1. Feasibility Planning
Chapter # 3

2. Chapter outline CH # 3 Fundamentals of Feasibility Planning
The Business Plan

3. What is Feasibility Planning?
A feasibility study is an analysis of the viability of an idea through a disciplined and documented process of thinking through the idea from its logical beginning to its logical end.
Helps answer the question of whether to go forward with the business idea.

4. What is Feasibility Planning?
A feasibility study provides an Investigating function that helps answer
“Is the project feasible?
Can it be done?
Does it make sense?
Should we proceed with the proposed project idea?
A feasibility study should be conducted to determine the viability of an idea BEFORE proceeding with the development of a business.

5. A feasibility study is valuable for:
Starting a new business
Expansion of an existing business
Adding an enterprise to an existing business
Purchasing an existing business

6. Levels of Feasibility Study
1- Market Feasibility
Industry description.
Industry competitiveness.
Market potential
Access to market outlets. 
Sales projection

7. Levels of Feasibility Study
2- Technical Feasibility
Determine facility needs.
Suitability of production technology.
Availability and suitable of site.
Raw materials.
Other inputs.

8. 3- Financial / Economic Feasibility
Estimate Expected Costs and Revenue
Estimate the Profit Margin and Expected Net Profit
Estimate the sales or usage needed to break-even
Estimate the returns under various production, price and sales levels to create a “sensitivity analysis”
Benchmark against industry averages and/or competitors
Identify limitations or constraints of the economic analysis
Project expected cash flow during the start-up period
Project income statement, balance sheet when reaching full operation

9. Why do a Feasibility Study?
Provide a thorough examination of all issues of business success
Give focus to the project and outline alternatives
Narrow business alternatives
Surface new opportunities through the investigative process
Identify reasons NOT to proceed
Provide quality information for decision making
Help to increase investment in the company
Provide documentation that the business venture was thoroughly investigated
Help in securing funding from lending institutions and other monetary sources

10. What is a Feasible Business?
A feasible business venture is one where
the business will generate adequate cash flow and profits,
the business will withstand the risks it will encounter,
the business will remain viable in the long-term, and
the business will meet the goals of the founders.

11. Feasibility Study vs. Business Plan
Feasibility study answers the bottom line question—Is this venture going to make money?
Feasibility study outlines and analyzes several alternatives or methods of achieving business success
Feasibility study is conducted before a business plan

12. Feasibility Study vs. Business Plan
Business plan is prepared only after the venture has been deemed to be feasible
Business plan deals with only one alternative or scenario that is determined to be the “best” alternative
Business plan considers the management side—goals and objectives of the planned business venture

13. What is a Business Plan?
A Business Plan summarizes the plan of action after a business idea has been determined feasible through the Feasibility Study.
A Business Plan provides a Planning function
A Business Plan outlines the actions needed to take the proposal from “idea” to “reality”
A Business Plan tells How your business will be created and Why it will be successful
A Business Plan provides a road map for strategic planning

14. Why Write a Business Plan?
Put the Pieces Together—Do the pieces fit together in a logical manner?
Create a Blueprint for Action
Focus Founders and/or Management Team
Obtain Financing
Attract Equity Investment
Attract Key Managers and Employees
Obtain Contracts
Create Joint Ventures, Mergers, Acquisitions

15. What is included in a Business Plan?
A Business Plan should be brief, concise & straight to the point
Main Requirements May Include
Industry Description
Product / service Description
Market Size
Customer Base
Competitive Advantage
Business Location
Three years of Financial Projections
Monthly Tracking of First Year Financials
Management Experience and Profile
Other Sources of Cash, if any

16. The Parts of a Business Plan
Cover Page
Market Analysis
Title Page
Competitive Analysis
Table of Contents
Marketing Plan
Executive Summary
Operations Plan
Management Plan
Organizational Plan
Company Description
Financial Plan
Product and Service Plan
Growth Plan
Mission and Vision Statements
Contingency Plan
Industry Overview
Supporting Documents

17. Executive Summary
executive summary a brief recounting of the key points contained in a business plan .
The executive summary should include the most important information from each section of the business plan.
To save time, investors and lenders rely on the executive summary to help them decide whether the business plan is worth pursuing.

18. Management Team Plan
The management team presents your qualifications and those of any partners.
You must describe how your management team has the capabilities to execute your business plan.

19. Company Description
The company description section of the business plan outlines the company’s background information and basic business concept.

20. Product and Service Plan
In the product and service plan section of the business plan, you present the nature of your business and the unique features of the product or service.
Main Features of the product including:
Branding, Trade marks, Variants, Packaging, Support services, Warranties, Prices & other offers.

21. Company Vision & Mission
The vision statement and mission statement state the guiding principles by which a company functions.
vision statement a declaration of the scope and purpose of a company
mission statement a declaration of the specific aspirations of a company, the major goals for which it will strive

22. Industry Overview
The industry overview section of the business plan presents your research into the industry, those companies providing similar, complementary, or supplementary products or services.

23. Competitive Analysis
The competitive analysis section of the business plan should demonstrate that the proposed business has a advantage over its competitors.
Main Competitor
Competitive Position
Competitive Advantage

24. Marketing Plan
A marketing plan discusses how a company plans to make its customers aware of its products or services.
A marketing plan also describes the market niche, pricing, company image, marketing tactics, a media plan, and a marketing budget.

25. Production Plan Details relating to How Product will be Manufactured?
Detail about all Processes, Raw Materials, Inventory, Technology, Formula, Quality control and other production related issues.

26. Operational Plan
distribution channel the means by which a product or service is delivered to the customer
The operational plan describes all the processes involving the production and delivery of the product or service.
The operational plan describes the distribution channel of the product or service.
direct channel the means of delivering a service or product directly to the customer, such as via a Web site
indirect channel the means of delivering a service or product indirectly to the customer, such as through a wholesaler

27. Organizational Plan
The organizational plan section of a business plan looks at the people aspects and the legal form of the business.
It also describes the roles and compensation of key management personnel and important employment policies.

28. Financial Plan
The financial plan presents forecasts for the future of the business.
Financing Decisions: Ratio of Equity & Debt Financing.
Financial statements. Financial projections, Forecasts, Budgets and other important documents related to company finances.
Plan for repayment of Loans / Exit strategy

29. Growth Plan
The growth plan describes how the business will expand in the future.
Investors and lenders like to see that a business has plans to grow in a planned and controlled way.

30. Contingency Plan
The contingency plan section of the business plan looks at the risks to business, such as changing economic conditions and lower-than-expected sales.
It then suggests ways to minimize the risks.

31. Who is Target of Business Plan?
Stakeholder
Issues to Emphasize
Banker
Cash-Flow, Assets, Solid Growth
Investor
Fast Growth Potential
Strategic Partner
Synergy, Proprietary
Large Customers
Stability, Service
Key Employees
Security, Opportunity

32. The Electronic Entrepreneur The E-Business Business Plan
A good business plan is as important for an e-business as it is to any other business. An E-business plan should include the following:
metrics
hardware
timeline
functionality
style

33. E-Business Plan
Functionality the way a product or service works, such as a Web site’s features Launch the first date on which a Web site is on the Internet Metrics methods used to measure activity and progress, such as those on a Web site; metrics software can measure number of visitors, time of day the site is most active, and which products receive the most hits
Web host
a business that provides server space and file maintenance services for Web sites controlled by businesses that do not have their own Web servers
 Web server
a computer that delivers Web pages

34. Common Mistakes in Preparing Business Plans
projecting exaggerated growth levels
trying to be an expert in all areas
claiming performance above industry averages
underestimating the need for capital

35. Sources of Business Plan Information
Government Support services
Small Business Promotion Authorities
Company Websites
Online Databases
Private Research Firms
Industry & Trade Associations
Chamber of Commerce