FINANCIAL FEASIBILITY STUDY

Market Health

In this phase, internal and external market conditions are studied. Both current and future market conditions are analyzed, dominant players are identified, and their strengths and weaknesses are assessed to bridge any gaps. The product or service being introduced is compared with existing offerings, its distinguishing features that create a competitive edge are identified, and its ability to address a market ‘need’ is analyzed.

The receptiveness of target customers is evaluated, delivery channels are identified, and the value propositions for customers are determined during this phase.

1.  Field Research
   I.Personal interview
   II.Telephone interview
   III. Surveys
2. Desk Research Internal Sources
   I. Sales figure
   II. Accounting sources
   III.Customer's complaints and comments
   IV.Sales representative report
3. Online Research
   I. Search engines
   II. Newspapers
   III. Other databases online
   IV.Sales representative report
4. Printed Research
   I. Business statistics
   Industrial market research reports
   III. Business directories
5. Other Market Analysis
   I.Market Trend
   II.Market Segment
   III.Targeted Customers
   IV.Target Market Analysis
   V. Pricing Strategy
   VI.Competitive Condition

Financial Aspect

In this step, start-up costs, operating costs, financing methods, and profitability are analyzed. Legal costs, capital acquisition costs, and fixed and variable costs are calculated at this stage. The mode of raising funds—whether through loans, investors, or other sources—is determined by understanding the implications and costs associated with each financing option.

Projected income and expected return on investment are also ascertained. Supplier and customer payment terms are determined to ensure healthy cash flow.

The general contents of every financial feasibility study will include the following:

1. Financial Summary,
2. Projected Statement of Financial Position
3. Income Statement
4. Cash Flow Statement
5. Notes & Explanations of the Financial Projections.
6. Ratio Analysis VI BEP

Technical Aspect

In this step, the resources necessary for the business are analyzed. Hardware and software requirements, the source and availability of capital assets, and whether expansion or a change in product line can be accommodated with the invested capital are among the key aspects to be determined regarding facilities and equipment.

Manpower requirements, the technical knowledge employees should possess, the training to be provided, and the competency and experience of managers are the main aspects to be considered regarding labor and management.

• The cost of the technology
• Costs for technological development
• Costs for the consultancy support (design and implementation)
• Costs for the organization for piloting training
• Running cost.

Schedule

In this stage, the time frame for setting up the business is determined. Although market analysis may take time, a viable business plan must be executed within a defined time frame due to the dynamic nature of the market. The business plan should be implemented within the stipulated period to ensure that the company’s goals and objectives are achieved.

Operation Feasibility

We use the PIECES framework, which helps in identifying the problems to be solved and their urgency:

A. Performance – Whether the mode of operation provides adequate throughput and response time? 

B. Information – Whether the end-users and managers with timely, pertinent, accurate, and usefully formatted information? 

C. Economy – Whether the mode of operation provide cost-effective information services to the business? Could there be a reduction in costs and/or an increase in benefits? 

D. Control – Whether the mode of operation offers effective controls to protect against fraud and to guarantee the accuracy and security of data and information? 

E. Efficiency – Whether the mode of operation makes maximum use of available resources, including people, time, the flow of forms? 

F. Services – Whether the mode of operation provides reliable service? Is it flexible and expandable?