IS YOUR BUSINESS/VENTURE FEASIBLE? Objective 2.13

Objectives Explain the purpose of conducting a feasibility study. Discuss benefits associated with conducting a feasibility study. Describe reasons for not conducting a feasibility study. Identify market considerations that should be analyzed when conducting a feasibility study. Explain technical considerations that should be analyzed when conducting a feasibility study. Discuss financial considerations that should be analyzed when conducting a feasibility study. Describe organizational/managerial considerations that should be analyzed when conducting a feasibility study. Explain competitive considerations that should be analyzed when conducting a feasibility study. Discuss characteristics of a well-conducted feasibility study. Identify possible courses of action that could be taken following a feasibility study. Demonstrate procedures for determining the feasibility of a venture/product idea.

Vocabulary Feasibility Study

What is Feasible? Possible Practicable Viable Achievable Reasonable Realistic Likely Sufficient

Feasibility Study An analysis and evaluation of a proposed project to determine if it (1) is technically feasible, (2) is feasible within the estimated cost, and (3) will be profitable. Feasibility studies are almost always conducted where large sums are at stake. Also called feasibility analysis. See also cost benefit analysis. Read more: http://www.businessdictionary.com/definition/feasibility-study.html#ixzz3ReY6NsTe

What is the Purpose of a Feasibility Study? Determines whether the business/venture idea makes sense. Are there any make or break issues that would prevent your business from being successful in the marketplace? Identifies roadblocks facing your business/venture BEFORE you make an investment. To answer the question: Should I proceed with this project?

Benefits of a Feasibility Study Provides a lot of information necessary for the business/venture plan. Good market analysis is a necessary in order to determine the business/venture feasibility. Identifies reasons NOT to proceed Provides documentation that the business was thoroughly investigated (will help with getting financing, as well as help to attract equity investment) Identifies new opportunities through the investigative process. Cost benefit analysis Feasibility Study Business Planning

Reasons people choose to NOT conduct a Feasibility Study... Already know it is feasible (another business is already doing it and is successful). Why do one when one was done a few years ago? Just a way for consultants to make money. Market analysis has already been done by the business that sold us the equipment. A feasibility study is a waste of time. These may sound like good answers but remember... you may need to live with these decisions for a long time.

Conducting the Feasibility Study... Market Considerations... Technical Considerations... Financial Considerations... Organizational/Managerial Considerations... Competitive Considerations... =

Market Considerations Current or projected demand for your proposed product or service(s)? What are the target markets for your product or service? What competition exists in this market? Is the location of your proposed business location likely to affect the success of your business? What is the projected supply in your area of the products or services needed for your project?

Technical Considerations Technology may or may not be of critical importance or it may not. Compare a daycare center to a manufacturing enterprise. If Technology is a consideration: What are the needs for the business/venture? What other equipment does your business need? Where will you get it? When will you get it? What does it cost?

Financial Considerations Start-up Costs Operating Costs Revenue Projections Sources of Financing Profitability Analysis

Organizational / Managerial What organizational Structure is the right one for your business/venture? Who will serve on the Board of Directors and what are their qualifications? What qualifications are needed to manage this business? Who will manage the business? What are the staffing needs?

Competitive Considerations What competition exists in this market? Can you establish a market niche which will enable you to compete effectively with others providing this product or service? How much is your competition charging for similar product?

Elements of a Well-Conducted Feasibility Study In order for a feasibility to be useful it must be COMPLETE and include (at a minimum) the following elements: Project Scope Defines the business problem and/or opportunity to be addressed. Current Analysis Define and understand the current method of implementation, such as a system, a product, etc. Requirements Financial, Human Resources, Material, Equipment Depends on the project Source: http://it.toolbox.com/blogs/irm-blog/the-elements-of-a-good-feasibility-study-23199

Elements of a Well-Conducted Feasibility Study In order for a feasibility to be useful it must be COMPLETE and include (at a minimum) the following elements: 4. Approach Recommended solution or course of action to satisfy the requirements. 5. Evaluation Examines the cost effectiveness of the Approach selected. 6. Review All of the preceding elements are then assembled into a Feasibility Study and a formal review is conducted with all parties involved. Source: http://it.toolbox.com/blogs/irm-blog/the-elements-of-a-good-feasibility-study-23199

Q&A The primary purpose of a feasibility study is to answer which of the following questions: What are the opportunity costs of this project? What technology will be needed for this project? Should we proceed with this project? Is this business plan valid?

Q&A Ben is conducting a feasibility study for a new venture idea. Which of the following questions should Ben answer in terms of the venture's financial considerations: How will the business obtain the money it needs? What regulations is the business likely to encounter? Is there a real demand for the idea, good, or service? How will the business communicate information about its products?

Q&A Which of the following is a characteristic of a well-conducted feasibility study: Subjective Abbreviated General Complete