What is a Feasibility Study

Is this a good business idea?

Helps answer the question of whether to go forward with

the business idea
What is a Feasibility Study
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
What is a Feasibility Study
A feasible business will:
 Generate adequate cash flow and profits,
 Withstand risks,
 Remain viable in the long-term
 Meet the goals of the founders
What is a Feasibility Study
Evaluate Alternatives

The feasibility study helps to “frame” and “flesh-out”

specific business scenarios so they can be studied in-
depth.
What is a Feasibility Study
Go/No Go Decision

The feasibility study will be a major information source

in making this critical decision.
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.
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.
Reasons to Do a Study
 Provides documentation that the idea was thoroughly
investigated.
 Helps attract funding from lenders, grant providers,
etc.
 Helps attract equity investment
Not the Business Plan
 Feasibility study conducted before decision to
proceed (go/no go).
 Business plan prepared after decision to proceed
(go/no go).
 Feasibility study provides investigative function.
 Business plan provides planning function.
Feasibility Study Outline
A. Executive summary
B. Marketing Feasibility
C. Technical Feasibility
D. Management Feasibility
E. Financial Feasibility
F. Social Economic Benefits:
Executive summary
a. Name of applicant
b. Business name
c. Location
Head Office
Project Site
d. Brief description of the project
Executive summary
e. Highlights of major assumptions and summary of
findings and conclusions
regarding the following:
1. Market feasibility
2. Technical Feasibility
3. Management Feasibility
4. Financial Feasibility
5. Socio Economic Benefits
Marketing Feasibility

a. Market Description
b. Demand Analysis
c. Supply Analysis
d. Demand Supply Gap Analysis
Marketing Feasibility
e. Marketing Mix
1. Product
2. Price
3. Place
4. Promotion
5. Channel of Distribution
f. Sales Forecast
Technical Feasibility
a. Product / Services
1. Products;
2. By-products;
b. Production Process
c. Production Schedule
d. Raw Material Requirements
e. Project Site
f. Project Lay-out
Technical Feasibility
g. Building Facilities
h. Floor Plan
i. Machineries and equipment
j. Utilities
k. Waste Disposal
Management Feasibility
A. Types of Business Organization
B. Proposed Workforce
C. Organizational Chart
D. Duties and Function
E. Qualifications
F. Compensation and benefits
Management Feasibility
G. Management Proposal
H. Management Style
I. General Company Policy
J. Office Equipments
K. Furniture and fixture
L. Gantt Chart
Financial Feasibility
1. Total Project Cost
2. Sources of Financing
3. Major Financial Assumptions
4. Projected Financial Statements
a. Projected Income Statement
b. Projected Statement of Changes in Equity
c. Projected Statement of Cash Flows
d. Projected Balance Sheet
Financial Feasibility
5. Financial Analysis
a. Net Present Value
b. Cash Payback Period
c. Internal Rate of Return
d. Profitability Index
e. Return on Investment
f. Break-even Point analysis
Social Economic Benefits
1. Your project employee
2. To the Government
3. To the Related Industry
4. Contribution to the Environment
5. Contribution to the Economy
6. Other Socio-Corporate Responsibilities
Thank you…..