Feasibility Study
A Project feasibility study is an assessment of the practicality of a proposed project or system. A feasibility study aims to objectively and rationally uncover the strengths and weaknesses of an existing business or proposed venture, opportunities and threats present in the natural environment, the resources required to carry through, and ultimately the prospects for success. In its simplest terms, the two criteria to judge feasibility are cost required and value to be attained.
A well-designed feasibility study should provide a historical background of the business or project, a description of the product or service, accounting statements, details of the operations and management, marketing research and policies, financial data, legal requirements and tax obligations. Generally, feasibility studies precede technical development and project implementation. A feasibility study evaluates the project's potential for success; therefore, perceived objectivity is an important factor in the credibility of the study for potential investors and lending institutions. It must therefore be conducted with an objective, unbiased approach to provide information upon which decisions can be based.
Process of Project Feasibility Study Preparation
A Project feasibility study is an assessment of the practicality of a proposed project or system, a successful project comprises lot of process and procedures
Step by step procedures
1. Details of Project: Detailed information about project proposal and promoters.
2. Scope of the project: Here explaining wide scope of the project
3. Facilities and services/Product: About what are the products or services offering by the company. Explaining what the benefits available for owners and customers.
4. Means of Finance and percentage of shareholding: Capitalization table, promoter’s capital bifurcation and investment stages.
5. Cost of the project: Explaining which are the actual costs for the project
6. Profitability: When the proposed project can achieve the profit, turnover and profit margin explaining widely.
7. Payback period: An investor is very concerned with the payback time, that is, how long it takes for the project to pay back the initial investment.
8. Marketing Strategies: The two basic functions of any business enterprise have often been defined as making and selling or in other words production and marketing. The effectiveness of a company depends on its ability to compete through creativity and on its skill in marketing a service. These pre-requisites should be understood as complementary to each other and not supplementary. Marketing consists of activities in the creation of market and the satisfaction of customers through the uninterrupted distribution of goods and services. It includes the business activities that are required to develop and transfer a flow of goods and services from production of goods and services to satisfy their needs.
9. Assumptions: The project Report will be prepared on the bases of certain assumptions.
10. Financial viability: It comprises projected profitability statement, projected cash flow statement, Projected Balance sheet, Depreciation computation, Ratio analysis and Basis of Projection and analysis.
11. Detailed runway analysis: The estimation has made to maintain cash balance all the time positive. Here graphical representation of runway – yearly cash balance will shows.
12. Conclusion: Briefing the proposed project is technically feasible economically viable and financially sound and hence it warrants favorable consideration by the Financial institution.
