The document provides guidance on conducting a feasibility study for a new business idea. It discusses that a feasibility study identifies potential problems with an idea and determines if the idea is viable and worth pursuing. It then outlines key steps to take in a feasibility study, including assessing the market demand and competition, understanding what a feasibility study entails, and writing the market feasibility section to analyze the potential market. The overall document serves as a guide for how to properly evaluate a new business idea through a feasibility study process.

1. Feasibility Analysis
By:-
Gaurav Singh Rajput
@gauravkrsrajput
Get started with these tips
A feasibility study looks at the viability of an idea with an emphasis on identifying potential
problems. The study attempts to answer two main questions: Will the idea work, and should you
proceed with it?
Before you start to write your business plan, it's important that you first identify how, where, and to
whom you intend to sell your product or service. You also need to assess your competition and
figure out how much money you will need to start your business—and more importantly, how much
it will take to keep it running smoothly until it is well established.
A feasibility study also addresses such important issues as where (and how) the business will
operate. If done properly, your feasibility will provide in-depth details about all the various
components of your business in order to determine if it can succeed. In the end, this document will
serve as a valuable tool for developing a winning business plan.
Why Feasibility Studies Are so Important
The information you gather and present in your feasibility study will help you:
• Identify all the things you need to make the business work
• Pinpoint logistical and other business-related problems and solutions
• Develop marketing strategies to convince a bank or investor that your business is worth
considering as an investment
• Serve as a solid foundation for developing your business plan
Location, Location, Location
Even if you have a great business idea, you'll have to find a cost-effective way to market and sell
your products or services. This is especially important for storefront retail businesses where the
location you choose could make or break your business. The right store in the wrong place is

2. doomed to fail. Most commercial space leases place restrictions on businesses that can have a
dramatic effect on income. A lease might limit business hours or days, or parking spaces. It might
restrict what products or services you can offer.
In some cases, it can even limit the number of customers a business can receive each day.
Also, you'll need to ask yourself if you should you rent space in a business park, industrial park, or
retail location—because different types of commercial real estate properties all have pros and cons.
How to do a simple business feasibility study.
Want to know whether or not your business idea is a good one? A simple business feasibility study
can help. A feasibility study looks at whether or not your home business idea can make money.
There are three conditions which can determine whether or not you will have a successful home
business.
1) Is there a market for your product? Are there people who like what you want to offer?
2) Can you actually make money? Is the market willing and able to pay for what you offer?
3) How many competitors will you have? Can you set yourself apart from others who are offering
the same or similar product or service?
If you want to know what makes a successful home business and whether or not yours is poised to
become one, carefully consider these questions. This simple business feasibility study could save
you from sinking too much time and money into a lousy home business idea.
Before you get started, you should have your home business idea mapped out. What are you going
to offer and how are you going to offer it? What will it cost to start and manage your business? How
will money be earned, and how much will you need to charge? Once you have your idea formed,
you can proceed to determine if it's viable.
1) Does Someone Want To Buy What You Are Selling?
In the end, your home business' success will be determined by whether or not there are people who
want to buy what you are selling. Is there a market for your product? You'll have a tough time
selling wool sweaters to Phoenix residents in the summertime. Basically, you want your product
offering to satisfy an unmet need for your potential customer.
Another thing to consider as you review your product offering is whether your product or service
has something that will encourage a customer to return. There is an old marketing adage that states,
“it costs 10 times more money to get a new customer than to retain an existing one.” It is a great
idea to find ways to continually drive your existing customers back to you for service updates,
refills, the newest products…etc.
2) Can You Make Money?
There maybe be many people who want what you're offering, but your business isn't a good idea
unless they're willing and able to pay for it. Many families would like to have errand services or a
housekeeper, but not many can or want to spend the money on it.

3. Once you've determined there is a paying market, you need to figure out what they're willing to pay
and if it's enough. To start, you need to calculate the cost of providing your product or service
(supplies and overhead expenses), as well as the value of your time and the profit you want to earn
to determine what you need to charge to make money. Next, you need to find out if that's a price
customers and clients are willing to pay.
You may find that initially, the numbers don't work out, but if you are willing to evaluate where the
problems are and make the needed changes to your business, many times you can figure out a
business model that will work.
3) How Much Competition Will You Have?
You may find that initially, the numbers don't work out, but if you are willing to evaluate where the
problems are and make the needed changes to your business, many times you can figure out a
business model that will work.
Competition isn't bad. In fact, it's a good thing because it is an indication that there is a buying
market and money to be made. But, if there is a lot of competition, you'll have to fight your way in
to compete. In essence, you'll have to figure out how to lure people who are already buying from
one place to your business.
To attract customers and clients in a crowded market you'll need to determine your competitive
advantage, how you're different and can better meet the market's needs from your competition. This
starts with doing market research to understand what people want or need, and then determining
your unique selling proposition (USP), or how you can best meet the market's need.then identifying
either a specific segment of the market to target, or how your product or service better meets the
needs the market.
There are a variety of ways you can set yourself apart from the competition. You can offer a better
price, a higher level of service, faster service, more options or less options (for easier choice), or
target a specific segment of the market. For example, most people need cars, but features and
pricing set a Honda apart from a Porsche. Both can get people from place A to place B, but each
offers unique advantages (and disadvantages). Honda's are affordable and reliable. While a Porsche
can be affordable, fun, and a status symbol, they're more expensive.
You have a basic overview to do your own feasibility study to determine if your home business
ideas is a good one. If you need more details, you can create a formal feasibility study.
10 Steps to a Professional Feasibility Study
You have a great idea for a new product, maybe a homemade cherry jam handed down to you by
your grandmother. It's really good jam and you want to bring your idea and your product to market.
That's a great beginning, but you'll probably need a business feasibility study, too.
A feasibility study is a process that tests your idea's viability. It helps you to get a handle on whether
your idea will fly or if it's likely to flop. Feasibility studies can also serve as a basis for creating a

4. small business plan and a marketing plan, both of which you'll need going forward. These 10 steps
and considerations can get you started.
Assess Demand
If you're thinking of selling cherry jam in your area, start by visiting grocers and surveying their
shelves. Do they have a paltry display? This could mean that there's no demand for your product.
And don't neglect the Internet. Do a keyword search for your product if you plan to sell it online. If
it looks like a lot of people are doing a brisk business selling cherry jam or a similar product, there's
a good chance that there's a demand for what you intend to sell.
Assess the Competition
You also need to know who you're up against. Let's say you'd like to sell your jam at the local
farmers market. Stop by the market at least twice, once on the busiest day and once on the slowest
day. See how many—if any—vendors are selling jam. Sample their products.
You should be able to judge fairly easily if your product is superior to those that you'll be competing
against. If you plan to sell your jam online, see if there's a leading brand that dominates the market
and already has a devoted customer base, then sample it.
Understand What a Feasibility Study Is
Now you're ready to get started on your study, and that begins with understanding exactly what it is.
A feasibility study typically includes six sections or components: a description of your business, a
market feasibility study, a technical feasibility study, a financial feasibility study, an organizational
feasibility study, and your conclusions
Begin gathering necessary the information you'll need to address all these issues. What do you need
to accomplish to make your business work? What are some potential problems you might
encounter? Devise some marketing strategies. Commit all this to writing—you'll refer back to it a
time or two or 10.
Writing a Market Feasibility Study
Prepare the market components of your feasibility study first, including a description of the
industry, the current market, the anticipated future market potential and industry trends, the level of
your competition, sales projections, potential customers and clients, and other revenue-generating
resources.
Your challenge is to keep all this as brief as possible. Your description of the industry should be two
paragraphs at most, along the lines of this example. Eliminate wishful thinking in your assessment
of the current market and your competition and be conservative with your sales projections.
Writing a Technical Feasibility Study
The technical feasibility study focuses on the technical and logistical factors that must be in place so
your business can produce, store, and deliver its products or services to the public. A technical

5. feasibility study includes details like the kinds of materials, labor, technology, and transportation
you'll need, as well as where your business will be located.
Remember, a loan officer or investor will be reading this, and yours is probably not the first
feasibility study he's ever encountered. He's experienced, you have his attention, and you're taking
his time. He expects your study to be polished and professional. So give a comprehensive
accounting of what you expect to need to get your business off the ground, including technology,
materials, labor costs, and transportation and shipping costs in clear, concise order.
Writing a Financial Feasibility Study
The information included in your technical feasibility study must be supported by your financial
feasibility study. Your technical feasibility study should flow seamlessly and directly into this
component
Here's where you'll address estimated startup capital. Identify and list your sources of capital, and
the explain estimated potential returns on investments. Don't overlook an explanation of how an
investor can expect to be paid for his support of your business. Your financial feasibility study
should be comprehensive down to the most minute detail. Don't assume that your reader already
knows or anticipates hearing this information.
Make sure your projected capital is adequate to cover the technical and logistical factors you've
already outlined.
Writing a Structure Feasibility Study
This covers the important details of your business's organizational structure and will help you make
your feasibility study and your business plan more attractive to potential investors and clients.
An organizational feasibility study defines the legal structure of your business and offers pertinent
professional background information about the founders, the partners, and other principals involved
in the venture, if any.
It can be helpful to include a code of ethics here, along with your business's principles and
practices. Address issues of employee training and accountability, as well as anti-discrimination and
other labor policies.
Feasibility Study Conclusions
Here's where you draw the conclusions you want your potential investors and customers to
understand.
You don't want to introduce statements here that have not been supported by the data and other
information you've already presented. Your previous study components must support your
conclusions clearly and without question. Use this section to enforce items you've already
mentioned and to make sure previous points are crystal clear.
Stick to facts. Avoid comments and phrases like, "I think," or "I believe." Other words to avoid
include "hope," "anticipate," and "opinion." Your reader wants facts, not speculation.

6. Presenting Your Completed Feasibility Study
This last but perhaps most important step involves assembling your feasibility study into a
professional-looking package. Content might be key, but the presentation is equally important
because you want to engage people from the start or they won't pay attention to the details. Make
sure your cover letter has impact. Design a cover sheet and assemble a table of contents. Gather
everything in an attractive binder or portfolio.
Should You Hire an Expert Consultant?
If you just don't have the time to complete a feasibility study, it might make sense to hire a
consultant to manage and conduct it for you. Ask colleagues for referrals and thoroughly research
consultants with expertise in your chosen product or service area. Learn what their fees are. If you
decide to hire someone, be clear that you want his report to be as objective and honest as possible.
Otherwise, roll up your shirtsleeves and get to work. You can write a feasibility study, and you can
do it well if you take your time and educate yourself a little first.
6 Components of a Feasibility Study
Feasibility studies contain comprehensive, detailed information about your business
structure, your products, and services, the market. They also examine the logistics of how you
will deliver a product or service, and the resources you need to make the business run
efficiently.
Description of the Business. This describes the product or services to be offered.
• Market Feasibility. This includes a description of the industry, the current market,
anticipated future market potential, competition, sales projections, and potential buyers.
• Technical Feasibility. This details how you will deliver your product or service, including
issues of materials, labor, transportation, where your business will be located and the
technology needed.
• Financial Feasibility. You need to project how much startup capital you'll need and
examine potential sources of capital and returns on investment.
• Organizational Feasibility. This examines the legal and corporate structure of the business.
You can also include professional background information about the founders of the
business and what skills they can contribute to the business.
• Conclusions. You should discuss how you envision the business succeeding. You need to be
honest in your assessment because investors won't look at your conclusions and take that as
proof. They should also look at the data and question your conclusions if they appear
unrealistic
Feasibility studies contain comprehensive, detailed information about your business structure, your
products, and services, the market. They also examine the logistics of how you will deliver a
product or service, and the resources you need to make the business run efficiently.

7. How to Write a Market Feasibility Study
he purpose of the lesson is to assist business women in identifying market competition, potential
markets, and market analysis to assess a business idea.
How a Market Feasibility Study Differs From a Marketing Plan
All feasibility studies should look at how things work, if they will work, and identify potential
problems. Feasibility studies are done on ideas, campaigns, products, processes, and entire
businesses. Feasibility studies are assessment tools - not just reports to try and sell your business to
investors. They should consider both pros and cons and analyze a variety of potential business
scenarios.
A Marketing Plan maps out specific ideas, strategies, and campaigns based on feasibility study
investigations, which are intended to be implemented. Think of market feasibility studies as a
logistical study and a marketing plan as a specific, planned course of action to take
What Things Should be Included in a Market Feasibility Study
Things to Include in a market feasibility study include:
• Description of the Industry
• Current Market Analysis
• Competition
• Anticipated Future Market Potential
• Potential Buyers and Sources of Revenues
• Sales Projections
How to Write an Industry Description
Give a brief one to a two-paragraph description of the industry your business is categorized as
according to the U.S. Department of Labor. Determining your industry is important for receiving
government contracts, attracting investors, and for receiving grants (if you form as a nonprofit).
Example: The industrial first aid kit industry is a lucrative, fast-growing field, with contract awards
as high as 14 million dollars in 2006. Fictitious Business Example (FBE) is being established for
the purpose of producing and providing, quality industrial first aid kits to the United States
Government, privately-held, and publicly-held companies to improve worker's safety on the job.
FCE's services are classified under the U.S. Department of Labor Standard Industrial Classification
(SIC) as SIC Code 5047 and classified as the industry titled, "Medical, Dental, and Hospital
Equipment and Supplies."
Tip: To find your company's Standard Industrial Classification (SIC) go to the U.S. Department of
Labor, OSHA web page located at https://www.osha.gov/pls/imis/sicsearch.html

8. Analyzing Your Current Market
This section of a market feasibility study describes the current market for your product or service. If
you are offering something so unique that there are few market statistics, you can either use related
industry information or even conduct your independent study. Several ways to conduct your
research for new ideas include: polling Internet forums, questionnaires addressed to targeted
consumer groups or the general population, or even customer surveys.
Any solid evidence you have that there is a demand (or market) for your product or services will
help you sell your idea. It is particularly important if you are marketing something unique, or within
a very small, specialized market. You need to show that your ideas are novel because you have
found a niche and not because there is no existing market for the idea.
A good source for finding out what is selling (and what is not) is the Department of Labor.
Industries showing employee growth is often a good indicator of an industry's overall stability.
Massive layoffs or few employer or employees indicates fewer business opportunities. Where there
is demand for something, there should be correlating growth in employment, the number of new
companies being formed, or in the industry's overall combined revenue.
Anticipated Future Market (Based on Industry Trends)
This section should include a narrative description, as well as attached spreadsheets, graphs, or
tables to showing trends, statistics, or projections. There are no sure-fire ways to tell if an industry
will have measurable growth in the future, but you can make logical and reasonable predictions
based on trends, past growth, and current markets.
Use Facts, Not Fiction
It is critical in this section that your projections are fact-based as much as possible. Any business
takes risks; the key is to minimize those risks is by carefully studying already successful businesses.
Rather than target just the entire industry, try to isolate similar businesses and study what they are
doing, how they are doing it, and their financial track record.
Visit Your Competitors Websites
You can obtain a lot of information just from visiting company websites and looking over product
lines. Look for discontinued products or services and high-priced items. Somewhere in between
these two things are probably the most stable long-term items. Discontinued means consumers are
no longer demanding the product, while high-priced items may indicate a fad.
Look at Big Companies Strategies
Since big companies spend big bucks on market research, take advantage of their money spent and
public information. For example, if you are trying to crack the pet market, look at PetSmart and
Petco. What new product lines or services are they offering? Chances are good that they spent
millions researching industry trends to develop new product ideas.

9. Study Press Releases
Look for press releases about businesses in your industry. Press releases are an advertisement, but
they also often tell why a company is branching out, closing a division, or change its product line.
They have already done the research for you so do not hesitate to take clues from other businesses.
Tips on How to Research Local Competition in Business
If you are planning to serve only a local market, start by identifying every competitor within a fifty
(50) mile radius. The fastest way to do this is using a telephone book or online business locator.
List each competitor by location and distance from you, and from each other. You should closely
examine all competing businesses that are within fifteen miles of your location. Consider their
locations, business hours, and how long they have been in business. These things can help you
determine how hard it will be to establish a similar business in the same geographic area.
You should also make a note of any similar businesses in your area that has recently gone out of
business. There may be a reason such as poor location, high taxes or operating restrictions, or there
may be not enough demand for the product or service in that area to sustain a business. Researching
local competitor information can tell you two things: What works now and what has not worked for
other business owners.
Tips on How to Research National Competition in Business
If you are planning to sell your products or services on a larger scale through franchise
development, or Internet sales, you need to look beyond local competition. You can start
with Forbes "World's Largest Companies (click "skip this welcome screen" if it appears). You can
search the list by country, rank, industry, and by other variables to fine-tune your search.
To find smaller competition, use a search engine to find businesses by keywords related to your
industry. For example, if you are starting an online retail outlet for specialty apparel, try
searching on "specialty apparel." The return will show you companies selling similar products that
are ranking high in search engine results and may be getting more business.
Visit their websites to see what they are selling - and what they are not selling. If you are not sure
what keywords relate to your industry, use free, online keyword search tools to help you know what
most people are searching for in your related field.
How to Calculate Sales Projections
Sales projections can be a challenge for any new business owner because there is little, or no track
record to support how fast you will grow, or what products or services will sell best.
Sales projections should factor in how much time, and money will be invested in the business, and
the markets you will be targeting. For example, if you get your product in the door at Walmart or
Target, your sales are more likely to grow faster, and your profits will be higher than if you sell your
product at the Dollar Store or only in local "mom and pop" stores.

10. For this reason, it is important that you write market feasibility study first. Your market study will
help you decide where to sell your product or services, and what products and services are most
likely to generate the most revenue. If you have an Internet-based business:
• Estimate the total traffic (number of visitors) to your website each month.
• Project anticipated site traffic volume over time.
• Use traffic projections to estimate the average number of sales per every 10,000 visits to
your site.
• Finally, calculate the average amount of each sale.
The more traffic you can drive to your site, the more opportunities you have for making a sale. Do
you have good Search Engine Optimization (SEO) skills? Do you have your website live and ready
to go? These things are important to all Internet businesses because as your site becomes more
popular, you can project an increase in sales.
Tip: Summarize sales projections in the content but attach a spreadsheet showing actual numbers
based on sales projection
How to Identify Potential Customers, Clients, and Contract Sources
This component of your small business market feasibility study should be descriptive. Your
potential customers, clients, and contract sources should include the following:
• A list of current customers, clients, and contracts and the potential for new or renewed
contracts.
• Any sales lead that may generate new customers or clients.
• A list of government contracting agencies with a brief description of what type of contracts
they solicit, and how they pertain to your industry.
• A list of market types you currently, or intend to target such as seniors citizens, working
mothers, organizations, specialty retailers, etc.
Depending upon the nature of your business, it may not be possible to associate specific amounts of
revenue with a particular market, but you can at least try to estimate the percentage of total revenue
expected from each source. For example, if you plan to sell products to five specialty stores, list
each store you plan to sell to, and a total overall revenue for a category "specialty stores" rather than
an amount for each individual store.

11. How to Write a Technical Feasibility Study
Explain how your business will produce and deliver
A technical feasibility study assesses the details of how you intend to deliver a product or service to
customers. Think materials, labor, transportation, where your business will be located, and the
technology that will be necessary to bring all this together. It's the logistical or tactical plan
of how your business will produce, store, deliver, and track its products or services.
A technical feasibility study is an excellent tool for both troubleshooting and long-term planning. It
can serve as a flowchart of how your products and services evolve and move through your business
to physically reach your market.
Begin—or End—With an Executive Summary
The word "summary" is key here. Highlight the key points of each section you'll include in your
technical feasibility study. You can do this in advance to provide yourself with a sort of guideline or
skeleton to follow as you prepare your study, but it's often easier and more concise to write it after
you've finished so you have the information you want to include right in front of you.
In either case, the summary should appear at the beginning of your technical feasibility study.
Prepare an Outline
Even if you decide to write your executive summary last, you can begin with an outline that will
serve a similar purpose in guiding you through the remainder of the study.
The order in which you present technical information isn't as important as making sure you have all
the components in place to show how you can run your business. You don't have to include specific
financial information in the technical portion of your feasibility study, but all information in this
component should support financial data represented elsewhere.
Basic areas you'll want to cover include materials, labor, transportation or shipping, physical
location, and technology. Be sure to include a thorough description of the services or products you'll
be offering. How will your business benefit consumers? Give investors a reason to choose you over
your competitors.
Calculate Material Requirements
List the materials you'll require to produce a product or service. This section is where you'll indicate
where you'll get those materials. Include information such as whether volume discounts will be
available as your business grows or if you plan to manufacture your parts at some point in time.
Include what parts and supplies you'll need to produce a product, including things like glue and
nails. Mention all materials that will be involved in producing or manufacturing what you're
selling.

12. You don't have to include actual financial data in this portion of the study either, but financial data
that supports your narrative assessment should be included as an attachment in a separate
spreadsheet.
Calculate Labor Requirements
You can't run a business, offer services, or manufacturer products without the help of others and that
help will cost you. Even if you start your business as its only employee, you'll have to add to your
labor pool at some point if you plan to grow.
In most cases, labor will be one of your biggest small business expenses, if not the biggest. List the
number and types of employees you need to run your business now and that you might have to
employ in the future as your business grows.
You can break labor into categories if necessary, such as senior level management, office and
clerical support, production or distribution staff, professional staff including lawyers, accountants,
engineers, and marketing, and fulfillment employees—those in the mail room or shipping
department.
If you plan to outsource order fulfillment, fundraising, or other aspects of your company’s business,
be sure to list what functions you're targeting and to whom you'll send them.
Transportation and Shipping Requirements
How will you transport items if you must send them from one place to another? Smaller items can
be shipped via local carriers, DHL, or USPS, but heavy or bulk items must be transported via a
freight or trucking company.
If you're shipping perishable items, you'll need special overnight handling. You might also need
special permits to ship certain items, and nonprofit organizations should consider applying for
discounted postal rates. These are all things that affect the “how” of moving your goods from one
place to another.
If you offer services, how will trainers, educators, consultants, and sales personnel get to customers
and clients? If you offer a product that's governed by state or federal law such as medications or
prescription medical supplies, will you need a licensed distributor or pharmacy to ship on your
behalf?
Calculate Marketing Requirements
How will you reach consumers? This is a crucial consideration because your business will fail
without them. It's something investors will be keen to know.
Go beyond simple advertising plans, although this is important, too. Exactly what type of
advertising campaign do you plan to launch? Will you lean more heavily on print media or other
options and what consumers will you target? Explain why they would want to buy from you rather
than any of your competitors.

13. The Physical Location of Your Business
Where you run your business will have an effect on your success. If you're starting out in a home-
based office, determine when and if you'll need a “brick and mortar” office at some point in the
future—office space outside your home. Will you eventually need warehouse facilities, your own
factory, or your own trucking facility? Will you require a retail storefront or any other purchased or
rented facilities to conduct your business?
Discuss the pros and cons of where these facilities will be located in the physical location
component of your feasibility study. Should they be in one central location or across state lines? Do
you need special parking considerations for customers or trucks? Do you have to be near other
facilities such as an airport, a commerce center, or a shopping mall?
Technology Requirements to Run Your Business
Every business needs at least some kind of technology to operate. The technology component of
your feasibility study should include discussions about telephone answering systems, computer
hardware and software, and inventory management.
Don't overlook items like cash registers and potentially the ability to accept credit cards and process
checks. You might need special devices to accommodate the disabled, or teleconferencing
equipment and facilities. Cellphones and PDAs are almost a must for most businesses, and you
might need alarm or camera systems and manufacturing equipment as well.
Include Target Dates
Tell investors when you plan to do what to bring your concept to fruition. Don't neglect to mention
the small steps. Cover it all, from initial organizational meetings to when you'll purchase equipment
or facilities and when and how you'll open your doors for business.
Be reasonable. You don't want to promise that you'll perform by a miraculous deadline then fail to
do so.
Support Your Financial Information
Don't make the mistake of trying to entice investors with your staggering growth projections and a
potential return on their investment. There's always an increase in expenses with any increase
in revenue.
Don't rely strictly on feasibility study conclusions to impress an investor. An experienced investor
or lending institution will read your entire report and come to their own conclusions. It's therefore
critical that the technical and financial data in your study reconcile. If other parts of
your feasibility study show growth, you'll also have to project labor and other costs and the
technical ability to support that growth.
The technical component should serve as the written explanation of your financial data because it
offers you a place to include detailed information about why an expense has been projected high or
low. You can explain why it's even necessary. It demonstrates to potential investors and lenders—
and in some cases, potential clients—that you've thought about the long-term needs your business
will have as it grows.

14. Summary of the Technical Feasibility Study
Be sure to include all the technical requirements of your business from production to customer
receipt. This information will help investors know more about the operations of your business.
Having a great idea for a product or business isn't enough—you have to show how you can make
money from it. The technical feasibility study addresses the physical and logistical mechanics of it,
and how you'll be able to get something into the product and back out the door to customers.
Learn How to Write a Financial Feasibility
Study
Part 1 - Start-Up Capital Requirements
A financial feasibility study projects how much start-up capital is needed, sources of capital, returns
on investment, and other financial considerations. It looks at how much cash is needed, where it
will come from, and how it will be spent.
The Purpose of a Financial Feasibility Study
A financial feasibility study is an assessment of the financial aspects of something. If this case, for
starting and running a business. It consideMost investment returns are typically distributed on a
quarterly, bi-annual, or annual basis. Consider how the various distribution cycles could affect your
business' cash flow during the first two years of operation. In other words, do not just run one set of
numbers, examine each type of distribution and support why you think the option you choose is the
best one.rs many things including start-up capital, expenses, revenues, and investor income and
disbursements. Other portions of a complete feasibility study will also contribute data to your basic
financial study.
A financial feasibility study can focus on one particular project or area, or on a group of projects
(such as advertising campaigns). However, for the purpose of establishing a business or attracting
investors, you should include at least three key things in your comprehensive financial feasibility
study:
• Start-Up Capital Requirements,
• Start-Up Capital Sources, and
• Potential Returns for Investors.
Start-Up Capital Requirements
Start-up capital is how much cash you need to start your business and keep it running until it is self-
sustaining. You should include enough capital funds (cash, or access to cash) to run the business for
one to two years

15. Finding Start-Up Capital Funding Sources
There are many ways to raise capital for your business, but no matter what route you take, investors
are more likely to invest, banks are more likely to approve loans, and large corporations are more
likely to give you contracts if you have personally invested in the business yourself.
When you make a list of funding resources, be sure to include anything that you can contribute to
the business, including free labor. If you are starting a nonprofit organization, your donated
professional time may even be tax deductible for you.
Potential Returns for Investors Feasibility Study
Investors can be a friends, family members, professional associates, client, partners, share holders,
or investment institutions. Any business or individual willing to give you cash can be a potential
investor. Investors give you money with the understanding that they will receive "returns" on their
investment, that is, in addition to the amount that is invested they will get a percentage of profits.
In order to entice investors you need to show how your business will make profits, when it will
begin to make profits, how much profit it will make, and what investors will gain from their
investment. The investment return section should offer both a description of how investors will be
involved and discuss different variables that will affect the profitability of your business, offering
more than one scenario.
How You Should Pay Back Investors
How investors will be paid will vary according to individual investment offers. Read every offer
over very carefully - not all investors may be right for your business.
The investment section of your financial feasibility study should not make specific or binding offers
to investors. Do not state investors will be paid specific dollar amounts by certain dates. Instead, list
general practices for how investments return will be distributed, assuming different business
scenarios. For example, you might state that investors will be paid X amount of dollars or X% on
their investment at the end of any business quarter where profits exceed a certain threshold.
Project total revenue, deduct business expenses, and then from the remaining amount, decide what
percentage will be distributed to investors. You should never promise 100% of the remaining
amount to investors. You need to keep cash on hand to continue operating your business, to grow
your business, and to build reserves.
Most investment returns are typically distributed on a quarterly, bi-annual, or annual basis. Consider
how the various distribution cycles could affect your business' cash flow during the first two years
of operation. In other words, do not just run one set of numbers, examine each type of distribution
and support why you think the option you choose is the best one.

16. How to Write an Organizational Feasibility
Study
What is the purpose of an Organizational Feasibility Study? To define the legal and corporate
structure of the business. An Organizational Feasibility Study may also include professional
background information about the founders and principals of the business and what skills they can
contribute to the business. Your organizational feasibility study should include:
Description of your business structure
• Description of your organizational structure
• Internal and external principles and practices of the business
• Professional skills and resumes
Description of Your Business Structure
This section contains a narrative description of the legal requirements for establishing your business
and why you feel this is the right structure for your business. Discuss the pros and cons of different
business structures.
For example, a sole proprietorship leaves the sole proprietor open to both financial and legal
liability risks. A high-risk business should never be set up as a sole proprietorship because it will
make it difficult to attract investors as well as clients and customers. It is also the hardest and most
expensive form of business to insure
If you wish to become a tax-exempt organization, you will need to incorporate, file for tax
exemption with the IRS (and, in some cases, within your own state), and set up a board of directors
and officers of the corporation. You will also need to decide if your organization should be a
membership or non-membership organization....
Organizational Structure
Discuss your business’ organizational structure. One of the best ways to present this information is
with an organizational chart. An organizational chart shows the hierarchy or chain of command in
your business. It lists key positions and subordinate positions under department heads, supervisors,
and managers.
Principles and Practices of the Business
Every business should have a published code of ethics and principals that govern how the company
conducts its business. In this section, include both internal and external principals of operations.
Internal Operations Business Principles and Practices
Businesses that are incorporated must have a board of directors.
Do you have a conflict of interest policy in place? Will you use “Robert’s Rules” for conducting
meetings?

17. • Do you offer services, where clients need to be screened for eligibility for financial aid,
social services, or, are there other prerequisite requirements such being a senior citizen,
minority, or disabled?
• Do you have hiring and employee training and management practices in place?
• Do you have an overall corporate philosophy that inspires, encourages, or offers incentives
to employees?
• Do you have an anti-discrimination policy in place?
External Business Practices and Principles
Do you have a customer policy or philosophy? Examples of client/customer philosophies include:
We do not serve clients; we team with clients to meet their goals.
• We value creativity and imagination and use these to our client’s advantage.
• Our employees maintain high ethical standards that reflect on how we treat our clients.
Professional Skills and Resumes
A business’ strengths come from the talent, skills, and experience of those running the company. In
this section, you give a brief overview of all founders, employees, and partners involved in the
business that will be contributing their skills and input into how the business is operated. You
should also include any board members, directors, and officers.
Include in your list of principals (most important people in your business or organization), a brief
overview of how their particular skills will serve the business. You can also include
accomplishments that relate to the business. It is also beneficial to attach resumes for at least the top
three principals listed.