Feasibility Study

Suppose after graduating, you want to establish a coffee shop. After calculating your
would-be business costs, what else do you need?

You need to know where to locate your business and how much it costs, the time and
money on obtaining permits, the goods to offer and the marketing strategies on how to
get people to patronize your business.

You need to determine whether a project is workable and financially worthwhile before
you spend large amounts of money on it. In short, you need to conduct a feasibility
study.

What is a feasibility study?

This is a systematic analysis of all factors that influence the probability of success of a
specific undertaking. It is designed to determine whether a project is feasible, and if
found feasible, to find out the degree of probability. It covers the market, technical,
financial and management aspects of the business.

Parts of the Feasibility Study

Chapter 1 Introduction

Chapter 2 The Marketing Aspect

Chapter 3 The Management Aspect

Chapter 4 The Technical Aspect

Chapter 5 The Financial Aspect

Chapter 6 The Socio-Economic Aspect

Chapter 1 Introduction

States the brief history of the line of business you are planning to start.
States an introduction of your product/business.
Enumerates the groups of people that will benefit from the study.
States the reasons how and why they will benefit from your study.

Chapter 2 The Marketing Aspect

This is considered as the most indispensable part of a FS.

Objectives of the Marketing Aspect 1. To enumerate the opportunities and threats of the
business. 2. To classify the strengths and weaknesses of the company. 3. To define the
different factors in the external environment that is expected to affect business
operations.

The Marketing Aspect

Marketing analysis
Why will your product/business be successful?
What situations will affect the success of your project?

Opportunities
What are the special characteristics of your product/ business?

The Marketing Aspect

Threats
What can be some problems encountered by the business?

Strengths
How can the company compete with others?
Weaknesses What can be the loopholes of your product/ business?

The Marketing Aspect

Demand Analysis
Why will the consumers patronize your product?
Are the consumers willing and have the capability to pay for the product?

Supply Analysis
Who and where will your supply come from?
Will there be enough supply to cater to your demand?

Chapter 3 The Management Aspect

This chapter deals with the organization and it is in this aspect that the proponents
identify the key officers and key personnel, basic considerations in forming organization,
form of ownership, organizational chart, project scheduling and perform job analysis.

Objectives: 1. Identify the form of ownership to be adopted 2. Know the project

originators of the business 3. Present job descriptions and job specifications of the
business.

The Management Aspect

Project Schedule
Divides each part of the plan into activities citing its covered period as well as the tasks
expected to be finished in each activity.

Ex. Activity 1: Feasibility Study Preparation

Period Covered: June- September 2014
In this period, the proponents spent their time collecting data through researches,
surveys, interviews, observations and other possible ways to know the possible
outcome and viability of the proposed product.

The Management Aspect Form of Business Ownership Sole/partnership/corporation

Internal Organization *Manpower/ Job Analysis -states the qualifications and
requirements for a particular job (job title, description and job specification) Ex: Job

Title: Accounting Officer Job Requirement: -college graduate -atleast 6 months

experience as accounting officer Job Description: - handles the money received from
day-t-day operation of the business - supervises the preparations of the statement of
account and maintain the accounting records. Salary: 12, ooo php/month

Chapter 4- The Technical Aspect

This part determines the technical soundness of a business. It gives all the details
necessary for the business to operate. Technical Specifications of the Product What is
the main product? What is it made of? Describe it physically together with its container
(if, applicable) Raw Materials How are the raw materials bought/gathered? Where do
the materials come from? Why do you buy it from there?

The Technical Aspect Building and Facilities Where will the operation of the business
be? House? Building? Is it rented or owned? How much? Will it be bought or
renovated? By how much? Office and Plant Location Where exactly will the location be?

Chapter 5- The Financial Aspect

This part shows the financial standing of the business and its viability in the market.
Objectives: Discuss the needed capital. Discuss the projected income of the business.
Determine how many years it will take to recover the investments.

The Financial Aspect Statement of Assumption Ex: 1. Projected sales is 80% of the
projected production budget. 2. Sales and purchases are on account. 3. Account
receivables are collected next month after the sales. 4. Accounts payables are paid next
month after the purchases. State the Cash Flows of the business: Capital Expenses
Projected (Expected Income)

Chapter 6- The Socio-Economic Aspect

Ex: Employment and Income: The proponents decided to hire workers in the vicinity of
Tanay, Rizal which is also their target market. The business can benefit the families by
giving appropriate amount of salary with favorable benefits that can help improve their
standard of living. Government The business will fulfill its obligation by paying taxes
promptly and accurately. Also, the business can help people in times of calamity by
giving donations.

Ex: Community: The community can benefit from the business for the owners can
sponsor some of the communitys projects or have some scholarship grants. Social
Implication The business will help generate the income for the community and at the
same time, cultivate creativity of the Filipino people.