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Feasibility Analysis

Feasibility analysis is the process of determining if a business idea is viable. It is the preliminary evaluation of a business idea, conducted for the purpose of determining whether the idea is worth pursuing. Feasibility analysis takes the guesswork (to a certain degree) out of a business launch, and provides an entrepreneur with a more secure notion that a business idea is feasible or viable.

Feasibility Analysis
It follows the opportunity recognition stage and comes before the development of a business plan. Is an assessment of the overall appeal of the product or service being proposed. The idea is that before a prospective firm rushes a product or service into development, it should be confident that the product or service is what its prospective customers want.

Feasibility Analysis
. The two components of a product/service feasibility analysis are: i. Concept testing ii. Usability testing

Concept Testing
A concept test entails showing a representation of the product or service to prospective users to gauge customer interest, desirability, and purchase intent. A concept statement is a one page description of a business that is distributed by a startup entrepreneur to people who are asked to provide feedback on the potential of the business idea.

Concept Testing
There are three primary purposes for a concept test:. 1. To evaluate the underlying premises of a product or service that an entrepreneur thinks is compelling. 2. To help develop an idea 3. To estimate the potential market share the product or service might command

Product/Service Feasibility Concept testing

a.) A description of the product or service being offered. b.) The intended target market. c.) The benefits of the product or service. d.) A description of how the product will be positioned relative to similar ones in the market. e.) A description of how the product or service will be sold and distributed. f.) Information about the founder or founders of the firm.

Usability Testing
A concept test is usually followed by the development of a prototype or model of the product or service. Usability testing Is the method by which users of a product are asked to perform certain tasks in order to measure the products easeofuse and the users perception of the experience.

Product/Service Feasibility
Usability tests are sometimes called user tests, beta tests, or field trials, depending on the circumstances involved. c. While it is tempting to rush a new product or service to market, conducting a usability test is a good investment of an entrepreneurs or firms resources.

Usability Testing - Prototype

Product/Service Feasibility Conducting a usability test typically requires the development of a prototype. A prototype is the first physical depiction of a new product, which is usually still in a rough or tentative mode. Virtual Prototype: a virtual prototype is a computergenerated 3D image of an idea. It displays an invention as a 3D model that can be viewed from all sides and rotated 360 degrees.

Industry/Market Feasibility
Feasibility Analysis In general, the most attractive industries are characterized as the following: (1) Are large and growing; (2) Are important to the customer; (3) Are fairly young rather than older and more mature; (4) Have high, rather than low, operating margins (5) Are not crowded

Industry/Market Feasibility

In addition to evaluating an industrys growth potential, a new venture will want to know more about the industry it plans to enter. This can be accomplished through both primary and secondary research

Financial Analysis
A financial plan assesses the financial implication of various strategies proposed in other sections to quantify the flow of cash & profit vis--vis investment required. All other aspects get converted into financial projections in terms of both funding requirements and income generating capacity of the venture to generate adequate return on investments.

Business - Plan
A business plan should be able to convert various numbers into the financial plans & funding needs of the venture for ones firm. Key purpose of writing a business plan is for investors to raise funds therefore they should estimate the fund requirements of the venture and the possible sources from where funds can be raised.

Sources of Funding
The broad sources of funding could be promoters equity, equity contribution from other owners, retained earnings ploughed back into the venture, subsidy & grants received and different types of loans -------- short terms as well as long terms of loan. Thus the 3 broad categories of funding could be -------------- DEBT EQUITY GRANTS & SUBSIDIES

Financial Analysis
The objective of financial analysis is to ascertain whether the proposed project will be financially viable in the sense of being able to meet the burden of servicing debt and whether the proposed project will satisfy the return expectations of those who provide the capital. While conducting a financial appraisal certain aspects has to be looked into like: - Investment outlay and cost of project - Means of financing - Projected profitability - Break- even point - Cash flows of the project - Investment worthiness judged in terms of various criteria of merit - Projected financial position

The issues involved in the assessment of technical analysis of the proposed project may be classified into those pertaining to inputs, throughputs and outputs. Input Analysis: Input analysis is mainly concerned with the identification, quantification and evaluation of project inputs, that is, machinery and materials. You have to ensure that the right kind and quality of inputs would be available at the right time and cost throughout the life of the project. You have to enter into long-term contracts with the potential suppliers; in many cases you have to cultivate your supply sources. When Macdonald entered India, they developed sustainable sources of supply of potatoes, lettuce and other ingredients for their burgers. The activities involved in developing and retaining supply sources are referred to as supply chain management.

Throughput Analysis: It refers to the production/operations that you would perform on the inputs to add value. Usually, the inputs received would undergo a process of transformation in several stages of manufacture. Where to locate the facility, what would be the sequence, what would be the layout, what would be the quality control measures, etc. are the issues that you would learn in greater details in subsequent lessons.
Output Analysis: this involves product specification in terms of physical features- colour, weight, length, breadth, height; functional features; chemical material properties; as well as standards to be complied with such as BIS, ISI, and ISO etc.


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