Scribd
Upload
70 views4 pages

GST301: Human and Financial Resources Planning in Entrepreneurship

This document discusses feasibility and viability studies, which are important for assessing the practicality and sustainability of new business ventures. A feasibility study determines if a business is practical, while a viability study looks at a business's ability to survive long-term. The key components of a feasibility study include analyzing the financial, production, marketing, legal, and technical feasibility. A completed feasibility report aids business planning, provides an evaluation of risks and productivity, and helps secure financing.

Uploaded by

Tenlo Wonder Tope
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
70 views4 pages

GST301: Human and Financial Resources Planning in Entrepreneurship

This document discusses feasibility and viability studies, which are important for assessing the practicality and sustainability of new business ventures. A feasibility study determines if a business is practical, while a viability study looks at a business's ability to survive long-term. The key components of a feasibility study include analyzing the financial, production, marketing, legal, and technical feasibility. A completed feasibility report aids business planning, provides an evaluation of risks and productivity, and helps secure financing.

Uploaded by

Tenlo Wonder Tope
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 4

GST301: Human and Financial Resources Planning in

Entrepreneurship
Lecture Two: (d) of the Course Outline

d. Feasibility and Viability Studies

Introduction
The decision to start a business is an important and critical one. In taking this decision, is
recommended to assess how feasible is the business. Critical issues bothering on
financial, human and material resources required to start and sustain the business are
assessed at the course of this study. Another vital aspect of starting any business is
business planning. Unfortunately, it is an area where many potential entrepreneurs fall
short of.

In order to give small business a chance to succeed, there is need to know where the
business is going and how it will get there. This is where the business plan comes in. In
addition, it is important that legal issues relating to start up are considered because
businesses operate within confines of the Law.

A viability study is an in-depth study that tries to determine the ability of the venture to
live, grow, develop, survive and be sustained. The difference between a feasibility study
and a viability study is that the feasibility studies confirm that the business is practicable
while viability is looking at the ability of the business to survive and be sustained.

Feasibility Analysis of New Venture


This is the process of checking out the workability and profitability of the proposed
business. Essentially it aims at providing answers to the questions in the following key
areas:
Feasibility Analysis Structure
Requirement Questions

Financial Requirement  How will the finance be sourced?

1
 How will the finance be repaid?

Production Requirement  Can the proposed product or service be acquired or


manufactured?
 If the product is to be manufactured, what technology is
required and is it possible?
 What scale of operation will be necessary to remain in
business?
 What assets will be required?

Financial Returns of the  What is the estimated profit or loss?


proposed business  What is the nature of the cash flow?

Marketing Strategy  Is there a market for the proposed product or service?


 How large is the market?
 How much of the market will the proposed business
control?

Legal and Regulatory  What are these requirements?


Requirement  Is the product/service legally feasible?

Aruwa (2006).

Uses of Feasibility Study


i. Serves as a blueprint and an implantation guide.
ii. A requirement for credit facility.
iii. Ascertains the expected business risks, hazards and ways of handling them.
iv. Gives picture of capital requirements, operating cost of project and project supplies.
v. Identifies potential sources of finance and terms of repayment.
vi. Prescribes both material and personnel requirements.

Feasibility Report

After identifying an investment opportunity, it is necessary to determine whether the idea


is practicable and profitable. Among the question the entrepreneur needs to ask when
making feasibility studies are: will it be practicable? Will it be feasible? Will it be viable?
Does the market exist for product? What is the nature of competition in the market? Will
the technology needed be available locally or be imported? What would be the profitable
market share? What is the financial requirement for the project? Can I provide the

2
capital? What market strategy can I adopt? What are the sources of funds? What
personnel will be required? What would be the production process? Etc.

Feasibility studies is an investigation into the potential outcome of a project. Oshagbemi


(1983) identifies four main functions of feasibility report:
1. It aids in business planning
2. It gives an evaluation of new business ventures to determine the feasibility and
productivity.
3. It provides the basis for a banker, promoter and supplier of goods to decide for or
against extending their services to the enterprise.
4. It is used to raise fund from the bank (when required and where necessary).

Components of Feasibility Report


1. Market feasibility
2. Economic feasibility
3. Technological feasibility
4. Financial feasibility
5. Social feasibility
6. Legal feasibility

Market Feasibility: This involve market analysis with the purpose of determining if
there is a market for the product or services either now or in the foreseeable future as well
as providing information that will help in formulating appropriate marketing strategies.

Economic Feasibility: This has to do with other economic assessment other than the
market. This includes the examination of economic trend (nature of the economy, interest
rate inflation rate, exchange rate, etc.) as they create opportunities which can be satisfied
by the products or services.

Technological Or Technical Feasibility: This aspect of the feasibility report will


contain such information as listed below: Proposed technology, manpower requirement,
production process, raw materials, machinery, utilities, quality control, waste
management and environmental impact, project location etc.

Financial Feasibility: This forms the major framework or the feasibility report on which
other aspect actually rely on. It looks at the cost implication of the business and so it look
at such items as capital expenditure, working capital requirement, cash flow analysis
sensibility analysis, projected revenue and expenses.

Social Feasibility: This is the social aspect of the report. It is here that we prove that the
business project is socially worth it, i.e. justifying the business socially, by checking
3
impact on job creation, impact on social value, health implication, etc. Note that an
economically feasible project may create social problem.

Legal Feasibility: This aspect covers such issues as the legal framework or requirement
as well as ethical and social responsibility issues of the business as a going concern.

Preparation of Feasibility Report


After gathering and analyzing all relevant information pertaining to a project, there is the
need to arrange all information into descriptive materials for easy reading, understanding
and reference. The report it made of two parts: Executive summary; and the Main body.

The Executive Summary

The executive summary contains:


1. Project sponsor
2. Location and sitting
3. Nature of the project
4. Business goal
5. The market and marketing
6. Total cost of the project
7. Financial plan
8. Security for loans and overdrafts
9. Earning profitability and cash flow situation.
10. Management expertise
11. Commissioning date
12. Implementation schedule

Main Body:
1. Introduction
2. The promoters
3. The product/services
4. The production process
5. Location and sitting
6. Infrastructural facilities-power, water, road, telephone, etc.
7. Market environmental analysis
8. Management plan
9. Financial data
10. Plan implementation
11. Conclusion.

You might also like

pFad - Phonifier reborn

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.


Alternative Proxies:

Alternative Proxy

pFad Proxy

pFad v3 Proxy

pFad v4 Proxy