What is a Feasibility Study• Is this a good business idea? Helps answer the question of whether to go forward with the business idea.• The process of determining whether an entrepreneur’s idea is a viable foundation for creating a successful business
Feasibility Analysis • Preliminary evaluation of idea to determining if it‟s worth pursuing • To determine how Feasibility attractive an industry is overall as a „home Analysis for a new business • To identify possible niches a small business can occupy profitably
When To Conduct a Feasibility Analysis• Timing of Feasibility Analysis – After concept statement evaluation – After opportunity recognition, before business plan – Before a lot of resources are invested• Components of Full Feasibility Analysis• Market Feasibility• Technical Feasibility• Organizational/Managerial Feasibility
USES OF FESABILITY. Generate RemainA feasible Meet the adequate Withstand viable inbusiness goals of the cash flow risks, the long- will: founders and profits, term
Evaluate AlternativesThe feasibility study helps to “frame” and “flesh- out” specific business scenarios so they can be studied in-depth.
Pre-Feasibility StudyMay help sort our alternatives and determine if a full-blown feasibility study is warranted
Market Assessment• A market assessment may be conducted first to identify market opportunities. If no opportunities exist, there may be no reason to proceed further.
YES/NO Study Results.Outline in depth the various business scenarios examined and the implications, strengths and weaknesses of each. Go/No Go Decision.The feasibility study will be a major information source in making this critical decision.
Reasons Not to do a Study The Lets hire a Just a way company We did a generalWe already for selling us study a managerknow it is consultants the couple of and have feasible. to make equipment years ago. him do the money. says it is study. feasible.
Reasons to Do a Study Gives focus to the project. Narrows the business alternatives. Identifies new opportunities. Identifies reasons not to proceed. Provides valuable information for “go/no go” decision. Increases probability of business success by identifying weaknesses early.
CONTD.. Providesdocumentation that the idea was thoroughly investigated. Helps attract funding from lenders, grant providers, etc.Helps attract equity investment
Feasibility Study Outline Market Feasibility Industry Sales descriptio projection n. Access to Industry market competiti outlets. veness. Market potential
TECHNICAL FEASIBILITY. Suitability Determine AvailabilityTechnical of Raw Other facility and suitableFeasibility production materials. inputs. needs. of site. technology.
FINANCIAL FEASIBILITY. EstimateFinancial/Ec equity and onomic credit Feasibility needs. Estimate Budget the total expected capital costs and requiremen returns. ts.
Feasibility StudyStudy Results• Identify and describe various business scenarios.• Compare and contrast scenarios.• Outline criteria for decision making.
When to Do & How to Use• When to do a Study?• Who will do the Analysis?• How will you Monitor the Study Progress?• How to Accept or Reject the Study?• How to Use the Results?