Tag: business feasibility study

Business Feasibility Study Structure

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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

Importance of Business Feasibility Study

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One out of fifty businesses is commercially viable so it is essential to conduct a feasibility study to avoid wastage of investment and resources.  Business decision making is based on the feasibility study. The primary aim of feasibility study is if the project will continue or not.  In business, feasibility study will determine if the business proposal works on the long time basis or endure financial risk that may come. Also, it helps to identify potential cash flow. Some business fails to success because they do not begin with a feasibility study.

Finally, business feasibility study will assess by the potential investors and stakeholders. They have to analyze every aspect of business feasibility including marketing aspect, production aspect, management aspect, and financial aspect.  If the result of the study is favorable, it is reasonable to continue with it.  On the other hand, if the result is not reasonable, no investor or businessman will take a risk on it.

The last but not the least, your feasibility study should provide supporting evidence for its recommendation. Decision-making process is also based on cost benefit analysis of the actual business or project viability. If the business feasibility study is viable, the full business plan is created.

How to Write a Business Feasibility Study

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One of the important parts of a business plan is a feasibility study because it determines if a business will be successful or not considering the environment, the market, operational requirements and financial analysis.

Create a page about your business to know if a feasibility study is even necessary. This information will serve as an outline for your feasibility study. Then, review the market background for your business as well as your probable customer according to age, proposalgender, classification. Also, take note your major competitors direct and indirect and think how and why your customer will choose your business over your competitors. List the strengths and weaknesses of your competitors. You can write two good points and two bad points to determine why they are competition.

Next step is to create a list of materials and equipment to be used in your business to become operational. Determine the management requirements such as employee’s qualification and employment infrastructure for your business. Know the costs for equipments and other start up costs as well as the location preparation.

Be sure to present your feasibility study with charts, graphs and table to visualize and clarify information before submitting it to another party or authority. It should contain useful facts and figures to be used in decision making.

Business Feasibility Study Checklist

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As we all know it is essential to produce a business feasibility study checklist or outline in order to organize our business feasibility study because creating an outline can be an effective tool to have complete list of what we’re going to write in our feasibility study.

Checklist for business feasibility study includes cover letter, cover sheets, table of contents, executive summary, project or product description, market feasibility study, organizational feasibility study, technical feasibility study, financial feasibility study, recommendation, conclusion, attachments and appendices.

In market feasibility study includes the description of the industry, market analysis, future market pfeasibility study checklistotential, potential buyer, sales projects and sources of income.  While in organizational feasibility study contains the organizational business structure with corresponding professional skills and resume, management and business personnel.

Technical feasibility study identifies the materials, labor, technology, transportation and physical location. While in financial feasibility study includes cost estimation and pricing recommendation, balance sheet projection for three years, cost benefit analysis, income projection and break-even analysis.

Of course, you have also to consider the description of the industry, market potential, market analysis, potential buyers and sources of revenues, business competition as well as sales projections.

Before submitting your business feasibility study, be sure to proofread by someone to check for errors such as typographical error, grammar and spelling.

Business Feasibility Study – Snack Stand

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A. Name and Address of the Business

The GF Snack Stand (Good Food Snack Stand) is proposed to be located at the 2nd floor of the Bataan Common Terminal, Ibayo, Balanga City, Bataan.

B.    Nature  Business

The GF Snack Stand offers a wide variety of snacks and beverages.  It caters the need of the persons in transit and others who are waiting for their ride home in the said common terminal.  It also provide hip and soothing music to those who are weary from work and school.

The menu mainly consists of chicken, ham, ham and egg and hotdog sandwiches, fishballs, kikiam, squidballs, french fries and juices such as gulaman and pineapple juice.

The said snack stand is open Mondays through Sundays from 7:00 AM to 7:00 PM.

Management Aspect

1.    What are the roles and responsibilities of each personnel?
2.    What are the different strategies were going to use in order to cope up with the competition?
3.    How can we cope up with the competition?

Financial Aspect

1.    How much will be the total cost of the project?
2.    How much is the contribution of each member?
3.    How much profit were going to earn this kind of project?

Socio-Economic Aspect

1.    How can the business contribute to the reduction of unemployment?
2.    How can the business contribute to the community?
3.    How can the business contribute to the economy?

Excerpt from Management Project by Arde R. Reyes