LESSON – 5 FEASIBILITY ANALYSIS, PROJECT REPORT AND BUSINESS PLAN Dr. Anand Saxena, Seema Sodhi
Introduction Objectives Feasibility Analysis 5.2.1 Market Analysis 5.2.2 Financial Analysis 5.2.3 Technical Analysis 5.2.4 Economic Analysis 5.2.5 Ecological Analysis 5.2.6 Legal and Administrative Analysis 5.3 Project Report 5.4 Registration 5.5 Business Plan 5.5.1 Need 5.5.2 Contents 5.6 Basic Startup Problems 5.7 Summary 5.8 Glossary 5.9 Self Assessment Questions 5.10 Further Readings 5.0 5.1 5.2
The process of setting up a business is preceded by the decision to choose entrepreneurship as a career and identification of promising business ideas upon a careful examination of the entrepreneurial opportunities. Generation of ideas is not enough; the business ideas must stand the scrutiny from techno-economic, financial and legal perspectives. That is, after the initial screening of the ideas that do not seem promising prima facie, you should conduct an in-depth examination of the chosen three-four before settling for the one where you would like to exert your time, money and energies. You should prepare a business plan that will serve as the road map for effective venturing, whether you may require institutional funding (in which case it is necessary to do so) or not. Setting up of new business enterprises is a very challenging task; you are likely to encounter many problems en route. It’s advisable to be aware of these problems as to forewarn means to fore arm!
After going through this lesson you should be able to • Conduct a feasibility analysis of the proposed business ideas in regard to Marketability Technical viability Funding Legalities • • Prepare a business plan Understand basic startup problems.
5.2 PROJECT FEASIBILITY STUDY
Feasibility literally means whether some idea will work or not. It knows before hand whether there exists a sizeable market for the proposed product/service, what would be the investment requirements and where to get the funding from, whether and wherefrom the necessary technical know-how to convert the idea into a tangible product may be available, and so on. In other words, feasibility study involves an examination of the operations, financial, HR and marketing aspects of a business on ex ante (Before the venture comes into existence) basis. Thus, you may simultaneously read this lesson and the lessons on marketing, finance etc. to have a better idea of the issues involved. What we present hereunder is a brief outline of the issues impinging upon the various aspects of the feasibility of the proposed project. By now, you would have understood that feasibility is a multivariate concept; that is, a project has to be viable not only in technical terms but also in economic and commercial terms too. Moreover, there always is a possibility that a project that is technically possible may not be economically viable. For instance, you can construct a dust free factory in Rajasthan, but it is more economically sensible to do so in Chandigarh/ Bangalore. So even as we take up the various aspects of feasibility oneby-one, it must not mislead into believing that there is a sequence and that there are no interdependencies. Examination of the feasibility requires skills that you may fall short of. You may take the help of the Technical Consultancy Organisations (TCOs) such as HARDICON (Haryana-Delhi Industrial Consultancy Organisation) towards this purpose. There are district-wise industrial potential surveys available with the SISIs and DICs that may serve as a good starting point. You may also make use of the Project Reports published by the directorate of industries and private consulting firms. Obviously, as you use these off-the- shelf project reports, you need to re-validate their assumptions and findings and resist the temptation of jump-starting. Whether you use the already published project reports or wish to start afresh, you need to...
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