1

Feasibility Study of Elegant Edge Inc.

A feasibility study is the evaluation of potentiality of project idea within its limitation in the practical way or
checking the viability of the business idea in the real world situation. Feasibility study includes product or
service feasibility, industry or target market feasibility, organizational feasibility and financial feasibility.
1. Service Feasibility

A feasibility study is an analysis of how successfully a project can be completed, accounting for factors that
affect it such as economic, technological, legal and scheduling factors. Project managers use feasibility studies
to determine potential positive and negative outcomes of a project before investing a considerable amount of
time and money into it.
A. Service Desirability

Product or service desirability is the attractiveness and utility of the product or service the firm intends to
provide. It confirms that the proposed product or service is desirable and serves a need in the marketplace. It
can be assessed by analyzing and determining product or service idea, intended target market, benefits of the
product or service, and company’s position in the marketplace.
I. Description of Service
This section provides the ideas about the services that Elegant Edge Inc. is offering to its valuable customer.
Elegant Edge Inc. is a decorating and catering business. It is related with providing services. It is supposed to
be a very viable business these days considering the propensity of the general public to celebrate and adorn
their celebrations competitively to be at par with others.
This business is proposed to be located at a commercial locality or an area where considerable number of
event are organized. Services include catering of food and services to events and functions such as weddings,
birthdays, corporate events, etc. and Decoration of event sites. Decoration of event site includes adding every
minimum detailing in the decoration from managing lights and decoration of the tables to the decoration of
stages. The decoration would be according to the choice of the customers. 2
And catering service includes all the food items like brunch, dinner, buffets, and cocktails according to the
nature of event or as per the customer needs. All decoration equipment as well as catering equipment will be
owned by the business.
There will be around 144 events per year.
(A minimum order of 100 is required to place an order and the order should be placed 3 days before the events
as our staffs need time for preparation.)
Food Products Main course Dessert
Description Appetizer
Tareko Farshi Mooli Chicken Dahi
Deep fried slices of Tender pieces of chicken Sweet Yogurt
corvettes coated with gram with white radish prepared Carrot pudding
flour, herbs and spices in spiced tomato sauce Milk balls
Tareko Aloo Bhuteko Lamb
Potato cake with fenugreek Fairly spiced lamb fried
and ginger; deep fried with onion and capsicum
Served with mint and Naram Lamb
tamarind sauce Tender pieces of lamb
Momo Steam prepared in a mild tomato
cooked chicken dumplings and dry fruit sauce
Mini fish stick Daal
Soup Lentil cooked and flavored
Cream of with spices, tomatoes,
mushroom/chicken onion, ginger and garlic
Aloo Kauli
Cauliflower and potatoes
cooked in onion and tomato
sauce
Mish Mash
Seasonal vegetables cooked
in tomato and cream
Steam Rice
Rice cooked with bay leaf,
cardamom in saffron flavor
Nepali Bread
A classic naan bread

Beverages will include a variety of fruit juices, sparkling water, soda, soft and hard drinks.
Decoration Products
 Bright and cherry flowers
 Giant balloons
 Monogramed cocktail napkins
 Chair covers
 Table cloth (bows, ribbons)
 Center piece
 Forks, knives, plates , cups

II. The Intended Target Market

Nepal is a country where numerous festivals and ceremonies are held in the form of important events. So, now
a day decorating and catering services has grown much in demand. Many people have need of this service for
various reasons. Earlier, decorating and catering services were limited to weddings only but now as the events
are increasing, the need for this service is also increasing.
The proposed target markets for this business are the upper and middle income groups of Kathmandu valley.
The main reason for selecting these groups is that the population of these groups is usually more interested in
spending a considerable amount of money to make their events more attractive. The target customers for said
business would be corporate and individual clients, event management companies, Marriage halls and lawns.
The recommended areas for the purposed business will be cities like sundhara, kamaladi, kapan, kalimati,
chabahil, etc.
III. Benefits of the Service
One must invest a good amount of time and research properly to find out one of the best decorating and
catering service. There are a number of businesses providing this service in the town but not all of them
promise to serve the best quality food. With the growing demand for services many new caterers have entered
the market.
Benefits For customers are
 Commitment to quality
 Fair pricing

 Consistent service delivery

 Proximity to marriage halls, lawns etc.
Benefits For business are
 Work Experience and Project Management Skills
 Industry Connections
 Marketing & Branding
 Increases creativity

IV. Company’s Position

Elegant Edge Inc. is coming into the catering and decorating industry knowing completely well that there are
other competent and well established decorating and catering companies in Kathmandu valley. In view of
above stated facts, we have decided to offer a wide range of decorating and catering services that will meet the
needs of a wide range of clientele base. When our clients sign just one contract with us, we will deliver nearly
all they would need to make their events a memorable one.
What separates our business from others is the ability to offer flexibility, attractiveness and quality service to
make the event special. Generally Decoration and catering in Kathmandu valley is done through phone and
fax. However, we offer online ordering services. We have a website that includes its complete contact and
information and the customer will get to pick their own menu as well as customized decorations. We
specialize in developing excellent relationship with our clients. We believe that this nature, combined with
comparatively price, fresh and high quality service sets Elegant Edge Inc. apart from other catering and
decorating service of Kathmandu valley.
B. Service Demand
Service demand determines if there is demand for the service. There are two techniques for determination.
I. Buying Intention Survey

Nowadays decorating and catering service is the “IT” trend in Nepal. Numerous important events are held as a
result the demand for this service is increasing. Before family members usually took care of different
arrangement during a social gathering or in an event. This trend is fast being replaced by the people’s interest
in hiring catering

services. This often results in better arrangements and opportunity for everyone in family to enjoy the
function.
A survey was conducted to know the customer interest in decorating and catering service. The outcome of
survey was people were really interested in receiving these kinds of services; and those who were familiar
with this business, they were satisfied with this kind of service. According to the survey, this kind of business
has possibilities of expansion. As many people have busy life schedule, it’s hard for them to plan an event.
However, this kind of business makes it possible to organize a beautiful and memorable event without having
to spend more time. Thus, this kind of service providing business has possibility of expansion and sustaining
in market. This kind of business attracts a large number of customers as people of today have a cause to
celebrate for every occasion which did not exist before. It saves valuable time of customers along with high
quality service and management so that our clients don’t have to worry about anything going wrong in the
event and can fully enjoy the moment.
II. Library, Internet and Research
While determining the demand for the service, administrating buying intention is important as well as more
data is needed. The second way to assess demand for products or service idea is by conducting Library,
internet and research. Library, internet and research are important to continually asses the strength of service
ideas and learn from users. We used reports and articles from library to know and understand the structure of
feasibility study, know on what kind of topics we can do feasibility study and to know the process of
conducting this study. After finding out the topic on which we want to do feasibility study, we used internet to
gather information about decorating and catering businesses. We gathered information from different sites. We
have been to different events. From attending those events, we knew about the management and the service
provided by this kind of business.

2. Industry/Target Market Feasibility

Decorating and catering are service providing business. Decorating and Catering is a business that provides
food service and decoration service to an event or location. These services are often sold on a per-person
basis. It usually include rental arrival time, staff arrival time, bar open and close time, meal time and rental
pick up. There are many factors that can affect the price of catering and decorating such as menu choices,
furniture or supply rentals, labor and service charges. Before people used to plan themselves and make food
and decorate any event themselves. Because of which they wouldn’t fully enjoy the moment with their friends
and family. But now, as these kinds of services are increasing they are finally able to enjoy the special
moment with their friends and families. Before catering and decoration was just limited to wedding reception.
In today’s time catering and decoration is not only limited to wedding reception. There is more than that.
Nowadays peoples use catering and decorating services for many different purpose from wedding reception to
business events; organizing charity events; collages functions. Due to this market potentiality of decorating
and catering is increasing.
In context of our country, previous family members use to take care of different arrangements in planning
events, more than that only wedding ceremony were the topic of big fest and decoration but time has changed.
Now we are on trend of following westerners and we call for celebration on every small occasion. We
organize events for all short of occasions from baby showers, collage functions, birthday party, mehndi,
sangeet, bartamanda, graduations, anniversary, which was not a thing in past. This led for increasing demand
of decoration and catering in our country. More than other part of Nepal, Kathmandu valley has more demand
for it. People living here have considerable amount of money to spend and they have a thing for luxurious
events and they are likely to make those events attractive. Not only have they celebrated because they want to
but also to be par with others. Thus, due to these all reasons catering and decorating business demand is likely
to increase more in coming future. In Kathmandu valley, as we organize many events and ceremonies, this
kind of service business has future. There are many individuals as well as group doing this short of business.
So, the Level of completion is comparatively high and is likely to increase even higher in coming time. To
stay in this service business, one must be able to provide quality service and management (in both food as
well as decoration), on timely delivery than its competitors. One must understand what kind of service that
our client exactly wants. For example: what theme they want for their events, what short of foods suits the
event.
A. Industry Attractiveness
I. Young and New rather Than Old: This type of business is a new business. It has just come into existence.
This sort of business is new and young and has more way to go. Many opportunities to pick up the trend and
style.
II. Early rather Than Late in Their Life Cycle: The general catering and decoration industry is in its early
phase of lifecycle rather than late. The recent trend of having gathering functions and celebration are new in
our society. Therefore, there’s a lot to develop in this industry and a lot more to see in coming future
especially the western style will be followed. E.g.: weekend party celebration.
III. Fragmented Rather Than Concentrated: The industry is not concentrated because there will always be
a new thing or two to look forward to in different assignment. The decorations and the menu will be different
according to the kind of celebration. For e.g.: you will expect to see a lot of bright colors in a baby shower
while flowers are the main item of decoration for weddings.
IV. Growing Rather Than Sinking: These businesses are growing rather than sinking. It is a new business
coming into existence. It has many clients and its clients are increasing day by day. The change in culture and
modernization is getting the business just started.
V. High Rather than Low Operating Margin: If we are to see the recent trend, people spend much more
money for showing off while celebrating. Therefore, the rate of the industry has been higher than the cost. The
margin is much higher as in any luxury product.

B. Target Market Attractiveness

As it is the growing trend in Nepal, customers are well aware of this service business. This service is used in
every occasion. Time has changed very much from what it used to be like in organizing any events. Now in
busy life schedule people prefer to use this kind of services rather than planning everything themselves.
People use these services in every occasion from celebrating birthdays to anniversary and organizing business
events and planning collage functions. Customers flow in this sector is also increasing. So, Competition in this
sector is high in Kathmandu valley.
3. Organizational Feasibility

It refers to how well a proposed information system supports the objectives of an organization's strategic plan
for information systems. It is done to assess management expertise and organizational competence.
a. Proposed Location

The recommended area for the proposed catering and decorating service will be in a medium income locality
(e.g. chahabil, newroad, etc.). The main reason for such a location is the presence of target market and
customer traffic which are the prerequisites for the success of the business; plus the presence of marriage halls
also make up for the increased customer traffic.
b. Communication Pattern/ System
It refers to the process of communicating system between and among the employees in an organization.
Horizontal method of communication is used between the departmental heads and vertical method of
communication is used to communicate the information between owners and lower level employees.
c. Organizational Structure

On the top of the hierarchy, Owner supervises and controls the whole business. Below the hierarchy, there are
Human resource Manager, Financial Manager and Service Manager who are responsible for maintaining the
value and meaning of the brand, and responsible for accumulating all the requirements for smooth operation.

9
Owner
Human Resource Manager
Recruitment And
Selection Of
Employees
Financial
Manager
Acquisition And
Investment Of
Financial
Resources
Service Manager
Administration
Function Of The
Duties and
Responsibilitie
s
To clarify more about the functions, the following duties and responsibilities are assigned.
Owners
An owner is the one who has all of the responsibilities of maintaining and running the business. An
owner is sometimes also the manager. They perform following duties and responsibilities:
• Overseeing, ordering and tracking all the food, supplies, equipment and other inventories needed.
• Maintaining the building and equipment (inside and outside), the parking lot and any other property
of the business.
• Plans menus by consulting with chefs; estimates food costs and profits; adjusts menus.
• Controls costs by reviewing portion control and quantities of preparation; minimizing waste; ensuring
high quality of preparation.
• Hiring, training, directing, scheduling and dismissing employees.

Avoids legal challenges by conforming to the regulations of the alcoholic beverage commission
Human Resource Manager
HR managers can perform a variety of tasks in fulfilling their main responsibility, which is leading an
organization’s HR programs and policies. They perform following task and duties:
 Accomplishing catering and decorating human resource objectives by recruiting, selecting,
orienting, training, assigning, scheduling, coaching, counseling, and disciplining employees;
communicating job expectation; planning, monitoring, appraising, and reviewing job contributions;
planning and reviewing compensation actions; enforcing policies and procedures.
 Promoting healthy relationship between staff and management through mediation, handling labor
disputes and guiding department managers through employee issues.
 Conducting employee training and orientation programs.
 Achieving Elegant Edge Inc. operational objectives by conducting information and
recommendations to strategic plans and reviews; preparing and completing action plans; implementing
production, productivity, quality, and customer-service standards; resolving problems; completing
audits; identifying trends; determining system improvements; implementing change.

Service Manager
The role of a service manager is largely clerical. They perform following duties and responsibilities:
•Responsible for overseeing all administrative functions in the Elegant Edge Inc.
•Assisting a manager to manage efficiently
•Ensuring administrative efficiency, proper procedure, implementation of policies and employee
morale.
•Leading and directing employees.
•Delegating administrative tasks, such as accounting, paperwork and payroll, while giving manager the
freedom to deal with other issues.

Finance Manager
Financial managers perform data analysis and advise senior managers on profit-maximizing ideas.
Financial managers typically:
 Prepare financial statements, business activity reports, and forecasts,
•Monitor financial details to ensure that legal requirements are met,
•Supervise employees who do financial reporting and budgeting,
•Review company financial reports and seek ways to reduce costs,
•Analyze market trends to find opportunities for expansion or for acquiring other companies,
•Help management make financial decisions.
d. Management Style

It is the process of managing the work and activities of the organization. Generally participatory
approach is used in this organization and each and every level of employees contributes their ideas and
participate in decision making process of an organization. It provides equal opportunity to all the
employees related to the organization.
e. Bio Data

It is a document which contains all factual information about an individual, including personal facts such as
date of birth, father's name, gender, marital status, height, complexion, etc. It is information regarding an
individual's education and work history, especially in the context of a selection process. The required
resume of the owner and managers are given below.

f. Resource Sufficiency
Availability of resources is of great importance to the efficient performance of the organization. An
organization cannot succeed to attain its objective in the absence of available resources. The important
resource consists of Manpower, Machinery, Investment, Building structure, and information which are
briefly explained below:
• Manpower: Higher level and Lower level manpower are used
• Machinery: Advanced machinery are used
• Building Structure: Two storey building with 6 rooms

4. Financial Feasibility

A financial feasibility study is an assessment of the financial aspects of something. For starting and
running a business; it considers many things including start-up capital, expenses, revenues, and
investor income and disbursements. It is a final component of a comprehensive feasibility study.
This section defines about the overall financial attractiveness of the venture. It also has the sections that
show the income and expenditure details, the balance sheet, cash flow analysis and the required ratio
analysis.
Basis and Presumptions
i. Project will work on single shift of 8 hrs. Working per day and 300 working days in a year with 80%
efficiency.
ii. Time period for achieving full 3 months capacity utilization.
iii. Labour wages Based on local Market conditions.
iv. Interest for fixed & working capital 14% on an average.
v. Margin money 25% on an average of project cost.
vi. Operative period of the project 10 years.
vii. Land cost and construction cost Rented Shed.
viii. Cost of Machinery & equipment Prevailing cost of market.
ix. Tax is assumed to be 34%.

A. Total Start-up Cost

a. Labour Cost
Particulars Rates (in rupees) No. of employees Total cost (in
rupees)
Managerial level 30,000 3 90,000
Waiter 4,000 15 60,000
Cleaners 2,000 5 10,000
Cooks 5,000 3 15,000
Decorator 3,000 5 15,000
Bar tender 4,000 2 8,000
Total cost 33 1,98,000

Perquisites @ 15% of salary Rs.29, 700

Total cost: Rs. 2, 27,700

b. Raw Materials and Particulars Amount (in rupees)

Utilities S.N
1. Various raw materials (food Rs. 50,000
items)
2. Various raw materials Rs. 15,000
(decorative items)
3. Gas Rs. 5,000
4. Power Rs. 5,000
5. Water Rs. 5,000
Total cost Rs. 75,000
Assuming the total numbers of events will be 12 in a month, the total variable raw materials and utility
cost will be Rs. 900,000.

c. Other Contingent Particulars Amount (in Rs.)

Expenses S.N
1. Rent Rs. 20,000
2. Stationery and Rs. 5,000
consumables stores
3. Transportation Rs. 10,000
4. Telephone Rs. 2,000
5. Advertisement/publicity Rs. 5,000
6. Insurance, taxes and Rs. 1,500
miscellaneous expenses
Total Cost Rs. 39,000

Total recurring expenditures (per month) Rs. 11, 66,700

d. Cost of Fixed capital

Land & Building: Rented at Rs. 60,000/- per month.
Vehicles: Rs. 10, 00,000
Machinery and Equipment
a. Machinery and Equipment
S.N Description Quality Price (in
rupees)
1. Decorative Large scale 3,00,000
Equipment
2. Cutlery/ Large scale 60,000
Equipment
Total 3,60,000

b. Electrification and installation Rs. 20,000

c. Cost of tools and other fixtures Rs. 50,000
d. Cost of office equipment, Rs.17,000
working tables ,etc.
e. Pre-operative expenses Rs. 10,000
f. Cost of power connection Rs. 3,000
Total Fixed Capital Rs. 4,60,000
g. Total Capital Investment
Fixed capital Rs. 4,60,000
Working capital (2 months) Rs. 6,83,400

f. Cost of Operation (per Particulars Amount (in Rs.)

annum) S.N
1. Total recurring cost per 4,100,400
year
2. Depreciation on machinery 36,000
and equipment @10%
3. Depreciation on office 3,400
equipment and furniture
@20%cc
4. Interest on total investment 1,60,076
@14%
Total cost 4,299,876

Turnover (per annum)

144 events × 100 persons/event × Rs. Rs. 18,000,000
1200/person
Cost per person is 𝑅𝑠.1166700𝑅𝑠.1200 ⁄=Rs. 972.25
After charging profit, the cost per person is Rs. 1200.
Total Cost
The total cost of 12 events is Rs. 11, 66,700.
So, the cost of a single event is Rs. 97225.
The total cost of 12 events in a year is Rs. 14,000,400 (12×12×97225).
Net Profit=Turnover- Total Cost
=Rs.18, 000,000-Rs.14, 000,400
=Rs. 3,999,600
Net Profit Ratio
=net profit per yearturnover per year ×100 =3,999,60018,000,000×100=22.22%

B. Overall Financial Attractiveness

The overall financial attractiveness can be determined through income statement, balance sheet, cash
flow analysis, ratio analysis, and CVP analysis.
I. Cost-Volume-Profit (CVP) Analysis

CVP analysis is used to determine how changes in costs and volume affect a company’s operating
income and net income. The CVP analysis of Elegant Edge Inc. is as follows.
Break-even Point Fixed cost (per Amount (Rs.)
annum)
Rent 7,20,000
Total depreciation 139,400
Total interest 1,40,000
Insurances, taxes, etc. 18,000
40% of salary and wages 1,092,960
40% of other contingent expenses 84,000
(excluding rent and insurances)

Total Rs. 21, 94,360

B.E.P
= 𝑓𝑖𝑥𝑒𝑑 𝑐𝑜𝑠𝑡𝑓𝑖𝑥𝑒𝑑 𝑐𝑜𝑠𝑡+𝑝𝑟𝑜𝑓𝑖𝑡×100
=21943602194360+3,999,600×100
=35.43%

II. Income Statement

Income statement is the summary of revenue and expenses of the firm during specific period. By
adjusting revenue and expenses, the net profit is computed. The estimated income statement of this
company is as follows.

Income Statement of
For the year ending December 2019

Particulars Amount
Sales 18,000,000
Less: Cost of Goods Sold 10,800,000
Gross Profit 7,200,000
Variable expenses
Salaries 2,376,000
Raw materials 9,00,000
Stationary 60,000
Transportation 1,20,000
Advertisement 60,000
Telephone 24,000
Total Variable Cost 3,540,000
Fixed expenses
Depreciation 1,39,400
Rent 7,20,000
Insurance, interest, taxes 18,000
Total Fixed Cost 8,77,400
Total Operating Cost 4,417,400
EBIT 2,782,600
Less: Interest 1,40,000
EBT 2,642,600
Less: Tax (30%) 7,92,780
EAT 1,849,820

III. Balance Sheet

The balance sheet is a financial statement that shows resources owned and owed by the firm at a
specific point of time. This statement balances the firm’s assets (what is owns) against its financing
(what is owes). The balance sheet of Elegant Edge Inc. is as follows.

Balance Sheet of SSheheuh

As of December 2019

Liabilities Amount(Rs.) Assets Amount(Rs.)

Capital 2,000,000 Fixed Assets
Retained Earning 1,849,820 Machinery And 3,60,000
Equipment
Tools And Fixtures 50,000
Office Equipment 17,000
Vehicles 1,000,000
Short term 1,000,000 Current Assets: 3,439,000
Borrowing 5,50,000 Cash and Bank 1,000,000
Account Payable 1,39,400 Balance
Accumulated 3,26,780 Inventory
Depreciation
Provision
Total Liabilities 5,866,000 Total Assets 5,866,000

IV. Cash Flow Statement

Cash flow is the movement of cash in and out of the firm during a period. Cash flows like operating
cash flow, cash flow from investing activities, and cash flow from financing activities are observed to
find out the final cash balance. The cash flow statement of Elegant Edge Inc. is as follows.

Cash Flow Statement of SHJHJ

For the year ended DEc

Particulars Amount (Rs.)

A. Cash flow from operating activities :
I. Cash paid from debtors and sales
Sales 18,000,000
II. Cash payment made to suppliers
Cost of goods sold -10,800,000
Account Payable 5,50,000
Inventory -1,000,000
Iii. Cash payment from operating expenses
Salaries -2,376,000
Rent paid -7,20,000
Advertising expenses -60,000
Insurance -15,000
IV. Interest paid -1,40,000
Cash from operating activities 3,439,000
(I+II+III+IV)
B. Cash from investing activities
Machinery and equipment -3,60,000
Office equipment -17,000
Tools and fixtures -50,000
Vehicles -1,000,000
Total -1427000
C. Cash from financing activities
Short term Borrowing 1,000,000
Net change in cash flow (A-B-C) 3,439,000

V. Ratio Analysis
Ratio analysis is the quantitative relationship between two or more sets of financial data derived from
financial statements. They provide information regarding strengths and weaknesses on various aspects
of the firm’s performance and status. The ratio analysis of Elegant Edge Inc. is as follows.
a. Current Ratio

Current ratio is the quantitative relationship between current assets and current liabilities. It measures
the ability of the firm to meet obligations due within one year.
Current ratio=Current assetsCurrent Liabilities=44390001550000=2.86
The current ratio of 2.86 means that for every rupee of current liabilities, there is Rs. 2.86 worth of
current assets.
b. Quick Ratio

Quick ratio is another measure of short-term solvency of the firm. It is the quantitative relationship
between quick assets and current liabilities.
Quick ratio=Quick assetsCurrent Liabilities=34390001550000=2.21
The quick ratio of 2.21 means for every rupee of current liabilities, there is Rs. 2.21 of quick assets.
c. Debt-Asset Ratio

The debt-asset ratio or debt ratio shows the proportion of total debts used in financing total asset of a
firm.
Debt ratio=Total debtTotal assets=15500005866000=0.26
Debt ratio of 0.26 indicates that 26% of total debts is used in financing total assets of the firm.

d. Inventory Turnover Ratio

Inventory turnover ratio (ITOR) measures how a firm’s average investment in inventory is capable of
generating sales.
ITOR=Cost of goods soldAverage inventory=10,800,0001000000÷2=21.6 times
The inventory turnover of 21.6 times indicates that the firm is turning over its inventory into sales 21.6
times in a year or in each 17 days (360 days ÷ 21.6).
e. Total Assets Turnover Ratio

It is the measure of the firm’s ability to make effective utilization of its total investment in assets in
terms of generating sales revenue.
TATR=SalesTotal assets=18,000,0005866000=3.06 times
The TATR of 3.06 times means our company generates Re. 3.06 with every Re. 1 invested in assets.

5. CONCLUSION
Based on the research and study that we conducted, we therefore conclude that our business is feasible
and viable in the market. The study shows positive result for its operation. The analysis of service
feasibility, industry and market feasibility, organizational feasibility and financial feasibility support
the operation of catering and decorating business in the desired location. Furthermore, it helps to
prepare business plan to use the concept in practical way.