Preliminary Planning: Feasibility

Concepts
Marites A. Closa
Objectives
● Introduce the concept of market feasibility study
● Discuss the factors that affect the feasibility
● Evaluate different factors that are needed in feasibility study
Introduction
● A feasibility study is simply an assessment of the practicality of a proposed
project plan or method.
● This is done by analyzing technical, economic, legal, operational and time
feasibility factors.
● Just as the name implies, you’re asking, “Is this feasible?”
○ Do you have or can you create the food business to do what you
propose?
○ Do you have the people, tools and the resources necessary?
○ Will the food business get you the ROI you expect?
Key Components of a Feasibility Study
● Executive summary - provides overview of the paper
● Description of product/service - detailed description of what you will be
providing, including the menu and specialties
● Technology considerations - this includes the tools, both software and
cooking materials that you will use for your restaurant or food service
● Product/service marketplace - collection of suppliers where you will
inquire regarding your tools and products for supply chain management
● Marketing strategy - describes how will you attract customers and brand
your food business
Key Components of a Feasibility Study
● Organization/staffing - describes the hierarchy for the recruitment of your
personnel
● Schedule - provides the plan for carrying out a process or procedure, giving
lists of intended events and times.
● Financial projections - an estimate of future financial outcomes for a
company or project, usually applied in budgeting, capital budgeting and / or
valuation
● Findings and recommendations - summarizes the conclusion and relative
suggestions in the food business
Types of Feasibility Study
● Technical Feasibility: Consists in determining if your organization has the technical resources and
expertise to meet the project requirements.
● Economic Feasibility: You’ll need to do an assessment of the economic factors of your project to
determine its financial viability. You can use a cost-benefit analysis to compare its financial costs against
its projected benefits.
● Legal Feasibility: Your project must meet legal requirements. That includes laws and regulations that
apply to all activities and deliverables in your project scope.
● Operational Feasibility: Operational feasibility refers to how well your project matches your
organization’s capacity planning, resources, strategic goals and business objectives.
● Time Feasibility: Estimate the time that will take to execute the project and set deadlines. Then think
how your project timeline fits with your current operations, such as your demand planning, production
schedule, among many other thing
7 Steps To Do a Feasibility Study
1. Conduct a Preliminary Analysis

● Begin by outlining your project plan.

● You should focus on an unserved need, a market where the demand is
greater than the supply, and whether the product or service has a distinct
advantage.
● Then you need to determine if the feasibility factors are too high to clear
7 Steps To Do a Feasibility Study
2. Prepare a Projected Income Statement

● This step requires you to work backward.

● Start with what you expect the income from the project to be and then
what project funding is needed to achieve that goal. This is the foundation
of an income statement.
● Things to take into account here include what services are required and
how much they’ll cost, any adjustments to revenues, such as
reimbursements, etc.
7 Steps To Do a Feasibility Study
3. Conduct a Market Survey, or Perform Market Research

● This step is key to the success of your feasibility study, so make your market analysis as
thorough as possible.
● It’s so important that if your organization doesn’t have the resources to do a proper one,
then it is advantageous to hire an outside firm to do so.
● The market research is going to give you the clearest picture of the revenues and return
on investment you can realistically expect from the project.
○ Some things to consider are the geographic influence on the market, demographics,
analyzing competitors, the value of the market and what your share will be and if the
market is open to expansion
7 Steps To Do a Feasibility Study
4. Plan Business Organization and Operations

● Once the groundwork of the previous steps has been laid, it’s time to set
up the organization and operations of the planned project to meet its
technical, operational, economic and legal feasibility factors.
● This is not a superficial, broad-stroke endeavor. It should be thorough and
include start-up costs, fixed investments and operating costs.
● These costs address things such as equipment, merchandising methods,
real estate, personnel, supply availability, overhead, etc.
7 Steps To Do a Feasibility Study
5. Prepare an Opening Day Balance Sheet

● This includes an estimate of the assets and liabilities, one that should be
as accurate as possible.
● To do this, create a list that includes items, sources, costs and available
financing.
● Liabilities to consider are such things as leasing or purchasing of land,
buildings and equipment, financing for assets and accounts receivables.
7 Steps To Do a Feasibility Study
6. Review and Analyze All Data

● All these steps are important, but the review and analysis are especially
important to make sure that everything is as it should be and that nothing
requires changing or tweaking.
● Reexamine your previous steps, such as the income statement, and
compare it with your expenses and liabilities.
● This is also the time to think about risk, analyze and manage, and come up
with any contingency plans.
7 Steps To Do a Feasibility Study
7. Make a Go/No-Go Decision

● You’re now at the point to make a decision about whether the project is
feasible or not.
● That sounds simple, but all the previous steps lead to this decision-making
moment.
● A couple of other things to consider before making that binary choice is
whether the commitment is worth the time, effort and money and is it
aligned with the organization’s strategic goals and long-term aspirations.
End of Lecture