Feasibility Studies Services
Introduction
FirstPlus business consultancy services are focused on business growth and operational efficiency; and our key area of expertise are business plan, Marketing Plan, Proposals and Feasibility Reports.
FirstPlus will develop a business plan (or feasibility report) that describes your business, business goals, reasons they are attainable, details strategies for achieve the goals, potential problems that may confront the business and ways to solve them, the organizational structure of your business (including titles and responsibilities), and finally, the amount of capital required to finance the venture and keep it going until it breaks even with 6 weeks.
Presented below is our method of conducting a feasibility study and developing the feasibility report
What is a feasibility study?
A feasibility study is an analysis of the viability of a venture or project idea.
The feasibility study focuses on analyzing of the ability to complete a project idea successfully, taking into account legal, economic, technological, scheduling and other factors.
It is used to investigate the possible negative and positive outcomes of the venture or project idea before investing much time and money.
All the activities of the study are directed toward helping answer this question: “ Is the venture or project idea feasible?.
A business project idea is feasible if
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it is technically feasible,
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It is feasible within the estimated cost, and
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It will be profitable.
Therefore, 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 owners.
The venture can be either a start-up business, the purchase of an existing business, an expansion of current business operations or a new enterprise for an existing business.
The result of the feasibility studies is documented in a feasibility report which is designed to provide an overview of the primary issues related to the viability of the business venture.
Its purpose is to identify any “make or break” issues that would prevent the business venture from being successful in the marketplace.
Therefore a well written feasibility report contains a lot of information necessary for planning and executing the business venture.
Feasibility study and Business Plan
If the feasibility study indicates that your business idea is viable, the next step is to develop business plan.
The business plan continues the analysis at a deeper and more complex level, building on the foundation created by the feasibility study.
A business plan provides an opportunity to identify any weaknesses and reveal any hidden problems ahead of time. It is an analysis of how well the business will work; and its purpose is to minimize the risk associated with the new business venture and maximize the chances of success through research, planning and thinking.
It analyzes the competition, the market, financials (Assets, Capital, Liabilities, expenses, Income and cash flow), management and staffing needs, manufacturing process, etc. It focuses on clarifying the goals and objectives of the business venture.
Planning, however, may not guarantee success in business and cannot make a bad business idea feasible. However, a business plan must be realistic and based on valid assumptions.
A feasibility study and business plan focuses on four major areas:
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Market issues
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Organizational issues
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Technical issue
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Financial issues
Conducting a Feasibility Study
As noted above, the feasibility study is organized into three major sections (market analysis, organizational analysis, technical analysis, and financial analysis). Each of these analysis is discussed below.
Market analysis Market analysis research
The purpose of market analysis is to thoroughly understand all aspects of the market and formulate a strategy to capture a share of it.
This requires conducting a marketing analysis research to collect enough data for analysis and understanding the behavior of the market in order to project into the future based on some assumptions and develop necessary strategy.
The market research can help in identifying opportunities in a market or market segment. If opportunities are found, the market assessment can give focus and direction to the construction of business scenarios to investigate in the feasibility study.
A market assessment will provide much of the information for the marketing feasibility section of the feasibility study. The information requires include the market, its size and its growth rate; the current and projected demand, target market and its demographic characteristics of the potential customers and develop distribution strategy.
It also includes the projected supply and competition in the market and identifies a market niche to compete effectively. How the location of the business is likely to affect the success of the business is analyzed.
All these are required to develop a marketing strategy and develop a 5-year Sales and demand forecast. The market analysis and marketing analysis research is conducted first because it is critical to the success of the business.
Organizational analysis
Once the marketing analysis and research have been conducted and the business is understood to be feasible, that it is time to perform organizational analysis.
First is to determine the right type of organizational structure, personnel size and benefits structure, the key management staff, their qualification, skills and responsibilities; and develop a 3-year project staff plan.
Technical Analysis
If the business venture involves manufacturing, there is the need to technical issues involved because the cost and availability of technology may be of critical importance to the feasibility of a business venture.
The required technology and equipment for the project must be known along with where they can be obtained when it will be available.
The manufacturing process, production capacity of the machine are required to identify the number of production staff required, for developing the projected aggregate production plan in line with the sales forecast, plan production shift, and inventory management .
Financial Analysis
Once the analyses of the market, organization and technical have been completed, the final step of a feasibility study is the financial analysis. This involves the following:
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Using the sales and demand forecast of the marketing analysis to project revenue of cost of production. Estimate monthly revenue projection.
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Determining the start-up costs like capital goods like land, buildings, equipment, and so on. If this will be borrowed determine the terms and other issues.
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Determine the projected operating costs such as rent, utilities, and wages that are incurred in the everyday operation of a business. The total should include interest and principle payments on any debt for start-up costs.
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Determine the sources of financing.
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Use the above revenue and costs to prepare 5-years Projected Balance Sheet statement, Projected Profit and Loss Account, Projected Cash Flow analysis, Break-even analysis; and computation of financial ratios
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Prepare an interpretation of the project financial statements and notes.
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Use the projected financial statements to prepare break-even analysis, profitability analysis and other financial ratios.
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Analyze the financial ratios to determine the financial and economic viability of the venture.
All these are documented in the feasibility report.
Components and Structure of the feasibility report
After the above have been done, then the feasibility report is written in an acceptable and implementable manner that can aids analysis. All the above put together, a feasibility report that will guide the business venture and aid decision making must have the following sections:
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Executive Summary: The summary of the whole report.
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Background : Brief description of the company, organization, business, limit and scope of study
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Market Analysis: It describes the Domestic market profile, Oversea market profile, Target market and Overall market feasibility and analyzes the potential customers and competitions, who and where they are, what makes customers to buy and how to position the business in the market.
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Marketing Strategy: Analyzes strength, weakness, opportunities and threats for the business and develop strategy for capturing your market niche
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Operations and production plan: that describes the technical and technology issues and developed operations and production strategy,
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Management and personal plan :Organizational analysis/Plan
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Financial Plan: this section contains the 5-years projected financial plan made up projected financial statements like Income and Loss Statement, Cash-flow Statement, Balance sheet and financial objectives and assumptions
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Financial Analysis: Evaluation of the feasibility using financial ratio (like break-even analysis, Gross Profit Margin And Net Profit Margin, Return On Equity And Return On Assets, Earning Per Share, Current ratio, Return on capital employed, Assets turnover and so on) computed from the project financial statement and financial analysis summary
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Conclusion and recommendation
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Appendices
If the recipient of feasibility report demanded for a special requirement, it will be presented as required.
FirstPlus Feasibility Study Requirement
You may click here for our Feasibility Study Requirement
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