Full Feasibility Analysis

From Preparing Effective Business Plans by Bruce R. Barringer

Note: All fields can be expanded to provide additional space to respond to the questions. A
copy of this template, along with each of the assessment tools, is also available in
PDF format at the authors Web site at www.prenhall.com/entrepreneurship.

Introduction
A. Name of the proposed business 12:00 Hostel
B. Name of the founder (or founders) Pimklao Kanchanakom
C. One paragraph summary of the business
12:00 Hostel was located at the center of Bangkok near Asoke
station. The hotel has only 40 capsule rooms which are separate into 2
zones; men and women. Furthermore we provide 10 deluxe rooms for the
customers who want to stay in the same room with their family or their mate.
The reasons why we have less amount of rooms because of were very want
to focus on service and the satisfaction of our customers, therefore we build a
small hotel for make sure that we can look after our guests thoroughly.

Part 1: Product/Service Feasibility

Issues Addressed in This Part
A. Product/service desirability
B. Product/service demand

Assessment Tools
Concept Statement Test

Write a concept statement for your product/service idea. Show the concept statement
to 5 to 10 people. Select people who will give you informed and candid feedback.
Attached a blank sheet to the concept statement, and ask the people who read the
statement to (1) tell you three things they like about your product/service idea, (2)
provide three suggestions for making it better, (3) tell you whether they think the
product or service idea is feasible (or will be successful), and (4) share any additional
comments or suggestions.
Summarize the information you obtain from the concept statement into the following
three categories:

* Strengths of the product or service ideathings people who evaluated your

product or service concept said they liked about the idea
* Suggestions for strengthening the ideasuggestions made by people for
strengthening or improving the idea
* Overall feasibility of the product or service conceptreport the number of
people who thing the idea is feasible, the number of people who think it isnt
feasible, and any additional comments that were made

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 * Other comments and suggestions

Buying Intentions Survey

Distribute the concept statement to 15 to 30 prospective customers (do not include
any of the people who completed the concept statement test) with the following
buying intentions survey attached. Ask each participant to read the concept statement
and complete the buying intentions survey. Record the number of people who
participated in the survey and the results of the survey here.
Along with the raw data recorded here, report the percentage of the total number of
people you surveyed that said they would probably buy or definitely would buy your
product or service if offered. This percentage is the most important figure in gauging
potential customer interest.

One caveat is that people who say that they intend to purchase a product do
not always follow through, so the numbers resulting from this activity are almost
always optimistic. Still, the numbers provide you with a preliminary indication of
how your most likely customers will respond to your potential product or service
offering.

How likely would you be to buy the product or service described above?
___0___ Definitely would buy
___0___ Probably would buy
___2___ Might or might not buy
___3___ Probably would not buy
___7___ Definitely would not buy
Additional questions may be added to the buying intentions survey.

Conclusion (expand fields and report findings, in discussion form, for each area)
A. Product/service desirability
The service got high amount of definitely would not buy, because the interviewee
found something that they didnt satisfy in our hostel.

B. Product/service demand
According to the survey, we took a survey with 12 people, the majority choose
definitely would not buy, consequently we got low demand.
C. Product/service feasibility (circle the correct response)
Not Feasible Unsure Feasible
D. Suggestions for improving product/service feasibility.
The interviewee comment that our hotel should not separate zone between men
and women rooms, because some customers are family, they need to stay together, so we
will improve it by open a new zone which mix men and women rooms.
Part 2: Industry/Market Feasibility

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 Issues Addressed in This Part
A. Industry attractiveness
B. Target market attractiveness
C. Timeliness of entry into the target market

Assessment Tools
Industry Attractiveness
To the extent possible, assess the industry at the five-digit NAICS code level your
potential business will be entering. Use a broader industry category (less NCICS
digits) if appropriate (http://www.census.gov/epcd/www/naicstab.htm).
Assess the attractiveness of the industry the potential business plans to enter on each
of the following dimensions.

Industry Attractiveness Assessment Tool

(used to assess the broad industry, rather than the specific target market, you plan
to enter)
Low Potential Moderate Potential High Potential
1. Number of competitors Many Few None
2. Age of industry Old Middle aged Young
3. Growth rate of industry Little or no Moderate growth Strong growth
growth
4. Average net income for Low Medium High
firms in the industry
5. Degree of industry Concentrated Neither Fragmented
concentration concentrated nor
fragmented

6. Stage of industry life Maturity Growth phase Emergence

cycle phase or phase
decline phase
7. Importance of industrys Ambivalent Would like to Must have
products and/or services have
to customers
8. Extent to which business Low Medium High
and environmental
trends are moving in
favor of the industry
9. Number of exciting new Low Medium High
product and services
emerging from the
industry
10. Long-term prospects Weak Neutral Strong

Target Market Attractiveness

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 Identify the portion or specific market within your broader industry that you plan to
target.
Assess the attractiveness of the target market on each of the following dimensions.

Target Market Attractiveness Assessment Tool

(used to assess the specific target market, rather than the broader industry, you plan
to enter)
Low Potential Moderate Potential High Potential
1. Number of competitors Many Few None
in target market
2. Growth rate of firms in Little to no Slow growth Rapid growth
the target market growth
3. Average net income for Low Medium High
firms in the target
market

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 Low Potential Moderate Potential High Potential
4. Methods for generating Unclear Somewhat clear Clear
revenue in the industry
5. Ability to create barriers Unable to May or may not be Can create
to entry for potential create able to create
competitors
6. Degree to which Satisfied Neither satisfied or Unsatisfied
customers feel satisfied by dissatisfied
the current offerings in the
target market
7. Potential to employ low Low Moderate High
cost guerrilla and/or buzz
marketing techniques to
promote the firms product
or services
8. Excitement surrounding Low Medium High
new product/service
offerings in the target
market

Market Timeliness
Determine the extent to which the window of opportunity for the proposed business
is open or closed based on the following criteria.
Determine the timeliness of entering a specific target market based on other criteria.

Market Timeliness Assessment Tool

Low Potential Moderate Potential High Potential
1. Buying mood of Customers are Customers are in a Customers are
customers not in a buying moderate buying in an aggressive
mood mood buying mood
2. Momentum of the market Stable to losing Slowly gaining Rapidly gaining
momentum momentum momentum
3. Need for a new firm in the Low Moderate High
market with your offerings
or geographic location
4. Extent to which business Low Medium High
and environmental trends
are moving in favor of the
target market
5. Recent or planned Large firms Rumors that large No larger firms
entrance of large firms entering the firms may be entered the
into the market market entering the market market or are
rumored to be
entering the
market

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Conclusion (expand fields and report findings, in discussion form, for each area)
A. Industry attractiveness
According to Thai society in nowadays, we can see that if we compare our country
with others countries, Thailand have less amount of hostels. Therefore our
business can grasp the attractiveness from other people.
B. Target market attractiveness
The business was satisfied from our target market. However, we have to make
sure that we create the new thing that its different and can attract to the target
market.
C. Market timeliness
There is no large industry in the hostel market in Thailand. Consequently, this
time is suitable to start the business.
D. Industry/market feasibility (circle the correct response)
Not Feasible Unsure Feasible
E. Suggestions for improving industry/market feasibility.
Always try to create and bring some new ideas to the business for make my hotel
be the best hotel of the world.

Part 3: Organizational Feasibility

Issues Addressed in This Part
A. Management prowess
B. Resource sufficiency

Assessment Tools
Management Prowess
Use the following table to candidly and objectively rate the prowess of the founder
or group of founders who will be starting the proposed venture.

Management Prowess Assessment Tool

Low Potential Moderate Potential High Potential
1. Passion for the business Low Moderate High
idea
2. Relevant industry None Moderate Extensive
experience
3. Prior entrepreneurial None Moderate Extensive
experience
4. Depth of professional Weak Moderate Strong
and social networks
5. Creativity among Low Moderate High
management team
members
6. Experience and expertise None Moderate High
in cash flow
management
7. College graduate No college Some college Graduated or
education education but not are currently

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 currently in college in college

Resource Sufficiency
The focus in this section is on nonfinancial resources. Use the following table to rate
your resource sufficiency in each category.
The list of resources is not meant to be exhaustive. A list of the 6 to 12 most critical
nonfinancial resources for your proposed business is sufficient.

An explanation of the rating system used in the first portion of the table is as follows:
1 Available
2 Likely to be available: will probably be available and will be within my budget
3 Unlikely to be available: will probably be hard to find or gain access to, and
may exceed my budget
4 Unavailable
5 NA: not applicable for my business

Resource Sufficiency Assessment Tool

Ratings Resource Sufficiency
1 2 3 4 5 Office space
1 2 3 4 5 Lab space, manufacturing space, or space to launch a
service business
1 2 3 4 5 Contract manufacturers or outsource providers
1 2 3 4 5 Key management employees (now and in the future)
1 2 3 4 5 Key support personnel (now and in the future)
1 2 3 4 5 Key equipment needed to operate the business
(computers, machinery, delivery vehicles)
1 2 3 4 5 Ability to obtain intellectual property protection on key
aspects of the business
1 2 3 4 5 Support of local and state government if applicable for
business launch
1 2 3 4 5 Ability to form favorable business partnerships
Ratings: Strong, Neutral,
or Weak
Neutral Proximity to similar firms (for the purpose of knowledge
sharing)
Neutral Proximity to suppliers
Strong Proximity to customers
Neutral Proximity to a major research university (if applicable)

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Conclusion (expand fields and report findings, in discussion form, for each area)
A. Management prowess
Im the owner of the business and yet I never have any experience about managing
business, however I always believe in myself and my team and this has the enough
reason that why my business will be success.
B. Resource sufficiency
Our business already have a land which located in popular area in Bangkok city.
Therefore I just only have to build the hotel building.
C. Organizational feasibility (circle the correct response)
Not Feasible Unsure Feasible
D. Suggestions for improving organizational feasibility
I need to to focus on teamwork. I have to look at my employees like theyre my
family.

Part 4: Financial Feasibility

Issues Addressed in This Part
A. Total startup cash needed
B. Financial performance of similar businesses
C. Overall financial attractiveness of the proposed venture

Assessment Tools
Total Start-Up Cash Needed

The startup costs (which include capital investments and operating expenses) should
include all the costs necessary for the business to make its first sale. New firms
typically need money for a host of purposes, including the hiring of personnel, office
or manufacturing space, equipment, training, research and development, marketing,
and the initial product rollout.
At the feasibility analysis stage, it is not necessary for the number to be exact.
However, the number should be fairly accurate to give an entrepreneur an idea of the
dollar amount that will be needed to launch the firm. After the approximate dollar
amount is known, the entrepreneur should determine specifically where the money
will come from to cover the startup costs.

The total startup cash needed can be estimate using the following table.

Total Startup Cash Needed (to Make First Sale)

Capital Investments Amount (bath)

Property 18,000,000

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Furniture and fixtures 4,000,000

Computer equipment 152,000

Other equipment 500,000

Vehicles 2,000,000

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Operating Expenses Amount

Legal, accounting, and professional services 120,000

Advertising and promotions 50,000

Deposits for utilities 0

Licenses and permits 1,500

Prepaid insurance 6,000,000

Lease payments 0

Salary and wages 250,000

Payroll taxes 9,000

Travel -

Signs 8,000

Tools and supplies 250,000

Starting inventory -

Cash (working capital) 25,000,000

Other expense 1 0

Other expense 2 0

Total Startup Cash Needed = 56,340,500

Comparison of the Financial Performance of Proposed Venture to Similar Firms

Use the following tables to compare the proposed new venture to similar firms in
regard to annual sales (Year 1 and Year 2) and profitability (Year 1 and Year 2).

Comparison of the Financial Performance of Proposed Venture to Similar Firms

Assessment Tool

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 Annual Sales

Estimate of Proposed Ventures Explanation of How the Estimate

Annual SalesYear 1 Was Computed
Estimate of Year 1 Sales 16,740,000_bath (40 capsules, the price is 1200 bath
per capsules and 10 deluxe rooms, the
Summary: How proposed annual sales, on price is 1500 bath.)
average, compares to similar firms (circle one)
First year after my hostel was opened,
Below Average Average Above Average I can estimated that I will gain money
around 16,740,000 bath from the
customers per year, because at the
first year I think that people will not
know my hotel well, therefore the
rooms will not unavailable in each
day. This will make my hostel lost
the money around 5,940,000 bath.

Estimate of Year 2 Sales

___22,680,000__bath_____ Second year after my hostel was
established, Im very confident that
Summary: How proposed annual sales, on the travellers around the world will
average, compares to similar firms (circle one) know my hostel. My hostel will be
rank on the top of the best hostel in
Below Average Average Above Average Thailand. Therefore, in everyday of
this year every rooms types of my
hostel will be unavailable. This will
make my hostel gain around
22,680,000 bath in the second year.

Net Income

Estimate of Proposed Ventures Explanation of How the Estimate

Net IncomeYear 1 was Computed
Estimate of Year 1 Net Income
The first year we have to expense a
16,740,000_- 56,340,500_= -39,600,000 bath huge amount of the total startup
around 56,340,500 bath. For
Summary: How proposed net income, on instance, we have to pay 18,000,000
average, compares to similar firms (circle one) for the building and also the amount
of the capital working is too high.
Below Average Average Above Average Consequently, its sure that in the first
year my business loss high amount of

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 money.

Estimate of Year 2 Net Income _22,680,000

-6,529,000 =16,151,000 bath________ Finally, we can get the profit, because
in this year we dont need calculate
Summary: How proposed net income, on about the property and the capital
average, compares to similar firms (circle one) working. I can imagine to the next 5
years that my hostel will have high
Below Average Average Above Average amount of income and finally we will
dont have any depts.

Overall Financial Attractiveness of the Proposed Venture

The following factors are important in regard to the overall financial attractiveness of
the proposed business.
Assess the strength of each factor in the following table.

Overall Financial Attractiveness of Proposed Venture Assessment Tool

Low Potential Moderate Potential High Potential
1. Steady and rapid growth in Unlikely Moderately likely Highly likely
sales during the first one to
three years in a clearly
defined target market
2. High percentage of Low Moderate Strong
recurring incomemeaning
that once you win a client,
the client will provide
recurring sources of
revenue
3. Ability to forecast income Weak Moderate Strong
and expenses with a
reasonable degree of
certainty
4. Likelihood that internally Unlikely Moderately likely Highly likely
generated funds will be
available within two years
to finance growth
5. Availability of exit Unlikely to be May be available Likely to be
opportunity for investor if unavailable available
applicable

Conclusion (report finding for each area)

A. Total startup cash needed

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 Property = 18,000,000 / Furniture and fixtures = 4,000,000 / Computer equipment
= 152,000 / Others equipment = 500,000 / Vehicles = 2,000,000 / Legal,
accounting, and professional services = 120000 /Advertising and promotions =
50,000 / Prepaid insurance = 6,000,000 / Signs= 8,000 / Tools and Suppliers
=250,000 / working capital 25,000,000 / Payroll taxes= 9,000 / License = 1500.
B. Financial performance of similar businesses
Due to my business is open hostel, so if we compare with others hostel most lists
of revenue and expense are the same. Nevertheless, one thing that I found in
others hostel financial report is my hostel receive more income in one year report.
C. Financial feasibility (circle the correct response)
Not Feasible Unsure Feasible
D. Suggestions for improving financial feasibility
The most importance thing for runs the business is I can not give up from any
barrier, especially about the money.

Overall Feasibility: Summary and Conclusion

Overall Feasibility of the Suggestions for Improving
Business Idea Based on the Feasibility
Each Part
Product/Market Feasibility Not feasible The most importance thing
Un ure for open the hostel
business is the hostels
Feasible design and service, so I
will create the new design
of my hotel.
Industry/Market Feasibility Not feasible I will expand the business
Unsure which is open the new
Feasible branch.
Organizational Feasibility Not feasibl My business need to develop
all the time, because when the
Uns re times pass the new
competitors are come.
Feasible
Financial Feasibility Not feas ble My business should
consider about the expense,
Unsure we should cut some
Feasible unnecessary for make the
expense become lower.
Overall Assessment Not eas From all of the analysis
ib information of my hotel,
e there have feasibility to
open the business.
Unsure However I have to always
Feasible improve and develop my
business.

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Conclusionbriefly summarize your justification for your overall assessment.

In conclusion, this time is the best time to open the 12:00 Hostel,
because in nowadays the trend to open the hostel is growth rapid around the world. Its
so lucky that in Thailand has less amount of the hostels, so if we open the business on this
time we will have a few competitors. The reason why I choose to open the hostel instead
of hotel because of the hostel is a good start point of the hotel business. Eventhough my
hostel is small, has only 50 rooms, and cheap; but we can said the we will take care of
our customers like 6 stars hotel. Our hotel always believe in the words A satisfied
customers is the best business strategy of all. Although we have to loss a huge amount
of money in the first year, but in the next 10 years we will believe that we will gain a
double huge amount of money that we loss back.

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