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FEASIBILITY STUDY

Feasibility Study

 A feasibility study determines the commercial

viability of any given project

 To start your Feasibility Study .start with your "business idea" on paper. .  Discuss it with others and adjust it as you obtain more information and ideas.

6. 5. 2. Plan Cost source of funding Manpower Personnel requirements Market Profitability . 3. 4.COMPONENTS OF A FEASIBILITY STUDY 1.

 The plan answers the questions what.  A sketch plan should accompany the description. . and how about the project. why.  It includes the duration or approximate time to complete the project.The Plan  The project and its objectives should be described in detail.

their availability. and where these could be purchased should be determined early on.The Cost  Cost of equipment and facilities needed should be determined.  Particulars as to the models and capacities of the equipment. .  Proponents must canvass at least two or three suppliers.

 In this case. a bank loan may be considered.The source of funding  Project approval is 50% assured if there is a prior provision for it in the company’s budget.  If there is no allocation or insufficient. the loan amount and its interest must be factored into the financial documents of the study. .  Realistic income targets from the venture must be projected.

 This may be due to no sales or low sales. buying too much or overheads being higher than expected. WORKING CAPITAL  When calculating how much working capital you need it may be necessary to allow for up to six months funds. having to extend credit. .

should also be drawn up.Manpower or Personnel  The size and particulars of manpower needed for the project should be noted. .  The personnel’s job descriptions. job titles. if any. and credential standards should be determined.  Salary rates and allowances.  These should be properly set out in any appropriate organizational chart.

What training will be required? 5. What alternatives are there? . What are their duties? 4. Ask the following questions:  1. What will be the cost? 3. Who will they be? 2.

.The market  The stability of the market determines the viability of projects.  A survey should be conducted to find out whom the commercial venture will cater and if there would be enough customers or clients.

 Customers:  You cannot sell to everyone.  Why will they buy from you?  Identify your Market Segments or groups:  What knowledge do you have of your market segments or groups? How many are there?  What will they buy? How often will they buy? What will be their average purchase? . who are your potential customers? Make a List. So.

Determine how much it will cost to buy or produce them and how much you can sell them for. Also look at how long it will take you to produce or procure them. . Products & Services: Create a list showing the products / services you will be offering to each segment.

 Suppliers: Identify preferred and alternative suppliers on a list and show products /services / prices on this list. . Collect catalogues and brochures to assist this study.

 Competition: List your competitors and show their perceived strengths and weaknesses.  Ask the Question: How can you attract their customers from them? Price is not the only answer. For each main competitor. list two good points and two bad points. You need to understand why they are competition to your proposed business. .

your suppliers. Map: Obtain a map and on it define your market boundaries. and any demographic information on your market. your location. your competitors. .

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Profitability / Benefit  A 10-20 percent return of investment (ROI) is usually regarded as profitable enough.  For socially-oriented undertakings. . there is a need to discuss how a project will benefit a specific group of people or community.

Formulate conclusions and recommendations. 4. 3. 5. Undertake data analysis. 2. .The FS Process 1. Gather and verify information. Establish sources of data. Determine purpose and scope of the study.

 The feasibility report provides options: GO or NO GO. interpreted. .The FS Report  This reflects the findings and conclusion.  Pertinent data are presented. and summarized.  It defines the study in terms of its objectives and identifies the factors that determine whether a project is feasible or not.

Elements of a FR 1. Title page Abstract Introduction Data Presentation and Discussion Analysis Summary Conclusion Recommendations References Appendix . 8. 5. 7. 4. 2. 6. 3. 10.List of Tables / Figures . 9.

3. Executive summary Introduction Discussion and Analysis Conclusion Recommendation Appendix . 4. 6. Modern-day report writers present FR in this format: 1. 5. 2.

 Two pages is more than enough! .the main purpose is to gain the reader's attention. it is the last to be written.  While it is the first section.a) Executive Summary .  Give a brief and clear overview of the key points of each section of your plan.

b) Introduction of Product/Service (description) describe the benefits of your product or service from the customer's point of view. or other information.  What is your product or service? How is it different from what's already available? If a product. trade secrets. will you manufacture it and how? Who are your suppliers? What are your distribution channels?  Describe patents. You must determine if the concept is a working and tested product or service. .

the potential annual growth of the total market for your product or service.  This requires research and is perhaps the most difficult section.c) The Market .is there a market for your idea? Can this be proven? Describe the size of your market (both in terms of customers and finances). . but also most important. What is your target market? What is your estimated market share percentage?  Describe seasonal fluctuations. and factors affecting that growth.

 Community businesses do make profit. but its what they do with the surplus that differentiates them. at a premium or somewhere in between?  The gross margin must be high enough to at least cover your expenses. . at a discount.d) Price and Profitability .how will you price your product or service.

the future!  Does the feasibility plan show that the idea is worthwhile? If so then it is time to proceed to the business plan… What can help me get started?  Try thinking about the following and make some notes… .e) Plan for Further Action .

.uk/index.php?q=nod e/61  Research and Technical Writing by Portillo et al.Source:  http://www.org.togetherworks.