Chapter: 3

Feasibility Analysis
 Business emerging process

1) Recognizing business idea

2) Testing the feasibility
3) Preparing business plan
4) Lunching business
If business idea does not satisfy the above 4
components, it should be dropped or rethought.
 Feasibility Analysis………..

 Still we are in planning phase !

 Failures do not plan to fail, they fail to plan
 Its your good fortune, when your plan meet the
what it did think Whether is business is viable or
not ?
 Can we do it or not?
 If the business ideas is feasible then we write
business plan
 primary and secondary research
 1. Product and Services

- Overall appeal of the P/S.

- Product features analysis
- Nothing else matters if the product or
service itself doesn’t sell.
- It considers the two parts;
1) P/S desirability
2) P/S demand
 a) P/S Desirability

- - Does it make sense?/ - Is it reasonable?

- Is it something consumers will get excited about
- Does it take advantage of environmental trend/ solve
problem/ or fill the gap in market place
- Is it the good time to introduce?
- Are there any fatal flaws in P/S basic design
- Concept Statement : Preliminary description of P/S
( one page including; features/target market &
customers/ benefits/ how it is valuable/ how it is better
than competitors/ mgmt team
- Getting feedback from those who are familiar about
industry
 b) P/S Demand ….

-Buying intentions survey

- Library, internet research
 2. Industry/ Target Market feasibility study

- Overall appeal of the Industry and market

- Industry : Group of similar firms
-Target market : portion of Industry I.e.
market share
- Industry/ target market attractiveness
 Industry Attractiveness ……

- Young or old
- Early or later stage of PLC industry
-Fragmented or concentrated
- Growing or shrinking
- Customer must buy or can buy
- High or low margin Industry
- Low or high price
- Overall industry competitions
 Target market Attractiveness ……

• Size of market.
• Market growth.
• The nature of competition and its diversity.
• Profit margin.
• Impact of technology, the law, and energy
efficiency.
• Environmental impact.
• Positions of Major Competitors
 3. Organizational feasibility study

- Mgmt Expertise: Mgmt Competence

a) Passion of mgmt team, b) How they understand market
c) Professionalism, d) Social networks
-Resources Sufficiency; An asset, competencies,
process, skill, knowledge or ideas which are
normally in control of the company are defined
as the resources
- Organizational competencies
“Not just on what resources exist but how they are
used”
Tangible assets + Intangible assets) × Capabilities
 4. Financial Feasibility Study

Normally success or failure of the business or

venture is measured in Financial Value and
Financial Performance
It is final and crucial component of
comprehensive feasibility analysis
It covers;
 Total Start-up Cash needed
 Financial Performance of Similar Business
 Overall financial attractiveness of the proposed
venture
 Financial Feasibility Study….

 Steady and rapid growth in sales

 High percentage of recurring revenue
 Reasonable
 Overall financial attractiveness of the proposed
venture
 a) Total start-up cash needed…

 Anticipated initial capital investment and

operating expenses.
 From where it will be fulfilled
 Reasonable plan to repay
 Overestimate is better than underestimate
 b) Financial performance of similar business…

 Proposed financial performance as compare

to similar already established.
 There are thousand of financial reports on
online
 But there should be meaningful comparisons
 Finding the similar and exactly comparable
firm is so difficult
 various software's are available to prepare
sample financial statement
 b) Financial performance of similar business…

 Proposed financial performance as compare

to similar already established.
 There are thousand of financial reports on
online
 But there should be meaningful comparisons
 Finding the similar and exactly comparable
firm is so difficult
 various software's are available to prepare
sample financial statement
 c) overall Financial attractiveness of Proposed ventures…

 Projected sales and rate of return.

 Pro-forma financial statement
 amount of capital invested
 Risk of lunching business
 Alternative investment