ENTREPRENEURIAL MIND

FEASIBILITY STUDY
What is a feasibility study?
 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.
 Feasibility study is carried out in order to assess the viability of a new project
 It is a primary and most important thing in the development of a project
Reasons to Do a Study
 Gives focus to the project.
 Narrows the business alternatives.
 Identifies new opportunities.
 Identifies reasons not to proceed.
 Provides valuable information for “go/no go” decisions.
 Increases probability of business success by identifying weaknesses early.
 Provides documentation that the idea was thoroughly investigated.
Types of Feasibility
OPERATIONAL FEASIBILITY
- Useful for identifying operational problems to be solved, and their urgency. ( proposed system solves
the problems)
✓ The “PIECES” framework
✓ P- Performance – the need to improve performance
✓ I- Information- the data
✓ E- Economy – control costs or increase profits
✓ C-control – to improve security
✓ E-efficiency - - improve efficiency of people and process
✓ S-services – to customers, suppliers, partners, employees
MARKET FEASIBILITY
- is a term used to describe the idea of whether or not a product will achieve success in the marketplace
and whether it will be profitable
✓ Determine facility needs.
✓ Suitability of production technology.
✓ Availability and suitability of site.
✓ Raw materials.
✓ Other inputs
FINANCIAL/ECONOMIC FEASIBILITY
- it involves a cost benefits analysis to identify how well, or how poorly a project will be concluded.
✓ Estimate the total capital requirements.
✓ Estimate equity and credit needs.
✓ Budget expected costs and returns
ORGANIZATIONAL/MANAGERIAL FEASIBILITY
✓ process of validating the technical resources and capabilities to convert the ideas into working
systems.
✓ Business Structure
✓ Business Founders
ENVIRONMENTAL FEASIBILITY
• Environmental impact and their assessment
LEGAL FEASIBILITY
• performed to understand if the proposed plan conforms to the legal and ethical requirements.
✓ Is the project legally feasible?
✓ Legal requirements.
FEASIBILITY REPORT
A feasibility report is the results of a feasibility study. This report details whether or not a project should
be undertaken and the reasons for that decision. Report Content
❑ Introduction/Executive Summary
❑ Background
❑ Outline of the Project
❑ Methodology/method of analysis
❑ Overview of alternatives
❑ Conclusion
❑ Recommendation
Introduction/Executive Summary
It states the objective of the report and of the project
▪ It should refer to terms of references
▪ Also it should state the constraints within which it has been conducted
▪ Executive summary:
▪ This should concise summary of the major recommendations of the report within 6 pages so
that it is quickly understood by a senior executive
Background
Some feasibility reports may require some background discussion in order to make the rest of the report
meaningful to readers.
▪ Describe your proposed plan in sufficient detail state if it worked elsewhere and how it was
implemented
▪ Background on the Situation. For many feasibility reports, you'll need to discuss the problem, need, or
opportunity that has brought about this report.
Outline of system
▪ Outline of the system involves the description of the project
▪ List type and quality of product(s) or service(s) to be marketed.
▪ Outline the general business model (ie. how the business will make money).
▪ Include the technical processes, size, location, and kind of inputs.
▪ Specify the time horizon from the time the project is initiated until it is up and running at capacity.
Methodology
It involves a discussion on the method of analysis for a feasibility study
• Return on Investment (ROI) analysis
For comparing overall profitability
ROI = Estimated lifetime benefits - Estimated lifetime costs
Estimated lifetime costs or
ROI = Net Present value / Estimated lifetime costs

Overview of alternatives
• Possible alternatives
• “Sticking with the current system” should always be studied as one alternative
• Different business processes for solving the problems
• Different levels/types of computerization for the solutions
• Advantages and disadvantages of the alternatives
• The major possible alternatives should be discussed and compared using clearly defined criteria.
1. Estimate Equity and Credit Needs
• Identify alternative equity sources and capital availability
✓ Producers, Local Investors, Angel Investors, Venture Capitalists
• Identify and assess alternative credit sources.
✓ Banks, Government (direct loans or loan guarantees), Grants,
✓ Local and State Economic Development Incentives.
• Assess expected financing needs and alternative sources.
✓ Interest Rates, Terms, Conditions, Etc.
2. Cost and benefits evaluation
• It demonstrates how this proposal is feasible
• It involves a discussion of technological feasibility, economic practicality, social desirability, and
ecological soundness
• Examples of benefits
1. cost reductions
2. error reductions
3. increased throughput
4. increased flexibility of operation
5. improved operation
6. better (e.g., more accurate) and more timely information.
Conclusion
• The conclusions section of feasibility is the restatement of the conclusions you have already reached in
the comparison sections. In this section, you restate the individual conclusions, for example, which
model had the best price, which had the best battery function, and so on.
• It must untangle all the conflicting conclusions and somehow reach the final conclusion, which is the
one that states which is the best choice
Recommendation
• The final section of the feasibility report states the recommendation.
• The recommendation section should echo the most important conclusions leading to the
recommendation and then state the recommendation emphatically.
• the basis for that judgment has to be stated somewhere in the requirements section

Example of Feasibility Report on Waste Water System

Feasibility Report
❖ Executive Summary
Includes
Principal/salient features of technical, financial, and administrative aspects of the
project
❖ Introduction
Project genesis – how the idea of the project originated?
- Whether fits in the development plan?
Organization of study
Scope and status of the report
❖Project area and need for the project(background)
➢ Project area
▪ geographic, topographic, climatic, religious, cultural
▪ descriptions
➢ Population pattern
▪ estimation and analyze the growth rate
▪ Estimate the probable density of the population
➢ Economic and Social conditions
▪ present living standards of various groups
▪ identification of locations according to income levels
▪ housing conditions
▪ data on education, literacy, unemployment etc
➢ Available water resources
• adequacy of surface and groundwater w.r.t quantity and Quality
• Development of water resources
• Pollution problems
➢ Existing water supply system
• Details (source, capacity, the area served, hours of supply,
• Number of connections, rate, etc.) of the existing system
➢ Existing drainage and solid waste systems
➢ Need for a project
• improvement, expansion
• new
• deficiencies of the existing system
❖Proposed project (water supply scheme outline)
➢ Details of the project
▪ rehabilitation of the existing facility
▪ construction of new facility ▪ alternative designs
▪ selection of sources
▪ alternative layouts of rising mains
▪ alternative sites of WTP & ESRs
▪ training schemes for O & M
▪ consultancy services needed
➢ Components of the project
▪ thoroughly described with necessary topo-maps
▪ location maps
▪ technical information
▪ engg. design & drawings
➢ Implementation schedule (CPM/PERT)
➢ Cost Estimates
➢ capital investment (for all components)
➢ recurring cost (annual)
➢ Impact on the environment
➢ Institutional responsibilities (Identification of organizations)
➢ approval
➢ funding
➢ implementation
➢O&M
❖Financial plan
➢Source of fund
➢Interest on the loan
➢Recurring expenses
➢Annual burden
❖Conclusion
➢Summary of findings and results of FR
➢Review of need
➢Recommended alternative scope, coverage, and components
➢Capital cost and tentative financing plan
➢Urgency for implementation
❖Recommendation
➢Specify all action for completion
➢Mention of detailed investigation, data collection and operational studies
ENTREPRENEURIAL MIND
BUSINESS PLAN
Building a Business Plan
Create a Business Plan as the first step on your path to success
Executive Summary
✓A Business Plan identifies key areas of your business so you can maximize the time you spend on
generating income.
✓Key investors will want to look at your Business Plan before providing capital.
✓A Business Plan helps you start and keep your business on a successful path.
✓You should prepare a Business Plan, although, in reality, many small business owners do not.
What is a Business Plan?
❑A Business Plan is a written document that defines the goals of your business and describes how you
will attain those goals.
❑A Business Plan is worth your considerable investment of time, effort, and energy.
❑A Business Plan sets objectives, defines budgets, engages partners, and anticipates problems before
they occur.
10 Reasons Why You Need a Strong Business Plan
1. To attract investors.
2. To see if your business ideas will work.
3. To outline each area of the business.
4. To set up milestones.
5. To learn about the market.
6. To secure additional funding or loans.
7. To determine your financial needs.
8. To attract top-level people.
9. To monitor your business.
10. To devise contingency plans.
How Detailed Should Your Plan Be?
❑Business plans differ widely in their length, appearance, content, and the emphasis placed on
different aspects of the business.
❑Depending on your business and your intended use, you may need a very different type of Business
Plan:
❑Mini-plan: Less emphasis on critical details. Used to test your assumptions, concept, and measure the
interest of potential investors.
❑Working Plan: Almost total emphasis on details. Used continuously to review business operations and
progress.
❑Presentation Plan: Emphasis on marketability of the business concept. Used to give information
about the business to bankers, venture capitalists, and other external resources.
Assembling a Business Plan
Every Business Plan should include some essential components:
◦ Overview of the Business: Describes the business, including its products and services.
◦ The Marketing Plan: Describes the target market for your product and explains how you will reach
that market.
◦ The Financial Management Plan: Details the costs associated with operating your business and
explains how you will pay for those costs, including the amount of financing you may need.
◦ The Operations and Management Plan: Describes how you will manage the core processes of your
business, including use of human resources.
Seven Common Parts of a Good Business Plan
Business plans must help investors understand and gain confidence on how you will meet your
customers’ needs.
Seven common parts of a good Business Plan are:
1. Executive Summary
2. Business Concept
3. Market Analysis
4. Management Team
5. Marketing Plan
6. Financial Plan
7. Operations and Management Plan
Part 1: Executive Summary
The Executive Summary of a Business Plan is a 3-5 page introduction to your Business Plan.
The Executive Summary is critical, because many individuals (including venture capitalists) only read the
summary. The Executive Summary section includes:
◦ A first paragraph that introduces your business.
◦ Your business name and location.
◦ A brief explanation of customer needs and your products or services.
◦ The ways that the product or service meets or exceeds the customer needs.
◦ An introduction of the team that will execute the Business Plan.
◦ Subsequent paragraphs that provide key details about your business, including projected sales and
profits, unit sales, profitability, and keys to success.
◦ Visuals that help the reader see important information, including highlight charts, market share
projections, and customer demand charts.
Part 2: Business Concept
The business concept shows evidence that a product or service is viable and capable of fulfilling an
organization's particular needs.
The Business Concept section:
◦ Articulates the vision of the company, how you plan to meet the unique needs of your customer, and
how you plan to make money doing that.
◦ Discusses feasibility studies that you have conducted for your products.
◦ Discusses diagnostics sessions you had with prospective customers for your services.
◦ Captures and highlights the value proposition in your product or service offerings.
Part 3: Market Analysis
A Market Analysis defines the target market so that you can position your business to get its share of
sales.
A Market Analysis section:
◦ Defines your market.
◦ Segments your customers.
◦ Projects your market share.
◦ Positions your products and services.
◦ Discusses pricing and promotions.
◦ Identifies communication, sales, and distribution channels.
Part 4: Management Team
The Management Team section outlines:
✓Organizational Structure: Highlights the hierarchy and outlines responsibilities and decision-making
powers.
✓Management Team: Highlights the track record of the company’s managers. You may also offer
details about key employees including qualifications, experiences, or outstanding skills, which could add
a competitive edge to the image of the business.
✓Working Structure: Highlights how your management team will operate within your defined
organizational structure.
✓Expertise: Highlights the business expertise of your management and senior team. You may also
include special knowledge of budget control, personnel management, public relations, and strategic
planning.
✓Skills Gap: Highlights plans to improve your company’s overall skills or expertise. In this section, you
should discuss opportunities and plans to acquire new information and knowledge that will add value.
✓Personnel Plan: Highlights current and future staffing requirements and related costs.
Part 5: Marketing Plan
▪ The Marketing Plan section details what you propose to accomplish, and is critical in obtaining funding
to pursue new initiatives.
▪ The Marketing Plan section:
◦ Explains (from an internal perspective) the impacts and results of past marketing decisions.
◦ Explains the external market in which the business is competing.
◦ Sets goals to direct future marketing efforts.
◦ Sets clear, realistic, and measurable targets.
◦ Includes deadlines for meeting those targets.
◦ Provides a budget for all marketing activities.
◦ Specifies accountability and measures for all activities.
Part 6: Financial Plan (Slide 1 of 2)
The Financial Plan translates your company's goals into specific financial targets.
The Financial Plan section:
◦ Clearly defines what a successful outcome entails. The plan isn't merely a prediction; it implies a
commitment to making the targeted results happen and establishes milestones for gauging progress.
◦ Provides you with a vital feedback-and-control tool. Variances from projections provide early
warnings of problems. When variances occur, the plan can provide a framework for determining the
financial impact and the effects of various corrective actions.
◦ Anticipate problems. If rapid growth creates a cash shortage due to investment in receivables and
inventory, the forecast should show this. If next year's projections depend on certain milestones this
year, the assumptions should spell this out.
Part 6: Financial Plan (Slide 2 of 2)
The Financial Plan is the most essential part of your Business Plan. It shows investors the timeframes you
have scheduled to make profits.
Some elements of the Financial Plan include:
◦ Important Assumptions
◦ Key Financial Indicators
◦ Break-even Analysis
◦ Projected Profit and Loss
◦ Projected Cash Flow
◦ Projected Balance Sheet
◦ Business Ratios
◦ Long-term Plan
Part 7: Operations and Management
The Operations and Management section outlines how your company will operate.
The Operations and Management section includes:
◦ Organizational structure of the company. Provides a basis for projected operating expenses and
financial statements. Because these statements are heavily scrutinized by investors, the organizational
structure has to be well-defined and realistic within the parameters of the business.
◦ Expense and capital requirements to support the organizational structure. Provides a basis to identify
personnel expenses, overhead expenses, and costs of products/services sold. These expenses/costs can
then be matched with capital requirements.
SUMMARY
Business Plans are critical for the success of a company.
Different businesses will require different types of Business Plans.
All Business Plans have some essential sections that explain the core aspects of the company.
In order to help your company have a better chance of gaining interest and investors, a Business Plan
should include seven essential sections:
1. Executive Summary
2. Business Concept
3. Market Analysis
4. Management Team
5. Marketing Plan
6. Financial Plan
7. Operations and Management Plan