A feasibility analysis report for a start up business can be a simple or complex exercise, depending on the type of business. The best approach is to first determine what the entrepreneur requires it for and what interests him/her. Then, set the criteria that need to be fulfilled in order to justify the start up business or convince decision makers who have to approve whatever for the business. The structure/contents template of a feasibility analysis report is neither rigid nor limited, and depends only on the needs, type and organization that require it.
The template set out below is therefore a general model that could satisfy most businesses. This report template is comprehensive so some items may not be relevant to the needs of some businesses while some specific requirements may be added. However, in writing a business feasibility report the write up should be creatively kept simple, clear and concise, straight to the facts and figures, evidences laden and stylishly assertive.
ii.i. Template and Structure for a Feasibility Analysis Report ii.i.i. Proposing Entrepreneurs’ Profile:
a.) Team Members Names:
b.) e-mail addresses:
c.) GSM Telephone Members:
d.) Positions of Team members in the Business:
e.) Postal and Residential Addresses:
f.) Educational Qualifications:
ii.i.ii. Business Name: This indicates the type of registration, whether a sole proprietorship, partnership, corporation or limited liability venture. Please note that a public limited liability company carries the “Plc” after the name or the “Ltd” when proposed as a private limited company.
ii.i.iii. Business Location Headquarters and Branches: A good description of the possible headquarters location of the company, its branches and facilities including offices and manufacturing plant. The report needs to specify the required size of the location, its adequacy and the costs to be involved in acquiring, constructing or renovating buildings and required utilities that will suit their operations. The proposed location should have adequate access to infrastructure and services like highways, railway, airport and other utilities in relation to customers.
ii.i.iv. Background History of the Business: This refers to the business overview and should briefly describe the proposed business. It should be specifically spelt out how it shall be organized and a proposed aspiration of the venture to be a small company forever or to be developed into an international standard later.
ii.i.v. Business Objective: This is always as conceived by the business team. It describes the main concept and the essence of the business. The main objectives usually put forward by most entrepreneurs are the generation of income, provision of jobs for the youth, improving the economic status of the business location and setting new standards or products in the business environment. Along with their own views, the feasibility report should consider the products and services being offered to highlight the essence. It is only when a business is able to produce products and services, distribute them to the market environment and still make return a profit to its investors that it can be described as economically feasible.
ii.i.vi. Required Technical skills: This section assesses the technical and professional readiness of the business. A business can only be considered technically and operationally feasible if it has the necessary expertise, infrastructure and capital to develop, install, operate and maintain the proposed venture, and be able to deliver the proposed goods or services at a profit.
ii.i.vii. Proposed financial Contributions (Capitalization): A start up business requires a lot of fund to provide sufficient access to resources. Most businesses die prematurely for the primary reason of under-capitalization. Financial provisions from all proposed sources of funding the business must be ensured to keep the business running from startup until it starts to make profits and breakeven.
ii.i.viii. Management and its Strategy: This section should spell out the organizational structure appropriate for the business and decide whether management would run the business by direct labour, contract, consultancy, etc. There is the need to specify the management team’s needed experience to identify the required staff positions that must be filled. The management team’s key skills and areas of expertise for executing this plan should be critically scrutinized to determine their competences. If there is any need to advise an additional key skill area of expertise; don’t hesitate to do so. Likewise, stipulate the qualifications needed to supervise operations and how easy or otherwise it could be to find potential qualified and experienced staff in their environment. It is also imperative to detail what it will cost to acquire and retain such staff on the job. Lastly, the management should be made aware of the significance of distribution and delivery contracts to the business growth.
ii.i.ix. Sources of finance at Start up: The report is supposed to give details of capital fund required and to enumerate the various sources of raising capital to sustain the business for the first one year. It should identify the short, medium and long term sources of funding. This could be from personal savings, contributions from other owners including shareholders, donations, bank loans and other loans, existing operations in the first year, etc.
ii.i.x.Production and operational requirements: Operations must define the production and other operational processes necessary to deliver the products and services from pre-production level to the market environment. These include manufacturing, consulting, logistics, after-sales service, travel and transportations, printing, etc. This section delineates how to run the business and deliver the products and services to the market.
A vital aspect of operations which the report must emphasize is the production line. The required technological equipment and human resources for the business, its purchase set up and running costs for profitability must be determined. The production process should be clarified whether it is full automation, semi-automation, mechanical or manual operation. Expectedly, most of the working employees, expenses and time will be used up on production and operational challenges.
ii.i.xi. Market Potential Assessment and Strategy: This is essentially all about distribution and sales strategy. Product or service businesses are considered feasible based only on evidences that it has sufficient market demand. This means that it must have enough customers to purchase a sufficient quantity of products or services in the target location and provide the strong potential that the product or service will return pleasant profit figures. Please note in the report that it is much easier entering a market where demand exceeds supply. In such an environment, customers will buy the product or services without much effort from the business.
The report has to decide the distribution channel whether the marketing strategy ought to adopt the cash-and-carry, direct sales, credit sales, wholesale outlet, commission agents or middlemen structure or the combination of the arrangements. The growth characteristics and the key drivers of the market, existing and potential competitors should be identified with the aim to suggest how they could be outwitted. The essence of this section is for all interested stakeholders and decision makers to understand the developments, opportunities and challenges obtainable in the business market and its environment.
ii.i.xii. Financial Assessments and Projections: The main essence of the financial assessment and projections is to determine whether the business is financially feasible or not. This is a vital aspect of the entire feasibility report. This financial appraisal also entails the payback and discounted cash flow as well as break even analysis. It offers the expected expenses and incomes of the business including the sales and advertising projections as well as how long it will take the business to break even. It should also be able to predict the total start-up costs required to begin operations right through the cost of land and buildings, plants and equipment, legal costs, accounting costs, day-to-day running costs, wages, rent, utilities, interest payments on debts, etc. All these will eventually be weighed against the business's projected revenue on weekly, monthly, and or annual/bi-annual basis to determine the projected profit or loss of the business. However, it is important to note that just because a business has potential, is not a guarantee for its success. There are a lot of other financial factors. The report should formulate an evaluation criterion for regular performance self assessment.
ii.i.xiii. Growth and the break-even period: A business must have a lifecycle. The startup stage is always the planning and take off period. All resources are put into it to ensure its birth and survival in the market. The feasibility report should be able to predict the timing of the various growth stages especially the break even, peak period in the life cycle of the product and the revenue dropping period. An average feasible start up business ought not to aim longer than 18 months to break even, depending on its type. The report should know what stage of the product life-cycle is a particular target population in. if it is a mature industry, it may mean the market has been saturated, or that sales are no longer growing and may even be dropping.
ii.i.xiv. Re-investment Policy: The feasibility report would need to find out the current status of the business, examine the up to date developmental programme of the business and be able to predict how the business should be in the future. It should also be able to define the basis for the business signposts for predictable periods of time. These are to aid the setting up of re- investment policy for the business in the next 2, 5 or 10 years.
ii.i.xv. Risk analysis: Risks especially the financial one is a major consideration for any business. The feasibility analysis ought to envisage and prepare for risks which sometimes could be major. These major risks could be in the organization, competitive, regulatory, etc sectors associated with the business. It must also be able to calculate how to alleviate such possible risks. Some entrepreneurs insure their entire system including staff and equipment.
