The document discusses the importance of conducting a feasibility study and creating a business plan before starting a new business. It describes the various aspects that should be analyzed in a feasibility study, including market factors, technical factors, financial factors, and more. Additionally, it provides guidance on how to structure a business plan, including sections on marketing, operations, organization, finances, and other essential components.

1. Module – 3
Feasibility Analysis and Crafting Business Plan
Chetan T.R

2. Feasibility Study
 The Feasibility study is an analytical tool used during
the project planning process, shows how a business
would operate under an explicitly stated set of
assumptions.
 The Feasibility study of a project can be ascertained
in terms of technical factors, economic factors or
both.
 It is documented with a report showing all the
ramifications of the project viz., inflows, outflows of
fund, technology, market, environment etc.

3. Y Feasibility analysis?
 Helps in determining profitability of business
 Helps to gather broad data for members of management
to take decision.
 Helpful for showing out projects which are consistent
with business’s objectives.
 Helps analyze the cost benefit approach, as it considers
all the costs of the projects.
 Helps identify the SWOT and unforeseen circumstances
that might affect the success and sustainability of the
business
 Helps in estimating the financial, human and
technological resources that are required to ensure
successful launching of the business

4. Steps in Feasibility study
 Identify and recognize the people or firms that will be
involved in preparing the various aspects of the study.
 Examine the feasibility factors like., market feasibility,
Technical, Technology and system feasibility, Legal
Feasibility, Operational Feasibility, Economic Feasibility,
Resource feasibility, Cultural feasibility, and Financial
feasibility study
 Proceed with Management study
 If it is a government project, social desirability has to be
assessed
 Prepare the summary of the feasibility study including brief
description and major assumptions made.

5. Types of Project Feasibility
Types of
Project
Feasibility
Technical
Managerial
Economical
Financial
CulturalSocial
Political
Environmental
Market

6. Technical
Feasibility
Input
Analysis
Throughput
Analysis
Output
Analysis

7. Managerial Feasibility Analysis
 Management Support
 Employee involvement
 Commitment

8. Economic Feasibility Analysis
 Project costs
 Benefit-cost
 Fixed and Variable costs
 Revenue

9. Financial Feasibility
 Expenditures
 Expected Cash Flows
 Rate of return on Investment

10. Cultural Feasibility
 Deals with the compatibility of the project with the
cultural environment of the project
 Laborers/Employees
 Customers
 Stake holders
 Shareholders

11. Social Feasibility
 Eg., Dye units, in Ahmedabad have mushroomed and
are polluting and generate effluents which are not
acceptable to the society. The government has
ordered closure of all dye units unless suitable
effluent treatment in implemented

12. Market Feasibility
 Product, scope of the market and competition
 USP, quality and pricing
 Demand Projections
 Export facilities
 Adequate marketing infrastructure and principal
customers
 Selling arrangements
 Trends in price

13. Product or service feasibility analysis
 Concept test:-
 Description of the Product/Service
 Intended Target market
 Benefits of the product/service
 Description of how the product will be positioned
 Description of how the product will be sold or distributed

14. Elements of Technical Feasibility
 System Performance
 System Interface
 Development Processes
 Risk assessment
 Staff qualification
 Failure Immunity
 Customer support
 Security

15. Feasibility Report
 Includes the analysis of various factors and viability
of the project with the assumptions
 FSR – Feasibility Study Report
 Is formally documented output of feasibility study that
summarises results of the analysis and evaluations conducted
to review the proposed solution and investigate project
alternatives for the purpose of identifying if the project is really
feasible, cost-effective and profitable

16. Steps to write a FSR
Write Project
Description
Describe
possible
solutions
Evaluation
Criteria
Write
conclusion
Propose the
most feasible
Solution

17. Importance of Feasibility Report
 Helps to list all details that are required for your idea
to work
 Identifies the problems and possible solutions
 Develop marketing strategies to convince the
investor that your idea is worth considering an
investment
 Serves as a solid foundation for developing the
Business plan

18. Project Report
 The Project report is prepared by the entrepreneur or
by the consultants or associates in order to present
relevant facts before the decision makers to enable
them to decide whether the project is worthwhile the
investment or not
 The Project report includes
 Preparation of detailed designs, specs, plant layouts, Process
designs, and time schedules for the execution of the project
 Collection of details or a complete work plan for various
processes or the project to be implemented after the proposal
has been finalized by the entrepreneur

19. Objective of a Project report
 Facilitates business planning and planning the future
course of action
 Enables an entrepreneur to compare different
investment proposals and select the most suitable
project
 Provides a SWOT analysis
 In case of public sector projects this report would
enable the concerned authorities to take an objective
decision on the project
 Facilitates the appraisal of the project in regards to
financial, economic and technical feasibility

20. Contents of a Project report
 Sources of Finance (Long term and Short term)
 Availability of machinery
 Technical Know-how
 Market potential
 Overall profitability
 Project schedule

21. Advantages of a Project report
 Helps entrepreneur in establishing techno-economic
viability
 Helps in getting term loans from banks and financial
institutions.
 Helps in getting working capital loan
 Shows feasibility of the project and possibility of
achieving profits

22. Problems faced in preparation of a Project Report
 Strict conditions of promoter’s contribution may
dampen
 Lending institutions demand a lot of documents
 Assessment of working capital due to unrealistic
assumption
 Time overrun results in cost overrun
 Government rules and regulations

23. Model project report for a new venture
 Sequence of standard format to be followed in
Preparing New Business Project report
I. Background of the Business
II. Customers profile
III. Long and short term corporate Objectives
I. To perform a viability assessment of the proposed new business
ideas in terms of marketability , technical feasibility, financing
and authorities
II. To be able to prepare a relevant business plan
III. To recognize fundamental start-up issues

24. IV. Market Analysis
I. Brief discussion on the type of market, chief influencers, players
etc.
II. Market description
III. Reasons for starting business in a particular market
IV. Target Clients
V. Advantages of the services offered by the new business
VI. Market consumption patterns
VII. Past and existing supply location
VIII. Production prospects and limitations
IX. Exports and Imports
X. Price structure
XI. Flexibility of demand
XII. Client behaviour, purposes, intentions, impetus, approaches,
inclinations and needs.
XIII. Supply network and marketing rules formulated by the
government
XIV. Government and technical limitations imposed on the
promotion of the product

25. V. Financial Assessment
I. Investment expenditure and value of the entire project
II. Methods of investment
III. Anticipated productivity
IV. Money flows of the project report
V. Investment value evaluated in context of different points
of merit
VI. Estimated financial ranking
VI. Marketing Assessment
I. Product
II. Price
III. Place
IV. Promotion

26. VII. Operational Plan
I. Business models
II. Production of goods and services
VIII.Financial Plan
IX. Management Structure
X. Business Structure(Ownership, staff etc)
XI. SWOT Analysis
XII. Appendices
I. Break-even analysis
II. Profit and Loss synopsis
III. Fund flow summary

27. Business Plan
 A Business Plan is a written statement of what an
entrepreneur hopes to achieve in one’s business and
how is one going to achieve it.
 Set of documents prepared by a firm's management
to summarize its operational and financial objectives
for the near future (usually one to three years) and to
show how they will be achieved.
 It serves as a blueprint to guide the firm's policies
and strategies, and is continually modified as
conditions change and new opportunities and/or
threats emerge.

28. Business plan headings
 Owner details
 Description of the business
 Outline of the market
 Evaluation of competition
 How the business will be organised
 Proposed marketing mix
 Premises and equipment
 Sources of capital
 Cash flow forecast
 Future plans

29. Significance of a business plan
 Used for planning out specific details of business
 To define what business is or what the business is or what it intends
to be over time
 Clarifying the purpose and direction of business
 Helps to plan for changes in the market, growing or slowing trends
and new innovations or directions to take as the company grows
 The development of a comprehensive business plan shows whether
or not a business has the potential to make a profit
 Act as sales tool to attract partners, secure supplier accounts and
attract executive level employees into the new venture
 Conveys the organizational structure of a business, including the
titles of directors or officers and their individual duties.
 Also Acts as a management tool that can be referred to regularly to
ensure business is on course with meeting the gals, sales targets or
operational milestones

30. Guidelines to prepare a Business Plan
 Do understand that the planning process is critical to run
a successful business
 Do utilise the business outline to determine what to
include in your plan
 Ensure the plan fits you
 Be clear in your objectives
 Do include market research
 Do include a financial plan and projections
 Explain both Strengths and weaknesses of business idea
 Do reserve and modify your plan as circumstances
change

31. Format of a Typical Business Plan
1. The Executive Summary
2. Description of the business
3. Product/Service
4. Management
5. Financial requirements
6. Organisation description
7. Industry
8. Marketing strategy
9. Product/Operations Plan
10. Ownership
11. Key personnel
12. Accounting records
13. Financial information
14. Appendices

32. Objectives of Business Plan
 To give direction to the vision formulated by the entrepreneur
 To Objectively evaluate the prospectus of business
 To monitor the progress after implementing business plan
 To persuade others to join business
 To seek loans from financial institutions
 To visualise concept in terms of market availability, organisational,
operational and financial feasibility
 To guide entrepreneur in actual implementation of plan
 To identify actual strength and weakness of plan
 To identify challenges in terms of opportunities and threats from
the external markets
 To clarify ideas and identify gaps in management information about
their business, competitors and market
 To identify the resources required to implement

33. Business Plan Process
Idea
Generation
Environmental
Scanning
Feasibility
Analysis
Project Report
Preparation
Evaluation,
Control and
Review

34. 1: Idea Generation
 Consumers/Customers
 Existing companies
 Research and Development
 Employees
 Dealers and Retailers

35. 2: Environmental Scanning
 External Environmental Factor
 Political
 Economical
 Social
 Technical
 Natural
 Demographical
 Internal Environment
 Raw material
 Production/Operation
 Finance
 Market
 Human Resource

36. 3: Feasibility Analysis
 Market Analysis
 Technical Analysis
 Material Availability
 Material requirement planning
 Plant location
 Plant capacity
 Machinery and equipment
 Marketing Plan
 Production Plan/Operation Plan
 Organizational Plan
 Financial Plan

37. 4: Project Report preparation
5: Evaluation, control and review
Company has to operate in dynamic environment,
it has monitor ad review the strategies and policies
to stay in line with competition existing in market

38. Marketing Plan
 Refers to plan that describes market condition and
strategy related to how products and services will be
distributed, priced and promoted in market.

39. Marketing aspects of a Business plan
Marketing
Aspects
Well defined
market
Channel
Strategy
Positioning
statement
Pricing
strategy
Communication
Strategy
Sales Strategy

40. Characteristics of an Effective Marketing Plan
• Should provide strategy for accomplishing the company mission and goals.
• Should be based on facts and valid assumptions
• Optimum utilization of existing resources
• Should provide for continuity
• Should specify performance criteria that will be monitored and controlled
• Should short and simple
• Should be flexible to adapt for dynamic market

41. Production/Operations Plan
 A Production Plan is that portion of intermediate
business plan that manufacturing/operations
department is responsible for developing
 The plan states in general terms the total amount of
output that the manufacturing department is
responsible to produce for each period in the
planning horizon

42. Operational aspects of Business Plan
Operational
Aspects
Operations
Strategy

43. Organization Plan
 Is the process f identifying an organization’s
immediate and long-term objectives, formulating
and monitoring specific strategies to achieve them.
 An Organization chart should include:
 Hierarchical structure
 How business is structured
 Legal form of ownership
 The Chain of command

44. Four stages of organizing a Business
 Establish a list of the tasks using the broadcast of
classifications possible
 Organize these tasks into departments that produce
an efficient line of communication between staff and
management
 Determine the type of personnel required to perform
each task
 Establish the function of each task and how it will
relate to the generation of revenue within the
company

45. Financial Plan
 Is a comprehensive evaluation of an investor’s
current and future financial state by using currently
known variables t predict future cash flows, asset
values and withdrawal plans.

46. Financial aspects of a Business Plan
 Expected sales and expense figure for the first three
years at least
 Cash flow figures for the first three years
 Current balance sheet figures and proforma balance
sheets for the first three years

47. Different Financial Projection Techniques
available to an Entrepreneur
 Proforma Income statement
 Proforma Cash flow
 Balance Sheet
 Assets
 Liabilities
 Owner equity
 Break even point
 Proforma sources an applications of funds

48. HRM aspects of a Business Plan
 Top level management
 Middle level management
 Operational level management
 Supporting staff
 Advisors
 Below points provide clarity
 No and Type of employees
 Pay Structure
 Training methods
 Job description

49. Technical aspects of Business plan
 Accounting, taxes and finance
 Order taking and tracking
 Inventory management
 Database management
 Presentations
 Internet Marketing

50. Social Aspects of Business Plan
 Consider the society’s welfare
 Focus on societal values
 Optimise the use of resources
 Protect environment, ecology by undertaking anti-
pollution measures
 CSR activities like social welfare programmes,
charitable contributions, undertake social forestry
and adopt villages to develop basic infrastructure
 Share the profit with stakeholders of the business
 Assist in the establishment of domestic social order

51. Errors in Business Plan formulation
Errors
Capacity
utilisation
estimates
Capacity
Computation
Market study
Machinery
selection
Project pruning
and Resource
straining
Cash flow in
initial year
Selling price
Location
selection
Project cost
Technology
oriented
products

56. Assignment
 Prepare a Business plan with the above given
parameters included for your own Business of
interest