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
