FEASIBILITY ANALYSIS A feasibility analysis is the process

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. ØIf the idea passes the feasibility analysis, the entrepreneur’s next step is to build a solid business plan for capitalizing the idea ØIf 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. ØIt can assist determining if there is a market for the product or to determine what product to develop to cater for the market. ØIt can assist in determining if the proposed pricing strategy is viable or not ØIt can assist in determining whether the proposed location is viable or not ØIt 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 Mc. Donalds 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

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