Submit online at www.fox.temple.edu/iei/feasibility.html The Feasibility Study Competition is the second stage of the Temple University Business Innovation Competition. It is open to students, faculty, staff and alumni of Temple University. Participants may be individuals or teams. Teams may include members without ties to Temple, provided that the person with the Temple affiliation is the business founder/lead executive/chief shareholder. Please see additional eligibility information on our Competitions home page, www.fox.temple.edu/iei/competitions.html. The purpose of the new venture feasibility study is to identify the most promising business opportunities. Winning feasibility studies will prove that the business idea is both innovative and workable. We suggest the following 5-6-page submission format; please bear in mind that it needs to address the criteria identified under Guidelines below: 1. Company Overview 2. Product/Service Description 3. Industry and Marketplace Analysis 4. Marketing Strategy 5. Distribution and Sales Strategy 6. Operations Plan 7. Development Plan 8. Management Team 9. Exit Strategy 10. Financial Estimates Judging and Confidentiality Submissions will be judged by a panel of experienced entrepreneurs, consultants, investors, and senior executives. All ideas and business plans are viewed only by IEI professional staff and competition judges, who are committed to keeping the utmost confidentiality and privacy, regarding all submissions as the intellectual property of the submittors. No copies of submitted material are distributed; if not picked up by authors within one month after the competition, submissions are shredded and destroyed. All concepts remain the property of the submittor and are neither released nor discussed with anyone other than IEI professional staff and judges without the express permission of the author. Winning entries will be publicized in Temple and external media.

Innovation & Entrepreneurship Institute

8th Annual Feasibility Study Competition

Awards Feasibility Plan Competition winners are eligible for cash and in-kind prizes and use of the Innovation Lab to prepare for the Business Plan stage of the annual Business Innovation Competition. Guidelines Winning studies will convince the judges that your idea could work. Judges will consider the following: Market Opportunity Is the value proposition sound? What is your unique selling proposition? Is there a market for your product or service? How innovative and well-thought-out is your product or service? Is your target market clearly identified and sufficiently large? Who are the key market players competitors, possible partners, suppliers? What is the competitive advantage over existing solutions?

Implementation Plan Is the business operationally feasible? Have the major operational risks been identified, with appropriate contingency plans, in regards to market entry barriers, intellectual property protection, suppliers, funding, etc? Is the founding team qualified and sufficiently experienced to launch the business?

Revenue Model Is the revenue generation plan reasonable and well-thought-out? Are the major financial assumptions reasonable given current market conditions? Are the financial projections realistic?

Tips Use the Feasibility Study Outline as checklist. (But remember, no two studies are ever alike in content, emphasis or style.) Keep the length to 5, but certainly no more than six pages, typed, single-spaced, 12pt Times/Arial font

Innovation & Entrepreneurship Institute

8th Annual Feasibility Study Competition

Make the study compelling. Feasibility studies must convince readers that the idea could work. Make your case clear and to the point. Consider using numbers, diagrams, models or pictures to help condense your argument - without sacrificing detail (must be included in the page limit). Support claims with evidence. Use credible sources and methods - and document all quotes, estimates, etc. Support all numbers with documented sources. Have an idea but need other expertise on your team? Check out the Team Builder Bulletin Board. Also check here to see if you can team up with someone who already has a great idea, but needs some help.

For questions or further information, please contact:


Innovation & Entrepreneurship Institute Fox School of Business, 201 Speakman Hall 215-204-3082, iei@temple.edu

Innovation & Entrepreneurship Institute

8th Annual Feasibility Study Competition

New Venture Feasibility Analysis


Although every feasibility study should reflect the particular combination of opportunity, concept and entrepreneurial team that fits your business, it is important to consider the full range of issues you might face - before jumping into more detailed study. Function of a Feasibility Study Feasibility studies help entrepreneurs - and their supporters - judge whether an idea is viable. The process of preparing a feasibility study is a testing process - a thought experiment in what could go wrong and what needs to go right for an enterprise to take root and grow. Preparing a feasibility study requires a tremendous amount of research and thinking which often lead to significant changes in the original idea. The good news is that the stronger the feasibility study the easier the business study is to write - and the more likely it is that your business will succeed. Feasibility Plan Narrative The feasibility study is not a formal document but it is a very important one. It is your first reality check. (The marketplace will be the real check, of course.) As such, the study should be very carefully thought through, extraordinarily well documented, and clearly written. A feasibility study should at least touch on most issues included in the final business plan, but for the feasibility study the focus is on getting the design right and testing its coherence, rather than on convincing investors and other partners to extend their support. Thus, clarity and evidence are more important for the feasibility study than convincing presentation. The first step in creating a business plan is to outline your concept, begin to define the scope of your business, and to visit each of the principal parts of your prospective plan: 1. Company Overview 2. Product/Service Description 3. Industry and Marketplace Analysis 4. Marketing Strategy 5. Distribution and Sales Strategy 6. Operations Plan 7. Development Plan 8. Management Team 9. Exit Strategy 10. Financial Estimates

The attached worksheets will help to guide you through this initial look at your business. In this initial stage, understand that you will have very little of the information needed to build a solid business plan. Nonetheless, use your best judgment to answer all of the questions and complete all of the worksheets. In subsequent steps, you will be investigating and developing these issues in depth.

Innovation & Entrepreneurship Institute

8th Annual Feasibility Study Competition

Company Name: _____________________________________________ Team Members: ____________________________________ ____________________________________ ____________________________________ ____________________________________ ____________________________________

1. Company Overview
The Company Overview is a brief description of the company you have founded or want to found. How will it be organized? Will it be a sole proprietorship, partnership, limited liability company, or corporation? What are your ambitions for the company? Will it always be a small company, or do you want to grow it into a national or an international giant? Upon reading this section, the reader should have a good idea of where you are and where you are going with your company. What is the name of our company? Does it company currently exist, or will it be forming?

How is our company organized (e.g., sole proprietorship, partnership, corporation)?

What is our overall strategy and what objectives do we have? What are our goals for the company (keep it small, grow it big, franchise it) What is the exit strategy for ourselves and for our investors (sell to a larger company, go public, merge, buy out investors)

Innovation & Entrepreneurship Institute

8th Annual Feasibility Study Competition

2. Product/Service Description
The Product and Services section is a detailed description of the products and/or services you will be selling. You should not assume that the reader is familiar with your product/service, so be sure to explain and describe it carefully. What exactly is our product or service? What isn't it? Carefully describe.

What is the unique selling proposition (USP) of our product/service? What are its features and benefits? Do we have any proprietary rights to the product/service (for example, technology, patents, copyrights, etc.)?

Why is our product/service superior to the competition, and how is it different?

Innovation & Entrepreneurship Institute

8th Annual Feasibility Study Competition

3. Industry and Marketplace Analysis


The Industry and Marketplace Analysis section dispassionately describes and outlines the industry and the marketplace in which you will compete. When finished with this section, you and your readers should understand the dynamics, problems, and opportunities driving your industry and marketplace. What is the industry that addresses this market? What trends are important in this industry? How does this industry segment the market?

What is the market we intend to serve? How large is it? What is its growth potential?

What motivates customer purchase decisions?

Who are the major players/competitors in the market?

Innovation & Entrepreneurship Institute

8th Annual Feasibility Study Competition

4. Marketing Strategy
The Marketing Strategy section of your plan will make or break the prospects for your venture. In the Marketing Strategy section, show how you are going to fit into your marketplace. What are unmet needs in the marketplace and how are you going to fill them? How will you differentiate your product or service from your competitors? What unique features, benefits, or capabilities will you bring to the marketplace? Who are your customers? Who are our target customers? What problems are we solving for them? What are their profiles? What motivates their buying decisions?

What are the strengths of our product/service? Weaknesses? Who are our competitors? How will we differentiate our product or service?

How will our product be priced? What is our cost and profit margin per unit sold? What are anticipated annual sales (units sold times price per unit)?

Innovation & Entrepreneurship Institute

8th Annual Feasibility Study Competition

5. Distribution & Sales Strategy


How will you reach your customers? How will you close the sale with your customers? Remember, "nothing happens until the sale is made" and the cash is received. What distribution channels will we use (e.g., direct sales, internet, wholesalers, etc.)?

How will we communicate with our customers (e.g., advertising, promotions, etc.)?

How will our product or service be sold? Who will do the selling (our own sales people, manufacturing representatives, etc.)?

What are the costs associated with our sales strategy? Which costs are fixed? Which are variable?

Innovation & Entrepreneurship Institute

8th Annual Feasibility Study Competition

6. Operations Plan
The Operations section outlines how you will run your business and deliver value to your customers. Operations is defined as the processes used to deliver your products and services to the marketplace and can include manufacturing, transportation, logistics, travel, printing, consulting, after-sales service, and so on. In all likelihood, about 80% of your expenses will be for operations, 80% of your employees will be working in operations, and 80% of your time will be spent worrying about operating problems and opportunities. Which operations are critical to the success of our business? Which are secondary?

How will we produce and deliver our product/service? What will we do in-house, and what will we purchase (make vs. buy)?

What will it cost to produce and deliver our product or service? Estimate fixed costs (plant, equipment, etc.) and variable costs (labor, materials, etc.)

Innovation & Entrepreneurship Institute

8th Annual Feasibility Study Competition

7. Development Plan
The Development section is a road map of how you are going to get from where you are now to where you want to be in the future. These steps can be as routine as securing retail space, or as critical as applying for and getting a patent on key technology. What must be done before we can introduce our product or service to the marketplace? What are the risks?

How long will it take to bring our product or service to market? What is our timeline?

What are the one-time start-up and development costs of our business (equipment, deposits, fixtures, furniture, )?

What additional information do we need understand and cost the development of our product or service?

Innovation & Entrepreneurship Institute

8th Annual Feasibility Study Competition

8. Management Team
List the names and titles/roles of the individuals involved in our business. What experience do they have in this industry and product line?

9. Exit Strategy
This refers to your future liquidity event, ie. How are the investors going to get their money out, and the return on their investment? Usual forms of exit are through the sale of the company to a larger competitor, initial public offering, or merger of equals. Which exit strategy do we intend to use? Why? What is our time horizon?

Innovation & Entrepreneurship Institute

8th Annual Feasibility Study Competition

10. Financial Plan


Your Financial Plan should be frosting on a cake. You have outlined a great business concept, demonstrated a real need in the marketplace, shown how you will execute your ideas, and now will show how much money everyone is going to make.
Summarize estimates made in previous sections: A. Annual unit sales: B. Price per unit: C. Variable cost per unit (production and sales): D. Fixed costs (admin, production, and sales): E. One-time start-up costs (eqpmt, mktg, legal, etc.): F. Working capital rqd (receivables , inventory, etc.): Calculate estimated annual gross revenues and income: G. Estimated annual revenues (A*B): H. Estimated annual variable costs (A*C): I. Estimated annual contribution margin (G-H-D): Calculate break-even figures: J. Contribution margin per unit (B-C): K. Annual break-even quantity (D/J): L. Ratio of break-even to expected quantities (K/A): Estimate the money you will initially need to start your business: M. Total up-front funds required (E+F): N. Additional units to cover up-front funds (M/J): O. Break-even quantity with up-front funds (K+N): Calculate financial performance figures: P. Payback period for startup funds (M/I): Q. Annual return on start-up investment (I/M): R. Variable cost to price ratio (C/B): S. Contribution margin ratio (I/G): $

Innovation & Entrepreneurship Institute

8th Annual Feasibility Study Competition

Do these numbers look attractive enough to proceed? How can they be improved?

How much cash will we need to start our business? Where will we get it (personal savings, friends & family loan, venture capital, an angel)?

Provide 3-year profit & loss projections of sales, expenses, and operating profit. Please describe your assumptions in arriving at these numbers. Year 1 Sales Expenses Operating Profit Year 2 Year 3