Components of a Feasibility Analysis Report

The main purpose of a feasibility analysis report is to help decide whether a given project or a business opportunity is feasible from both technical and financial perspectives. This is crucial for making well-informed business decisions.

 

A typical feasibility analysis shall be compromised of the following elements:

Project Scope

This defines the nature of the project, its objectives, the business opportunity, and how the project shall address this business opportunity.

Market Research

This is one of the most important elements of a feasibility analysis. The market research should include the following:

·         Analysis of market opportunities and identifying potential customers

·         Investigating demand trends for the products to be offered

·         Studying the competitive environment and substitutes

·         Determining product differentiation factors

·         The marketing plan, detailing how to reach for customers, retain them, pricing, and marketing positioning strategy.

Business Requirements

These are the essential requirements that are needed for the project to achieve its objectives. Business requirements include:

·         Technical Requirements: include the potential locations and space requirements for the project, facilities management, machinery and equipment, sources of supply, and systems and software.

·         Organizational requirements: include legal requirements, the manpower plan, and analysis of business processes.

The Financial Plan

This is a very important and critical component of any feasibility analysis. The purpose of the financial plan is to show how profitable the project or the business opportunity is likely to be. The financial plan shall include:

·         Startup costs: these are the costs needed for the business to be ready for starting operations. These costs include fixed assets, and information systems.

·         Funding details: including funding needs and the suggested sources of funds.

·         Operating costs: these are the ongoing costs of doing business. These costs include raw materials, sales and marketing expenses, salaries, rent and facilities, and maintenance costs. A proper cost analysis is required.

·         Revenue Projections: These are linked to the market research section.

·         Projected financial statements: these shall include financial information projected for at least three years. The main financial statements to be included are: the balance sheet and the profit and loss statement. The statement of cash flows may be included as well.

·         Financial and Investment analysis: payback period, breakeven analysis, and IRR are essential to the investment decision making process.

·         Future expansion plans: this is linked to the marketing research as well. Funding needs as well as profitability analysis is required.

 

To conclude, the feasibility analysis helps summarize the major aspects of a project or a business opportunity in a structured and organized form. Moreover, it assists project and business managers plan their business more professionally, and aids investors in their decisions.

 

By:

Hattem AlHajery

Entrepreneurship at Any Age: Doris Drucker and Visivox

Introduction

In the chapter named “Entrepreneurship at Any Age” from the book “Entrepreneurship and Innovation: Global Insights from 24 Leaders”, Doris Drucker explains how entrepreneurship is not limited to young people, and what it takes to be a successful entrepreneur. Then she moves on to describing a product she invented called “Visivox”, and how it has been developed from an idea to a final product.
This article explores the lessons learned from Mrs. Drucker’s experience, and outlines the key challenges and opportunities for improvement.

Key Learnings

Successful entrepreneurs are those who are Looking forward, opportunists with optimistic outlook, energetic, patient, and preservative, willing to take risks, able to convert ideas into salable products, and aware of the right timing to bring their ideas to life.

An entrepreneur at any age can be successful as long as he/she possesses these qualities, and in reasonably good physical and mental health.

You can always start your own venture, just do it.

Visivox is an illustration of how opportunities can be made. The market initially was not completely defined. Over time, the product developed and new markets emerged. In order for opportunities to be made, interactive learning process from customers, business partners and employees is essential.

Testing the product is essential for a successful business idea. Samples from Visivox have been built and shown to potential buyers. The lean startup methodology can be a good methodology to test whether this is the right product that satisfies customers needs.

It is essential to acquire the right resources needed to convert the idea into a product that customers need. Mrs. Drucker, during the development of Visivox, was able to secure the relevant resources needed. These mainly include human resources, and materials. A make or buy decision had to be taken, where Mrs. Drucker decided to make the product instead of outsourcing. An entrepreneur needs to decide which of the value chain activities are to be made, and which ones to be outsourced.

Every entrepreneur faces the challenge of converting the startup into a sustainable and scalable business. The initial market for Visivox (professional speakers) was not big enough for the product, market research was done in order to expand the market for the product and grow the business. A successful business idea is the one that creates/meets customer demand leading to a profitable business.

Innovation is a key success factor for entrepreneurs. Innovation involves creating a market where new customers are served. Innovation should be an integral part of the business model, starting from the identification of customer needs, and the generation of ideas that satisfy those needs, to the listing of required activities, how they are linked, and by whom shall they be performed. Visivox started as an idea that is targeted to meet existing customer needs that no other product satisfies, and making the product available and affordable to those customers.

Challenges and Improvement Opportunities

Challenges include: entry of competitors to the same market to provide products that meet the same market needs of Visivox, emergence of substitutes, new technologies may cause existing products to be obsolete.

After meeting the needs of Visivox’s customers, it is recommended to increase the profitability of the product by addressing customer segments who are willing to pay more. This can be achieved by improving the performance of product, and adding more features to the product.

Conclusion

As long as the entrepreneur possesses the right formula for success, he/she can start his/her own venture regardless of his/her age. It is never too late.

Always seek opportunities for success. If you can not find them, create them.

It is essential to test the market and learn about customer needs.

Acquiring the right resources is critical to business success.

Innovation has to be embedded in the entire business activities.

Written by:

Hattem AlHajery, CMA, CDIF.