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ABM 68

PROJECT FEASIBILITY
STUDY

Prepared by: Percival L. Domingo, RA


Instructor I
What Is Feasibility Study?
• A feasibility study looks at the variability of an
idea with an emphasis on identifying potential
problems and attempts to answer one main
question: will the idea work and should
proceed with it?
- it address things like where and how the
business will operate.
Importance of Feasibility Study
Information you gather and present Feasibility
Study will help you:
• List in detail all things you need to make the
business plan
• Identify logistical and other business-related
problems and solutions
• Develop marketing strategies to convince a
bank or investor that your business is worth
considering as an investment
• Serve as a solid foundation for developing your
business plan.
Components of a Feasibility Study
• Description of the Business
- the product or services to be offered and
how they will be delivered
• Market Feasibility
- includes a description of the industry,
current market, anticipated future market
potential, competition, sales projections,
potential buyers
• Technical Feasibility
- details how will deliver a product or
service
• Financial Feasibility
- projects how much start-up capital is
needed, sources of capital
• Organizational Feasibility
- defines the legal and corporate structure
of the business
• Conclusion
- discusses how the business can succeed.
Be honest in your business assessment
because investors won’t just look at your
conclusions they will also look at the data and
will question your conclusions if they are
unrealistic.
I- Market Feasibility Study
• All feasibility Studies should look at how
things work, if they will work, and identify
potential problems

Things to include in a market feasibility study:


 Description of the Industry
 Current Market Analysis
Competition
Anticipated Future Market Potential
Potential Buyers and Sources of Revenues
Sales Projections
• How to write an Industry Description?
- give a brief one to two-paragraph
description of the industry your business is
categorized
• Analyzing your Current Market
- section that describes the current market
for your product or service. If you are offering
something so unique that there are few
market statistics, you can either use related
industry information or even conduct your
independent study
Ways to conduct your research for new ideas
include:
Polling internet forums
Questionnaires address to targeted consumer
groups or the general population, or even
customer surveys.

• Anticipated Future Market


- section that should include narrative
description, as well as attached spreadsheets,
graphs, or tables to showing trends, statistics
or projections.
• Sales Projections
- should factor in how much time and
money will be invested into the business, the
markets you will be targeting
• Identifying Potential Customers, Clients, and
Contract Sources
It should include:
A list of current customers, clients, and
contract and the potential for new or renewed
contracts
Any sales leads that may generate new
customers or clients
A list of government contracting agencies with
a brief description of what type of contracts
they solicit, and how they pertain to your
industry.
A list of market types your currently, or intend
to target such as senior citizens, working
mothers, organizations, specialty retailers
Elements of a Good Feasibility Study
There are basically six parts to any effective
Feasibility Study:
1. The Project Scope
` - used to define the business problem and/or
opportunity to be addressed.
- should be definitive and to the point
- define the parts of the business affected
either directly or indirectly, including the project
participants and end-user areas affected by the
project
- project sponsor should be identified
2. The Current Analysis
- used to define and understand the
current method of implementation, such as a
system, a product, etc.
- the strength and weaknesses of the
current approach are identified (pros and
cons)
• Analysis Paralysis- spending more time
unnecessarily in Current Analysis
3. Requirements
- requirements are defined depends on the
object of the project’s attention.
4. The Approach
- represents the recommended solution or
course of action to satisfy the requirements.
Points to consider:
•Does the recommended approach satisfy the
requirements?
•Is it also a practical or viable solution?
5. Evaluation
- examines the cost effectiveness of the
approach selected. This begins with the
analysis of the estimated total cost of the
project.
6. Review
- that if all of the preceding elements are
then assembled into a Feasibility Study and a
formal review is conducted with all parties
involved.
• Purposes of Review
 to substantiate the thoroughness and
accuracy of the Feasibility Study
To make a project decision (either
approved/reject it.
II- TECHNICAL FEASIBILITY STUDY
- assesses the details of how you will deliver a
product or service.
i.e., materials, labor, transportation, where your
business will be located, the technology
needed, etc.
- in some regards, it serves as a flow chart of
how your products and services evolve and
move through your business to physically
reach your market.
The Technical Feasibility must support your
Financial Study
• An experienced investor and lending
institution will read your entire report and
come to their conclusions. Therefore, it is
critical that the technical and financial study
reconcile.
• Expenses for technical requirements should be
noted in the technical feasibility study.
i.e., materials and labor
• Basic things that most businesses need to
include in their technical feasibility study
1. Materials
2. Labor
3. Transportation or Shipping
4. Physical Location
5. Technology
• Calculating Material Requirements
in this section, you list the materials you
need to produce a product or service, and
where you will get those materials
* things to include in your list of materials:
- parts needed to produce a product
- supplies (glue, nails, etc.)
- other materials that are involved in
producing or manufacturing your product
• Calculating Labor Requirements
- labor will be one of your biggest small business
expenses. In this section you will list the number
and types of employees needed to run your
business now, and that may be employed in the
future as your business grows.
* You can break labor into categories if
necessary:
- Office Support - Production or Distribution
- Professional Staff
• Transportation and Shipping Requirements

* If you offer a perishable items, you will need


special overnight handling
* If you offer services, how will sales
personnel get to customers and client?
• Here, list things that will affect how you get
your goods and services to other businesses or
individuals, including:
Methods of transportation and shipping
services that will be needed to get your
products/services to a customer
Special handling/ other unique
arrangements required to transport your
product
Special handling/ other unique
arrangements required to transport your
product
Any special permits that will required,
including postal rate discounts
Cars and other vehicles needed to conduct
your business
• Physical location of your Business
* you might consider the following:
1. Warehouse Facilities
2. Your own Factory
3. Your own trucking Facility
4. Retail Storefront
5. Any other purchased or rented facilities
needed to conduct your business
Here, you should also discuss the pros and cons
of where these facilities will be located. Do
you need to have special parking
considerations for customers?

• Technology Requirement to run your Business


- Cell phones
- Computer hardware and software
- Camera Systems
- Manufacturing Equipment
III- FINANCIAL FEASIBILITY STUDY
- an assessment of the financial aspects of
something.
- it considers many things including start-up
capital, expenses, and revenues.

* you should include at least three key things


in your comprehensive financial feasibility
study:
1. Start-up Capital Requirements
2. Start-up capital resources
3. Potential returns for Investors
• Start-up Capital Requirements
- is 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.
• Finding 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 in the business
yourself
• Potential Returns for Investors Feasibility
Study
- any business or individual willing to give
you cash can be a potential investor.

• How should I Pay Back Investors


-Project total revenue, deduct business
expenses, and then from the remaining
amount, decide what percentage will be
distributed to investors.
IV- ORGANIZATIONAL STRUCTURE
FEASIBILITY STUDY
- The purpose of this study is to define the
legal and corporate structure of the business.
It may include professional background
information about the founders and principals
of the business and what skills they can
contribute to the business.
• Your organizational feasibility study should
include:
1.Description of your business structure
2.Description of your organizational structure
3.Internal and external principles and practices
of the business
4.Professional skills and resumes
 Description of Business Structure
-contains a narrative description of the
legal requirements for establishing your
business and why you feel this is the right
structure for your business.
 Organizational Structure
- present this information with a
organizational chart.
Organizational Chart- shows the hierarchy or
chain of command in your business.
Professional Skills and Resumes
- in this section, you give a brief overview of
all founders, employees and partners involved
in the business that will be continuing their
skills and input into how the business is
operated.
-include a brief overview of how their
particular skills will serve the business. You
can also include accomplishments that relate
to the business.
V- CONCLUSION
• Your conclusion should state the facts and
information necessary to ensure that the
reader clearly understands your points.
• Your conclusions must be based on research
and verifiable information, not on the
simple belief that your information, not on
the simple belief that your idea can work.
• A strong conclusion will:
1. Discuss how the business can succeed.
Explain why, using research-based
information that is contained in your study
rather than opinions.
2. If your business idea takes a nontraditional
approach, explain why this will help you
succeed.
3. Point the reader back to the location of any
examples you give by listing section, page
title and page number
4. Summarize the most important points of
your study. Don’t attempt to cover minor or
unimportant details. Keep your focus on the
major selling points
5. A good summary and conclusion should be
concise, no longer than one to two pages. It
should be written in plain, understandable
terms.
6. Don’t attempt to persuade the reader with
jargon or an advertising pitch. FS findings
should be objective and based on the
research and information you’ve include.
7. Avoid using phrases like” I believe”, “in my
opinion”, “I hope” or “I anticipate”. Do use
strong, impersonal and affirmative phrases
such as, “Research supports that this study
industry will continue to grow.”
8. A summarized conclusion helps to develop an
overall impression, but it should not replaced
the supporting documents. Submit the
summary as part of the feasibility study, not
as a substitute for study.
Plan your Work,
Work your Plan.

THANK YOU AND GODBLESS !!!