FINANCIAL FEASIBILITY STUDY

Market Health

The internal and external market conditions are studied in this phase. The prevailing and future market conditions are analyzed, the dominant players are identified, and their strengths and weaknesses are determined to bridge the gap. The product/service being introduced is compared to the existing products/services, distinguishing features that create an edge over the existing products is understood and whether it solves any ‘need’ of the market is analyzed. The receptiveness of target customers is studied, delivery channels are identified and value propositions to the customers are determined in 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
   II.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

The start-up costs, operating costs, financing methods, and Profitability are analyzed in this step. The legal costs, capital acquiring costs, and fixed and variable costs are calculated at this stage. The mode of raising funds, through loans, from investors or other ways is determined, by understanding the implications and costs related to the financing options. The projected income and expected Return on Income are also ascertained. The supplier and customer terms of payment are also determined, to ensure healthy cash flow. The general contents of every financial feasibility will have 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

The resources necessary for the business are analyzed in this step. The hardware / Software requirements, source and availability of Capital assets, and whether an expansion or change in line can be accommodated with the capital being invested are some of the aspects to be determined regarding facilities and equipment. Manpower requirements, the technical knowledge they should possess, training that should be provided, and the competency and experience of managers are the 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

The time frame to set up the business is decided in this stage. Though market analysis takes time, a viable business plan must be executed within a set time frame as the market is very dynamic. The business plan should be turned into reality within the stipulated time to ensure that the company’s goals and objectives are met.

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 provide 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 offer 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?