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FEASIBILITY ANALYSIS
A feasibility analysis is the process of
determining whether or not an entrepreneur’s
idea is a viable foundation for creating a
successful business.
PURPOSE OF FEASIBILITY
ANALYSIS
To determine whether or not a business idea is
worth pursuing.
If the idea passes the feasibility analysis, the
entrepreneur’s next step is to build a solid
business plan for capitalizing the idea
If the idea fails to pass the study, the
entrepreneur drops it and moves on to the next
study
BENEFITS OF FEASIBILITY
ANALYSIS
Saved:
1.Time
2.Money
3.Energy
KEY ELEMENTS OF
FEASIBILITY
ANALYSIS
PERSONALITY FEASIBILITY
There are traits that come naturally to an
entrepreneur and others which may come with
time. Some characteristics, persons may never
have. An analysis and reflection is important
before starting any venture. A personal SWOT
analysis profile can assist with this.
MANAGEMENT FEASIBILITY
When looking at your own personality profile,
you will realize that you may have some
deficiencies. This is where a strong management
team comes in. It is helpful if the entrepreneur
looks for members whose strengths compensate
for his weakness. The team must collectively
possess the experience, training, drive and
management skill to achieve success.
OPERATIONAL FEASIBILITY
Not only must the entrepreneur look at sourcing
land, labour and capital but he / she must ensure
that the value chain (each stage of the production
process that adds value to a product) is at its
maximum. For example, the layout of the
production line, can assist in saving time once the
production process is properly thought out.
FINANCIAL FEASIBILITY
The major areas to analyze at this time is capital
requirements compared to estimated earnings in
order to get a projected return on investment. At
this stage, a broad financial analysis is sufficient.
If the concept passes the overall feasibility
analysis, then the entrepreneur should conduct a
more thorough financial analysis when creating
the business plan.
MARKETING FEASIBILITY
Market research can guide a feasibility analysis.
It can assist determining if there is a market for
the product or to determine what product to
develop to cater for the market.
It can assist in determining if the proposed
pricing strategy is viable or not
It can assist in determining whether the
proposed location is viable or not
It can assist in determining the level of
marketing effort required based on the market,
the product, price, location and level of
competition
TIME FEASIBILITY
Getting a product onto the market is time
sensitive. It is important that a realistic time span
be placed on the development of the business. If
businesses fail to do so, they can be faced with a
situation where a product is placed on the market
where it is no longer relevant. Important areas
such as obtaining necessary licenses, staff,
equipment and supplies in a timely manner must
be considered.
INDUSTRY FEASIBILITY
The characteristics of the industry and the firms
that make it up, trends in the related technology
and expectations for the future are factors that
could affect the success and sustainability of the
enterprise. Even in a promising industry, it is
important that the management team have the
kind of knowledge, experience and network that
are necessary to be effective.
CULTURAL FEASIBILITY
This looks at how the proposed business could
affect local culture or be affected by the local
culture. Will the business or product be well
received? Will there be objections or even
protests by the local community? Think about
the case where McDonalds set up in India and
sold beef. What happenned?
DISTINCTION BETWEEN
MARKET RESEARCH AND
FEASIBILITY ANALYSIS
Whilst market research is focused specifically on
the 4 P’s, the feasibility study also considers this
but goes beyond the market and evaluates the
proposed business as a whole.
CASE STUDIES
THE END