FEASIBILITY STUDY
Presented by
Mr T.P Mushayavanhu
What is Feasibility Study?
An entrepreneur can use a
feasibility study in order
to decide if there is enough
demand for a product or
service.
FEASIBILITY STUDY A feasibility study can help an
the process that tests a entrepreneur determine
business concept; it allows the whether business conditions
entrepreneur to decide whether are appropriate to go forward
a new business concept has
potential with starting a business.
Importance of Feasibility Study
• The big picture
• New alternative solutions
• Evaluate alternatives
• Identifies reasons not to proceed.
• Enhances the probability of success by addressing and
mitigating factors early on that could affect the project.
Importance of Feasibility Study Cont.’
• Provides quality information for decision making.
• Provides documentation that the business venture was
thoroughly investigated.
• Helps in securing funding from lending institutions and
other monetary sources.
• Helps to attract equity investment.
FEASIBILITY ANALYSIS: TESTING AN OPPORTUNITY
DEVELOPING A BUSINESS CONCEPT
Once you have an BUSINESS CONCEPT
idea for a new a clear and concise description
of a business opportunity; it
business, define it by contains five elements: the
writing a clear and product or service, the
customer, the benefit/, the
concise business distribution and the
concept. management team.
Its purpose is to focus your
thinking.
BUSINESS CONCEPT STATEMENT
A one page document which includes:
• A description of the product/service
• The intended target market
• The benefits of the product/ service
• Product/ service positioning relative to competitors
• A description of how the product/service will be sold
• A brief description of the company’s management team
DEVELOPING A BUSINESS CONCEPT CONT.’
Product or Service: Management Team
• What is being offered?
• This is the solution to the problem • A brief description of the company’s
• Product/service positioning relative to management team
competitors • Key skills that can contribute to
business success
Target Market
• Who is it? They pay for the product.
Delivery/Distribution
Benefits and Features • Retail, wholesales, mail order,
• Benefit- promotes or enhances the value of product. Internet, door-to-door?
• Feature – distinctive aspect, quality, or characteristic
of a product
Testing the Concept in the
Market
customers
industry product and
service
Feasibility
value chain Study founding
Questions team
start-up needs competition
Testing the Industry
The broadest level of
feasibility analysis
looks at the industry in
which the business will INDUSTRY
operate.
a group of businesses
with a common interest
Talking To The Customer
The most important part
of the feasibility study is
testing customers to
measure interest and TARGET CUSTOMERS
identify the target
customers. people most likely to buy
a business’s products
and services
Testing Product Or Service
Requirements
To consider all of the
requirements of a product
or service, create a PROTOTYPE
prototype.
a working model used by
entrepreneurs to
determine what it takes to
develop their products or
services
Testing Product Or Service
Requirements
• You need to design prototypes.
• These types of prototypes are not physical, they are
designs, blueprints, story boards, or flowcharts that
map out the business and the processes that will take
place at the business.
• Intellectual Property – protect your prototype through
patents, trademarks, copyrights, and trade secrets.
Studying The Competition
An easy way to evaluate
COMPETITIVE GRID
the competition is to
create a competitive a tool for organizing
important information
grid.
about a business
venture’s competition
Studying The Competition
Analyzing The Value Chain
A business can create a
competitive advantage by
improving the value chain or
its products and services. VALUE CHAIN
The value chain includes the distribution channel
manufacturers, distributors, through which a product
and retailers. or service flows from
the producer to the
customer
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Business Concept Statement and
Feasibility Study Assignment
• Write a business concept statement and a feasibility report for your
proposed product/service idea. Show the concept statement to 10 to 15
prospective customers and to at least 5 industry experts.
• Draft and attach two different questionnaires for prospective
customers and for industry experts to the concept statement. Ask
them to:
1. Tell things they like or dislike about your product/ service idea
2. Identify the strengths and weaknesses of the product/service and provide
suggestions for making it better.
3. Justify whether they think that the product/service is feasible or will be
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successful.
Business Concept Statement and
Feasibility Study Assignment Cont.’
4. Comment on the industry attractiveness and the
potential threats.
5. Tell whether the product/service idea is technically
feasible.
6. Comment on the legal requirement to venture in
the suggested industry.
7. Tell if the management team has the necessary
skills to realise their vision.
8. Comment on the capital investment required to
successfully venture into the business
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Feasibility Report
Components of a Feasibility Study
a) Introduction
b) Product / Service Feasibility
• Is the product/ service desirable
• Is there demand for the product/service
• Are there any weaknesses involved
• Overall conclusion- is it feasible
c) Market feasibility
• Describe current market- (size, growth rate, outlook)
• Competition and ( SWOT analysis)
• Pricing strategy, Distribution Strategy
• Project future sales
• Identify potential threats and solutions
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Components of a Feasibility Report Cont.’
d) Organisational Feasibility
• List key managers, tittles, responsibilities, relevant
background
• Management ability- skills, experience, Qualifications
• Resource sufficiency – Cost
e) Technical Feasibility
• Expert opinion
• Cost structure
• Technology proposed - does it have risks involved
• The present technical resources of the organization
• Evaluation of the hardware and software and how it meets the
need of the proposed system
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Components of a Feasibility Report Cont.’
f) Legal Feasibility
• Determines whether the proposed system
conflicts with legal requirements.
e) Financial Feasibility
• Projections- cash flow
• Estimated total earnings
• Estimated cost
• Payback period, Cost benefit analysis
• Risk factors
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The End
Email: tmushayavanhu@hit.ac.zw
