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.