1. Chapter 5
Conducting a Feasibility Analysis and
Crafting a Winning Business Plan
planning is bringing the future into the
present so that you can do something
about it now-
Alan Lakein
if u wait until all the lights are “green”
before you leave home, you’ll never get
started on your trip to the top.
Zig Ziglar

2. Conducting a Feasibility Analysis
Definition of feasibility study
The process of determining whether or not
entrepreneur’s idea is a viable foundation for
creating a successful business.
Elements of a Feasibility Analysis
1) Industry and market feasibility
2) Product or service feasibility
3) Financial feasibility

3. Conducting a Feasibility Analysis
1) Industry and market feasibility
Good starting point
- A basic analysis of the industry and targeted
market segments
- The focus-
- 1) To determine how attractive an industry is
overall as a “home” for a new business
- 2) To identify possible niches a small business
can occupy profitably.

4. Conducting a Feasibility Analysis
The Five Forces Model
a model that recognizes the power of five
forces-rivalry among competing firms,
bargaining power of suppliers, bargaining
power of buyers, threats of new entrants, and
threat of substitute products or services-on an
industry. Michael E. Porter.

5. Conducting a Feasibility Analysis
2) Product or Service Feasibility Analysis
an analysis that determines the degree to which a
product or service idea appeals ot potential customers
and identifies the resources necessary to produce the
product or provide the service.
Two methods that can be used:
a) Primary research
Information that an entrepreneur collect firsthand and
analyze
b) Secondary research
Information that has already been compiled and is
available for use, often at a very reasonable cost or
sometimes even free.
EG: customer surveys and questionnaires, focus group,
market research, articles, local data and www

6. Conducting a Feasibility Analysis
Prototypes
an original, functional model of a new product
that entrepreneurs can put into the hands of
potential customers so they can see it, test it
and use it.
In home trials
a research technique that involves sending
researchers into customers’ home to observe
them as they use the company’s product or
service.

7. Conducting a Feasibility Analysis
3) Financial Feasibility Analysis-the major elements to
be included in a financial feasibility analysis include the
initial capital management, estimated earnings and
resulting return on investment.
a) Capital requirements-estimated start up capital.
b) Estimated earnings-an entrepreneur should
forecast the earning potential of the proposed
business.
c) Return on investment-the final aspect of the
financial feasibility analysis combines the estimated
earnings and the capital requirements to determine
the rate of return the venture is expected to produce.

8. Crafting a Winning Business Plan
Why Develop a Business Plan?
Business plan
A written summary of an entrepreneur’s
proposed business venture, its operational
and financial details, its marketing
opportunities and strategy, and its
managers’ skills and abilities.

9. Crafting a Winning Business Plan
The elements of a Business Plan
1) Title page and table of contents
2) Executive summary
3) Vision and mission statement
4) Company history
5) Business and industry profile
6) Business strategy
7) Description of the company’s product or service
8) Marketing strategy
9) Documenting market claims
10) Competitor analysis
11) Description of the management team
12) Pro forma (projected) financial statements
13) The loan or investment proposal

10. Crafting a Winning Business Plan
What Lenders and Investors Look For in a
Business Plan
Five C’s of credit
Criteria lenders and investors use to
evaluate the creditworthiness of
entrepreneurs seeking financing capital,
capacity, collateral, character and
conditions.