Feasibility Study

Topics: Financial statements, Venture capital, Cost Pages: 8 (2381 words) Published: April 15, 2010
What to Include in your Feasibility Study
March 30, 2010, 3:32 am
In starting a new business venture, it is important to conduct a feasibility study to ensure that your business will be successful. Some things to be included are plan, cost, and sources of funding, manpower and personnel requirements, market and profitability. In the plan section of your feasibility study, State clearly the objectives and description of the project. Duration to complete the project is also included. It is usually answers the questions what, why and how about the project. Indicate the cost of equipment and facilities needed for the project. The proponents should undertake reliable canvassing using at least two or three supplier and be particulars to models and capacities of equipment as well as the availability of materials. Also, it is important if there is budget for the project. If there is no sufficient budget for the project, a bank loan may be considered. In this case, the loan amount and its interest must be factored into the financial documents of the study. Realistic income targets from the venture should be projected. As per personnel or manpower, it is important to determine the size and particulars of manpower as well as personnel’s job description, job titles and credential standards. Also, salary rates and allowance should be noted. In addition, the stability of the market determines the viability of the project. A survey should be conducted to know if there are sufficient clients or customers and to whom the commercial venture will cater. Of course, project should know if it is profitable. A ten or twenty percent return of investment (ROI) is usually regarded as profitable enough. Vital Parts of Feasibility Study

A. Summary of Project
1.Name of Firm
2.Location – head office and plant site
3.Brief description of the product
4.Highlights of major assumptions such as market projections, share and prices, investment costs, method of funding 5.Summary of findings and conclusions on the following
a. Market feasibility
b. Technical feasibility
c. Financial feasibility
B. General Information – Describe the pre-operating period, during the operating period, labor, and professional firms or consultants to be hired, if any. Also, includes status of timetable of the project and other information such as pending litigations, information regarding intangibles, etc. C. Competitive position considering imported and/or substitute products. D. Marketing Program – description of the present marketing practices of competitors in the exports and domestic market. Projected export and proposed marketing program of the project. It includes the contribution to the economy, plant layout, structure, raw materials, utilities, and waste disposal. E. Financial Feasibility – Total project cost, initial capital requirements, sources of financing, financial statements, and financial analysis. F. Social Desirability – specific project contributions to the economy and society and social rate return. Some Feasibility Study Mistakes

It is imperative to show your idea is feasible to attract investor and fund the project. No matter what is your offering whether a product or service, you need to convince other people to finance your ideas. I provide some feasibility mistakes which serve as guidelines to your feasibility study. •Doing feasibility study without doing research. It is a wasting of time and money without preliminary research on validity of the idea. It is necessary to conduct initial research or pre-feasibility study before the start on of a full feasibility study. •Incorrect data interpretation. Sometimes, the writer overestimates the market size as well as the opportunity for the new venture. For example, you will observe that the product has a large market place, but not realized the strengths of competitors and their customer’s loyalty. •Incorrect cost estimation. Make sure to detailed the...
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