COURSE WORK ONE

Examine the need for a feasibility study?

SOLUTION
A feasibility study is an analysis of the viability of an idea.
Successful entrepreneurs are often described as tenacious, passionate, flexible, and natural risk
takers. They are creative thinkers, confident and tolerate uncertainty.  Even if an entrepreneur
possesses these characteristics, a successful business requires a feasibility study.
A business feasibility study is often ignored but acts as a vital prerequisite to building a successful
business from the scratch. It is an analysis of how viable or successful an idea can be considering its
technical, economical, legal, operational and scheduling factors. It helps the entrepreneur to identify
potential problems and answer questions like:
Should I go ahead with this idea?
Will this idea work?
Does it make sense from an economic and operational standpoint?
These and more are the likely questions raised and answered during a business feasibility study.
Feasibility study considers five separate areas in assessing a business, and they include:
• Technical Feasibility: This assessment is to determine whether the business has the technical
expertise and resources to handle the project. It also involves the evaluation of hardware,
software and other technological requirements to handle the proposed project.
• Economic Feasibility: This assessment is to determine the viability, cost and benefits
associated with a project before the financial resources are allocated. It helps the
entrepreneur to determine the proposed project’s positive economic benefit.
• Legal Feasibility: This assessment helps to determine whether the proposed project conflicts
with the legal requirements of its country of operation.
• Operational Feasibility: This assessment measures how well a proposed project solves the
problems, and takes advantage of the opportunities identified during scope definition. It
focuses on the degree to which the proposed project fits in with the existing business
environment. It analyses how a project plan satisfies the requirements identified in the
analysis phase of the project development.
• Scheduling Feasibility: This is the most important assessment for the success of a project;
after all, a project will fail if not completed on time. It is a measure of how reasonable the
project timetable is. Typically this means estimating how long a project takes to develop.
Some projects usually require the setting up of a gantt chart for easier monitoring.
Relevance of the study to an entrepreneur includes:
• It serves as a filter, screening out ideas that lack potential for building a successful business
before an entrepreneur commits the required resources for capital.
• It also assists the entrepreneur with information gathering to assess the business concept,
including legal and compliance requirements, costs and marketing.
• It helps to narrow the business alternative.
• It opens an entrepreneur’s eyes to new opportunities or ideas that could change the scope of
the project.
Is there a possibility of giving up a business plan for a feasibility report? Why ? Support your
answer?
No
Defining Both Terms
A feasibility study is done before starting a business, when you have the idea for the business but
you want to make sure it's feasible, or advisable. Put another way, is it worth your time, effort and
money to create this business? Several different professionals may contribute to the study, such as
an accountant, entrepreneurs who have opened successful businesses, and Realtors who advise on
the worth of the location and pricing, comparing similar businesses in the area.
A business plan details how the business will operate. It assumes your feasibility study has been
completed and it was determined the idea is viable. Now you're going to spell out your financial and
other objectives, the methods you plan to use to achieve them, and your proposed organizational
structure.

It's equally important to understand the difference between feasibility study and business plan. They
are not the same, and one cannot substitute for the other. Differences include:
• Purpose: Feasibility studies determine whether to go ahead with the business or with
another idea, whereas business plans are designed after the decision to go ahead has already
been made.
• Methodology: Essentially, feasibility studies are research projects, whereas business plans
are projections for the future.
• Risks: Feasibility studies determine the risks associated with the idea, whereas business
plans explain how management will deal with the risks so that it will make a profit.
• Cost: Feasibility studies can require hiring outside professionals with expertise who will
conduct thorough studies, whereas business plans are written by employees of the business,
as part of their jobs.
A feasibility study is not a business plan. The separate roles of the feasibility study and the business
plan are frequently misunderstood. The feasibility study provides an investigating function. It
addresses the question of “Is this a viable business venture?” The business plan provides a planning
function. The business plan outlines the actions needed to take the proposal from “idea” to “reality.”
The feasibility study outlines and analyzes several alternatives or methods of achieving business
success. The feasibility study helps to narrow the scope of the project to identify the best business
scenario(s). The business plan deals with only one alternative or scenario. The feasibility study
helps to narrow the scope of the project to identify and define two or three scenarios or alternatives.
The person or business conducting the feasibility study may work with the group to identify the
“best” alternative for their situation. This becomes the basis for the business plan.
The feasibility study is conducted before the business plan. A business plan is prepared only after
the business venture has been deemed to be feasible. If a proposed business venture is considered to
be feasible, a business plan is usually constructed next that provides a “roadmap” of how the
business will be created and developed. The business plan provides the “blueprint” for project
implementation. If the venture is deemed not to be feasible, efforts may be made to correct its
deficiencies, other alternatives may be explored, or the idea is dropped.

Why a Feasibility Study is Important for any Business

 
A feasibility study examines the practicability of a proposal, business venture or idea. The principal
function of this is to determine if the project will continue or not. In business, feasibility studies
work in a number of reasons.
The feasibility report will look at how a certain proposal can work in a long-term basis or endure
financial risks that may come. It is also helpful in recognizing potential cash flow. Another
important purpose is that it helps planners focus on the project and narrow down the possibilities.
Accordingly, a feasibility study can provide reasons not to pursue the said project or proposal.
When it comes to the operational aspect, the analysis determines whether the plan has the
necessary resources for it to be practicable. Truman Mox will also help you figure out whether or
not the people will support the subsequent product or service. Additionally, you can have
knowledge on the trends because a feasibility study looks at the present-day market and studies the
anticipated growth of your target business sector.
Feasibility studies are prevalent in all A financial plan is too early to be thought of at the initial
stage. After all, business is just starting. Discuss?
business industries. Whether Hotel, Hospitality, Restaurant, Real Estate, Medical, Office or
Industrial. Getting a head start on a Feasibility study from Truman Mox will ensure you save time
and money on the project.

Reasons to Do a Feasibility Study

Conducting a feasibility study is a good business practice. If you examine successful businesses,
you will find that they did not go into a new business venture without first thoroughly examining all
of the issues and assessing the probability of business success.
Below are other reasons to conduct a feasibility study.
• Gives focus to the project and outline alternatives.
• Narrows business alternatives
• Identifies new opportunities through the investigative process.
• Identifies reasons not to proceed.
• Enhances the probability of success by addressing and mitigating factors early on that could
affect the project. 
• 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.
A financial plan is too early to be thought of at the initial stage. After all, business is just starting.
Discuss?
solution