A feasibility study is valuable for: Starting a new business Expansion of an existing business Adding an enterprise to an existing business Purchasing an existing business.

1. FEASIBILITY PLANNING
Prepared By:
Nijaz N

2. FEASIBILITY PLANNING
• Is the process of determining if a business idea is viable.
• A feasibility study is valuable for:
 Starting a new business
 Expansion of an existing business
 Adding an enterprise to an existing business
 Purchasing an existing business.

3. FEASIBILITY PLANNING
• A feasible business will:
 Generate adequate cash flow and profits,
 Withstand risks,
 Remain viable in the long-term
 Meet the goals of the founders

4. Why do a Feasibility Study?
• Provide a thorough examination of all issues and assessment of probability of
business success
• Give focus to the project and outline alternatives
• Narrow business alternatives
• Surface new opportunities through the investigative process
• Identify reasons NOT to proceed
• Enhance the probability of success by addressing and mitigating factors early
on that could affect the project
• Provide quality information for decision making
• Help to increase investment in the company
• Provide documentation that the business venture was thoroughly investigated
• Help in securing funding from lending institutions and other monetary sources

5. Reasons Not to do a Study
• We already know it is feasible.
• We did a study a couple of years ago.
• Just a way for consultants to make money.
• The company selling us the equipment says it is feasible.
• Lets hire a general manager and have him do the study.
• Waste of time – we need to buy the site and begin construction.

6. Reasons to Do a Study
• Gives focus to the project.
• Narrows the business alternatives.
• Identifies new opportunities.
• Identifies reasons not to proceed.
• Provides valuable information for “go/no go” decision.
• Increases probability of business success by identifying weaknesses
early.
• Provides documentation that the idea was thoroughly investigated.
• Helps attract funding from lenders, grant providers, etc.
• Helps attract equity investment

7. Data Sources for a Feasibility Assessment
• Data required for a feasibility study can come from
– primary or secondary sources
• Primary data can include formal interviews and surveys
• Collection of primary data can be expensive and time consuming
• Secondary data can include industry and trade publications, statistics
of industry associations, and government agency reports

8. Levels of Feasibility Assessment
• A feasibility study of an idea is conducted at three levels
 Operational Feasibility
“Will it work?”
 Technical Feasibility
“Can it be built?”
 Economic Feasibility
“Will it make economic sense if it works and is built?”
“ Will it generate PROFITS?”

9. Steps for an Economic Feasibility Study
 Identify and Estimate all Capital Expenditures
 Identify and Estimate all Variable Costs related to the Proposed Business
Venture
 Identify People and Skills required to operate
Determine Wages, Salaries, and Benefits
 Identify and Estimate Project Related Costs
 Infrastructure development or improvements
 Advertising and Promotion
 Legal Fees
 Municipal & State Development taxes
 Identify and Estimate all Fixed Costs

10. Other Feasibility Study Outline
• Market Feasibility
 Industry description.
 Industry competitiveness.
 Market potential
 Access to market outlets.
 Sales projection
• Technical Feasibility
 Determine facility needs.
 Suitability of production
technology.
 Availability and suitable of
site.
 Raw materials.
 Other inputs.

11. Feasibility Study v/s Business Plan
• Feasibility study answers the bottom line question—Is this venture going
to make money?
• Feasibility study outlines and analyzes several alternatives or methods of
achieving business success
• Feasibility study is conducted before a business plan
• Business plan is prepared only after the venture has been deemed to be
feasible
• Business plan deals with only one alternative or scenario that is
determined to be the “best” alternative
• Business plan considers the management side—goals and objectives of the
planned business venture

12. Four Stage Growth Model
Pre-Start-Up Stage
Start-Up Stage
Early Growth Stage
Later Growth Stage
The period during which entrepreneurs plan
the venture and do the preliminary work of
obtaining resources and getting organized prior
to start-up
The initial period of business when the
entrepreneur must position the venture in a
market and make necessary adjustments to
assure survival
A period of often rapid development and growth
when the venture may undergo major changes
in markets, finances and resource utilization
The evolution of a venture into a large company
with active competitors in an established
industry when professional management may be
important than entrepreneurial verve.

13. Elements in Feasibility Planning
• Executive Summary
 Venture defined, products or services identified, market characteristics
(market size, location & customers), founders introduced with roles,
financial summary (estimates of revenue & expense, founder’s equity,
dept & capital needed).
 Business Concept
 Purpose of the venture, major objectives of founders, description of the
distinct competency of the firm.
 Product / Service
 Function