Conducting a Feasibility Study

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Conducting a Feasibility Study

• Shad Valley 2007

2
Distinguish Between a Business Plan and a
Feasibility Study

• The feasibility study is a sub-set of a
  comprehensive business plan
• The feasibility study is usually a precursor to
  the effort and expense of preparing a business
  plan
• The feasibility study focuses on verifying the
  technical and economic feasibility of the
  business idea

The Business Plan
Feasibility Study
3
The Iterative Nature of Planning

• Plans are based on forecasts when ever you
  forecast, your first attempt usually falls short
• Planning is an iterative (step-by-step) process
  that informs the planner each time the forecast
  is made, re-evaluated and made again.
• With each successive forecast, refinements should
  be made such that issues are identified,
  clarified, analyzed and plans made resolve or
  address them.

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Feasibility Study Contents

• Venture Concept
• Market Assessment
• Technical Feasibility of your idea
• Your Marketing Plan
• Managing the Supply Situation
• Conduct cost and profitability assessment
• Plan for future action

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Feasibility Study Contents

• Venture Concept
• Explain clearly and concisely the principal
  concept underlying your venture and what sets it
  apart from other businesses
• Market Assessment
• Describe the profile of your principal target
  customers
• Indicate current market size, trends and seasonal
  patterns
• How do you plan to test your idea?
• Describe any market research or customer surveys
  you plan to conduct
• Assess the nature of your competition
• Estimate your expected sales and market share

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Feasibility Study Contents

• Technical Feasibility
• Indicate the degree of innovativeness of your
  venture idea and the risks associated with it
• Does it need to be subjected to some form of
  technical evaluation or assessment?
• Does the business need accreditation?
• Do you have a prototype? Has it been tested
  from a technological point of view? Will it have
  the specifications to meet the needs and
  expectations of the market?
• Can it be mass produced? Job shop production?
  Sub contracted?

7
Feasibility Study Contents

• Your Marketing Plan
• Detail the marketing strategy you plan to use
• Describe your marketing plan including your sales
  strategy, advertising and promotion plans,
  pricing policy and channels of distribution.

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Feasibility Study Contents

• Managing the Supply Situation
• How do you plan to assure continuing access to
  critical supplies of raw materials and component
  parts at reasonable prices?
• Will you produce or subcontract your production?

9
Feasibility Study Contents

• Cost and Profitability Assessment
• Estimate funds required to set up your business
• Develop short-term financial projections
  including
• Cash flow forecasts
• Pro forma profit and loss statements
• Pro forma balance sheet
• Break even analysis

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Feasibility Study Contents

• Plan for future action
• What were the strong and weak points of your
  venture idea?
• Did your assessment indicate the business was
  likely to be profitable?
• Is it sufficiently attractive to proceed with the
  development of a complete business plan?