Feasibility Study Structure

feasibility study structureFeasibility study is created in order to minimize risk and to ascertain the viability of a project, a thorough study must first be undertaken.  As soon as it is certain that a specific project could be carried out profitably, it is only then, that it could be implemented.

A feasibility study is not merely an investigation but at the same time a plan or a framework on how the operation of a business project shall be accomplished.  It is composed of five major components namely: Marketing, Technical, Management, Financial and Social Desirability.

You must determine if there are sufficient demands for the product as well the competitive position of the firm in the industry.  Sale projection for the project must also investigate as part of your market study.

The manufacturing process, plant size, production schedule, machinery, plant location and layout, structure, raw materials, utilities and waste disposal is taken into consideration when it comes to technical study.

Management study involves on how the project shall be managed such as the business organization including the organization chart and function of each unit management personnel, skills and numbers of labor required.

In your financial study, you can include the assessment of total capital requirements, break-even outputs, sales and prices, amount of sales required to earn a certain amount of profit and the cash payback period.

Last but not the least is the social desirability which is measure by economic benefits to the people living in the community and its vicinities.

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New Restaurant Feasibility Study

Entrepreneurs or businessman should take consideration of doing a feasibility study to make a right decision of putting up a restaurant business. They should determine the probability of success. They sometimes overestimate the size of the market in their area and do not take into account the tough competition they will face from established restaurant with loyal customer.

Factors to consider when planning a new restaurant:

–    Market

Studying market is one of the best effective ways to determine if the new restaurant will have enough client or customer.  It includes the study of demographic characteristics such as age and income to estimate the size of potential market.

–    Target Locations

Good business location most specially restaurant business includes high traffic location, large office complexes, near malls and hotels or retail centers.  Make sure that your business location creates demand for your restaurant. Also, consider the lease cost or rental cost and make sure that there is parking with easy customer’s access.

–    Competitors

Review your competition such as knowing the total number of restaurants in your target area as well as their style. Analyze their strengths and weaknesses to determine if there is a room for a new restaurant.

–    Industry

Be familiar with the industry by reviewing any statistical information about industry trends and growth. Consider attending meetings and talk to restaurant owners.

–    Food Cost

Break down the cost of each menu and determine who will be your major supplier and ask for pricing. Study food cost projections and the prices you are going to charged.

–    Management Capability

Hire restaurant manager and staff the have sufficient experience to run a restaurant. Train and motivate your staff to maintain high customer satisfaction and also so that your kitchen run smoothly.

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Market Feasibility Study Outline

It is important for a business to study and analyze the potential market. Like for example if you plan to sell a certain product or offer a particular service, you have to determine if there are potential clients or customers in your location site. Market feasibility study is used as a tool to identify problems or obstacle that you may encounter during the implementation phase of your project. It will include the sales projection as well as the project cost. Also, it will know if the proposed project will be successful in terms of marketability.

market feasibility outline

What to include in your Market Feasibility Study

– Introduction

It includes specific details of the project addressed by the market study as well as the objectives of this study.

– Site Analysis

It includes the description of your chosen location for your business such as the topography, environmental, zoning, and architectural factors. It should address the visibility and accessibility of the site.

– Market Description

It contains the description of your target market including prospective customer’s lifestyle information that involves their age, sex and habits. Identify the factors affecting in choosing of the products or services. Also, it should include that size of the total market as well as the market trends.

– Competition

It analyzes the competitors such as their product lines and markets as well as the competitor’s strengths and weaknesses and compare your marketing strategies to your competitors.

– Pricing

It reviews the products or services cost including all variables and fixed expenses and make sure it will provides profits. Also, compare your prices with similar products or services in the industry.

– Distribution

It identifies the best effective method to distribute or getting your products or services to customers/clients in the target market.

– Promotion

It provides the potential promotion types or advertising method to be used including the media choices, project expenditure, and possible use of ad agency. Also, it describes your target audience.

– Sales Forecasting

It projects sales income for the next four quarters. It also involves sales history of your competitors based on research, recent sales trends in industry and seasonal adjustments.

– Production

It identifies the level of production/service necessary to meet the demand generated by marketing.

– Action Plan

It contains the list of all the marketing strategies and ranks all strategies by levels of importance.

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Financial Feasibility Study

Financial feasibility study is written to determine the start up capital, sources of capital, return of investment and other financial consideration. This document contains how much money will be needed and details each expenses and potential income. It considers the start-up capital, expenses, revenues and investor’s income and disbursement.  The project will be feasible if the revenue is more than the project cost. It involves the study of start-up costs, operating cost, income and profit, and financial planning.

What to include in your financial feasibility study?

  • Start-up capital need until incomes are realized at full capacity. Start up cost includes business license, staffs training, initial production for manufacturing firm, and others.
  • Capital requirements for facilities, equipment and inventories
  • Working capital needs
  • Operating expenses such as rent, labor cost, professional fees, advertising and promotion expense, etc.
  • Contingency capital needs for construction delays, market access delays, technology malfunction, and others.
  • Other capital needs
  • Equity needs
  • Credit needs
  • Alternative credit sources such as banks, government, grants and economic development incentives
  • Expected income, costs, profit margin and expected net profit
  • Sales or usage needed to break-even
  • Expected cash flows
  • Income statement
  • Balance sheet
  • Other statements

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Sample Feasibility Study Outline

I.    Executive Summary

This section is very important part of the feasibility study because it provides summary of the detailed contained within the rest of the document.

II.    Description of Products and Services

This section provides description of the product and/or services. It should capture the important aspects of the products and/or services that the organization or the shareholders is considering.

III.    Technology Consideration

This section explain that the organization consider with regard to technology. Nowadays, modern technology have been used to businesses to improved their products and services.

Feasibility study outline

IV.    Product/Service Marketplace

This part will describes the existing marketplace for the products and/or services  including the target market for this product or services, competitor, suppliers and the reason why your client or customer choose your products or services.

V.    Marketing Strategy

This section provides description on how the products or services will market such as how to promote and advertise it to the prospective client or customer.  Marketing plans should be focused on the right target groups to yield the greatest return on investment.

VI.    Organization and Staffing

This section will enumerate the need for additional staffing or personnel for the new products or services.

VII.    Schedule

This part includes the schedule for the implementation of the product or services including the detailed schedule such as the product planning. It includes some targeted milestones and time frames for completion.

VIII.    Financial Projections

This section provides the description of the financial projections for the new products and/or services such as the cost-benefit calculation, projected income statement, balance sheets. It also provides the assumptions on which the illustrated financial projection are based.

IX.     Findings and Recommendation

This section provides the summary of the findings of the feasibility study and explains why some course of action is or is not recommended such as the advantages and disadvantages. Also, it contains the recommendation for the products and/or services.

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Technical Feasibility Grant

The goal of technical feasibility grant is to fund the cost of the company to undertake a technical study.  Technical study that  pass to their requirements includes the development of new products, processes, technologies  as well as the redesign or improvement of current products , processes or services.  It also includes the possibility of extending or expanding company facilities to meet companies’ needs and application of new technologies for the companies’ growth.

The purpose of writing a technical feasibility study is to know if the project is viable. The content of feasibility study includes; prototyping and design, assessment of manufacturing process, evaluation and selection of plant, source of raw materials, cost analysis and market research.

Technical feasibility study is used to assess the details on how to deliver a product or services. It will determine how your business will produce, store, and deliver products and services. It serves as flowchart on how your product and services progress and move through your business to reach your target market. It involves the study of facility needs and suitability of production technology providers as well as the availability of raw materials, transportation, labor, and products.

Some countries provide technical feasibility grant to the companies who needs financial assistance for their business venture.  So it is important that you write it in a correct format.

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Business Feasibility Study Structure

For all we know, a Business feasibility study is written to know if the business idea will become successful or not when implemented. It serves as an evaluation tool for every business because it will determine whether or not it’s worth investing your time and money to this business idea. Also, it will determine the profitability of the business.

Business feasibility study will analyze your business idea, market and financial feasibility of the business. The objectives of your study are to assess the market size, your competitive analysis, capital requirements, and management ability.

business feasibility studyDuring market analysis, you have to determine the type of demand that available for your product or service you plan to offer such as the consumer and distributor and then establish the size of the market and its growth capacity.

After determining if the market is available, you have to know your competitors and determine what makes your product or service special compare to your competitors. Also, analyze the sales strategy to use. Other factor to consider is to determine the management and personnel requirements.

Of course, before starting your business you have to know the financial feasibility of your business idea including making sales forecast, computing start-up and working capital requirements, estimating profitability and financial viability. Financial projection includes balance sheet, income statement, cash flow, and break even analysis.

Below is an example of Business Feasibility Study outline:

•    Executive Summary
•    Introduction
•    Product or Service
•    Market
•    Competition
•    Industry
•    Marketing and Sales Strategy
•    Operating Requirements
•    Financial Projection
•    Balance Sheet Projection
•    Income Statement Projection
•    Cash Flow Projection
•    Break Even Analysis
•    Financial Requirement
•    Recommendation and Findings
•    Conclusion

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Sample System Feasibility Study Outline

Feasibility study is a tool use to determine if the project or business will be successful. It serves as an evaluation since it contains the analyzation of each aspect in order to know the outcome of the proposed solution to the problems. These aspects include technical aspect, marketing aspect, financial aspect and economic aspect and so on. Make sure that before making any decision,

Writing feasibility study is hard when you don’t know how to start. So I make an outline to be used as guidelines. This sample feasibility study is about a Proposed System.

system feasibility study

I. Introduction

a. Purpose

b. Scope

c. System Overview

d. Project References

e. Acronyms and Abbreviations

II. Management Analysis

a. Environment

i. Organizational Structure

ii. Input/Output

iii. Processing

iv. Security

v. System Interaction

b. Current Procedures

c. Objectives

d. Constraints

e. Assumptions

f. Methodology

g. Evaluation and Criteria

h. Recommendation

III. Proposed System

a. Proposed System Description

b. Benefits and Improvements

c. Cost and Time Resource

d. System Effects

i. Software Effects

ii. Equipment Effects

iii. Organization Effects

iv. Operational Effects

v. Developmental Effects

vi. Site and Facility Effects

vii. Security and Privacy Effects

e. Recommendation

IV. Alternative System

a. Description of Alternative System

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Components of a Good Feasibility Study

Writing feasibility study is very essential in business so that entrepreneurs or businessman may know if the proposed business or ideas is profitable. Time and effort in writing feasibility study is worth since feasibility study serves as an evaluation and analysis of a proposed business or proposed project to know if it is technically feasible and it is feasible within the estimated cost.

Here are some components to consider in writing a good feasibility study:

–    Introduction
Background information of the proposed business or proposed project will be described such as the proposed name and purpose of the business. It also includes the skills and experience of the business investors.

–    Business or Project Description
Information about the business or project as well as the nature of industry or nature of the project is discussed in this section.

–    Market Analysis
Current and potential demand of the product or idea is determined. Also, it contains information about the buyers as well as the sales forecast over the first three years.

–    Management Analysis
Skills and talent of the management team or personnel involved in the business or the project should be included. It contains the primary duties of each personnel with the organization structure.

–    Technical Analysis
Detailed requirements of the facilities, inventory and production control is identified.  Also, it provides the raw material needed and other utilities.

–    Risks and Problems
Major and minor risks and problems of the proposed business opportunity or project are elaborated.

–    Economic Analysis
Cost and benefit analysis discussed.

–    Financial Analysis
Total estimated cost of the proposed business or project are included as well as the projected cash flow and profitability.

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Components of Feasibility Study

One of the purposes of writing a feasibility study is to minimize the risk and to ascertain the possibility of the business to become successful. Feasibility study will measure if a certain business or project could be carried out profitably. It also serves as framework on how the operation shall be accomplished. It is always wise to write a feasibility study before implementing a business or project to ensure to have a successful venture.

The components of a feasibility study are the following:

  • Marketing Study. This involves the study of sufficient demands for the products and the competitive position of the firm in the industry.
  • Technical Study. This is the study of plant size and location, production schedule, layout, structure, utilities, raw materials and waste disposal.
  • Management Study. It includes the organizational chart as well as the function of each unit management employee or personnel such as their skills and the number of labor required.
  • Financial Study. This study includes the evaluation of the total capital requirement, break even analysis, amount of sales required to earn a profit and the cash payback period.
  • Social Desirability. This study is include to measure the economic benefits to the people living in vicinities.

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