FEASIBILITY

STUDY
Feasibility Study
• is an analysis of the viability of an idea.
• focuses on helping answer the essential
question…
• “should we proceed with the proposed project
idea?”
• All activities of the study are directed toward
helping answer this question.
Before you begin writing your
feasibility study…
• identify how, where, and to whom you intend to
sell a service or product
• assess your competition
• figure out how much money you need to start
your business and keep it running until it is
established.
Determining early that a business
idea will not work saves
• Time
• Money
• Heartache
A feasible business venture is
one where the business will..
• generate adequate cash-flow and profits
• withstand the risks it will encounter
• remain viable in the long-term and
• meet the goals of the founders.
Technical
Aspect
 The technical study discusses how the
products are to be produced, when these
products are to be produced, how much will
it cost to produce the products, where to
produce the products and what technology to
be used.
Production Process/Process Flow
The production process discusses how the products will
be produced, specifying each step that will be involved,
and the time involved. The said steps will be shown in a
process flow chart where some of the following symbols
will be used.
• Transportation
• Storage
• Operation
• Inspection
• Delay
Equipment, Machinery, Furniture and Fixtures
This part discusses or describes the technology that will
be used– manual, mechanical, automated, or robotics.
If production process is done manually, then the use of
equipment, machinery, furniture and fixture will be
limited. However, the student will still make a list of all
the needed equipment, and other facilities. The list
should include the description, the specification, and the
prices of the listed assets. If it is mechanical,
automated, or robotics, the student will also do the
same.
Location
The student is required to gather maps in order to
show where the proposed project will be located.
In the discussion, the student should also describe
the distance of the proposed project from its
competitors as well as its supply of raw materials,
public markets, roads, communication facilities.
He need to discuss also the environmental
conditions of the place whether it be rural, urban,
or near schools, hospitals.
Building
The student should determine whether it is
necessary to put up, to rent, or to lease a
building. If a building is to be constructed, he
should provide a computation for the cost of
the building. This includes the determination
of the life of the building as well as the
depreciation method to be used.
Layout/Floor Plan

This topic specifically discusses how the

place (factory, store, or office) looks like and
how it is arranged. It is recommended that the
student presents the drawings including
dimensions so that readers could easily
visualize how the proposed venture will be.
Capacity/Scheduling
The student, after describing the location,
layout, building, equipment, machineries,
furniture and fixture can now discuss its
capacity. He should be able to determine the
maximum capacity, the production schedule,
the number of shifts per day, number of
working hours per day, etc.
Waste Disposal
There are some processes that produce
unhealthful wastes. Here, the student should
discuss how to dispose the wastes and also the
cost of disposing.
Utilities and Other Operating Costs
This part describes the amount, cost, and
sources of utilities-fuel, water, and electricity.
It also includes other costs that the proposed
project will incur like supplies, telephone,
telex, maintenance, repairs, insurance, taxes,
licenses, and SSS contribution. The provision
foreseen costs such as miscellaneous cost and
contingencies is also included.
Production Costs
It includes the initial raw material costs,
labor costs, operating costs, and other costs,
and other costs to produce the product.
Marketing
Aspect
 The Marketing is considered the most
important area. This is so because it describes
market situations where the product can be
identified through the demand analysis.
Industry Profile
It describes the general trade practices of
an industry or business which sells the same
product. Some of these practices are pricing,
sales, methods of transportation, promotion,
channels of distribution, supplies, packaging
resources available, the values of people, and
also the opportunities, threats, strengths and
weaknesses of the industry.
Product Description

The primary ( and secondary, if any)

product/s of the proposed project is/are to be
vividly described in this section.
Demand
This section the student/researcher
pinpoints the specific customers who are
willing and are able to buy the proposed
product/s. This could be done through
segmenting the market geographically and
demographically.
Demographical segmentation – determines to
whom, in a particular place, the products will
be offered. It also defines the market
• Sex
• Age
• Religion
• Educational Attainment
• Ethnic Group
• Income level
• occupation
• credit availability.
Supply
It represents the number of
sellers/producers selling similar or
substitute products. Supply is referred to as
the competitors.
The first thing to do is to enumerate the
competitors, their location, and their
capacity/size. Then the student/researcher
will determine the 5 year historical supply as
well as the 5 year future supply by using one
of the projection methods.
Marketing Plan

Marketing Plans or strategies should be

done in order to attract customers and even
the customers of the competitors.
• Occupants – Who are the target markets?
(What are their values, culture, religion etc.?)
• Object – What makes the products attractive
to the target market Packaging, color, shape,
size, etc?
• Objective – What is/ are their objective/s in
buying the product-status symbol, price
quality, etc?
• Occasion – When do the customers usually buy
the products- daily, weekly, during birthdays,
anniversaries, or Christmas season?
• Outlet – Where could the target buyers buy
the products—from the wholesalers, retailers,
brokers, contractors?
• Organization in the Family – What is the
customer’s role in the family—initiator, buyer,
or decision maker?
5 P’s of Marketing Mix
1. Product - What should be done with the
product so that it will be more attractive than
the competitors’ products?
2. Promotion – What promotional activity should
be done in order to compete with the promotions
of the current suppliers?
3. Pricing – What terms of sale will increase the
selling value of the products-n/30,2/10, n/30?
What pricing technique can be used
Pricing Techniques:
• Cost – Plus Method – it is the simplest method.
The cost of the product is figured out and tacked
on a little something for profit.
• Market-Oriented Method - this is not based on
cost, but on the interaction of demand and
supply,
• “Loss” Leader Strategy - Some products may be
sold at a losing preposition to attract customers to
go to their stores. The mark-up is taken from
other products.
• Psychological Pricing – Stating the price on a
lower scale. For example: P2.95 instead of
P3.00.
• Value for Money Pricing – this pricing
approach is not aimed at maximizing profit
per single purchase but in bulk of
quantity/frequent sale.
• Pricing Factor Segmentation – the “seller”
subdivides the market into groups responsive
to price and price deals, product quality,etc.
• Marked Down Pricing – in cases where demand
is limited and competition is intense, the usual
mark-up pricing approach is temporarily
suspended in favor of a markdown to capture a
segment of the market.
• Bonus-Pack Pricing – for the end-users, this is
commonly used so that they will buy more than
the required quantity.
A good example is the :
“Buy 34 at the price of 30”
4. Place or the Channel of Distribution
This describes how one will reach his customers. He
may use the services of the middlemen, if his
location is far from his customers. If this is so,
include also in the budget the compensation which is
given to the middlemen. The compensation could be
in the form of commissions, fringe benefits,
promotional assistance or other forms.
5. People – this refers to the salesmen who will be
selling and promoting the products, Do they know
the product? Are they committed to the company?
Are they motivated and satisfied?
Financial
Aspect
 A financial feasibility study is an
assessment of the financial aspects of
something. If this case, for starting and
running a business. It considers many
things including start-up capital,
expenses, revenues, and investor
income and disbursements. Other
portions of a complete feasibility study
will also contribute data to your basic
financial study.
 A financial feasibility study can focus on
one particular project or area, or on a group
of projects (such as advertising campaigns).
However, for the purpose of establishing a
business or attracting investors, you should
include at least three key things in your
comprehensive financial feasibility study:
• Start-Up Capital Requirements,
• Start-Up Capital Sources, and
• Potential Returns for Investors.
Start-Up Capital Requirements

• Start-up capital is simply how much cash

you need to start your business and keep
it running until it is self-sustaining.

• You should include enough capital funds

(cash, or access to cash) to run the
business for one to two years.
Start-Up Capital Funding Sources

There are many ways to raise capital

for your business, but no matter what
route you take, investors are more likely
to invest, banks are more likely to
approve loans, and large corporations
are more likely to give you contracts, if
you have personally invested into the
business yourself.
Potential Returns for Investors

Investors can be a friends, family

members, professional associates, client,
partners, share holders, or investment
institutions. Any business or individual willing
to give you cash can be a potential investor.
Management
Aspect
 This chapter describes the form of business
organization that is best suited for the
proposed subject, the organizational
structure, the number of personnel needed,
their qualifications, their compensation, and
the projected time table before the project is
implemented.
Forms of Business Organization

• Single proprietorship
• Partnership
• Corporation
• Cooperatives
• Organizational Structure – the student should
be able to enumerate the positions needed
and their respective job descriptions and job
specifications.
• Personnel Requirement – based on the
organizational structure , the student should
determine the number of workers needed in
the organization.
• Qualification Standards – the student
discusses the qualifications of workers.
Three kinds of qualifications standards:

• Personal – this refers to the personality required

of a worker – his traits, manners, values, the
way he talks his appearance, etc.

• Experience – this refers to the length of working

experience required of a worker, and also
related job experiences.
• Academic – this refers to the worker’s academic
qualifications or the educational attainment
required to perform the job better.

• Compensation Package – After determining the

number of workers needed and their
qualifications, express their efforts in monetary
form. Salaries and wages required by law and
the result of the wage survey.
Socio-Economic
Aspect
THANK YOU! 