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FEASIBILITY ANALYSIS

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Part 3: Organizational Feasibility

            Issues Addressed in This Part

A.

Management prowess

B.

Resource sufficiency

             Assessment Tools

Management Prowess

·         Use the following table to candidly and objectively rate the “prowess” of the founder or group of founders who will be starting the proposed venture.

 

Management Prowess Assessment Tool

 

 

Low Potential

Moderate Potential

High Potential

1.

Passion for the business idea

Low

Moderate

High

2.

Relevant industry experience

None

Moderate

Extensive

3.

Prior entrepreneurial experience

None

Moderate

Extensive

4.

Depth of professional and social networks

Weak

Moderate

Strong

5.

Creativity among management team members

Low

Moderate

High

6.

Experience and expertise in cash flow management

None

Moderate

High

7.

College graduate

No college education

Some college education but not currently in college

Graduated or are currently in college

Resource Sufficiency

·         The focus in this section is on nonfinancial resources. Use the following table to rate your “resource sufficiency” in each category.

·         The list of resources is not meant to be exhaustive. A list of the 6 to 12 most critical nonfinancial resources for your proposed business is sufficient.

An explanation of the rating system used in the first portion of the table is as follows:

1

Available

2

Likely to be available: will probably be available and will be within my budget

3

Unlikely to be available: will probably be hard to find or gain access to, and may exceed my budget

4

Unavailable

5

NA: not applicable for my business

Resource Sufficiency Assessment Tool

Ratings

Resource Sufficiency

     1     2     3     4     5

Office space

     1     2     3     4     5

Lab space, manufacturing space, or space to launch a service business

     1     2     3     4     5

Contract manufacturers or outsource providers

     1     2     3     4     5

Key management employees (now and in the future)

     1     2     3     4     5

Key support personnel (now and in the future)

     1     2     3     4     5

Key equipment needed to operate the business (computers, machinery, delivery vehicles)

     1     2     3     4     5

Ability to obtain intellectual property protection on key aspects of the business

     1     2     3     4     5

Support of local and state government if applicable for business launch

     1     2     3     4     5

Ability to form favorable business partnerships

Ratings: Strong, Neutral, or Weak

Proximity to similar firms (for the purpose of knowledge sharing)

Proximity to suppliers

Proximity to customers

Proximity to a major research university (if applicable)

 Conclusion (expand fields and report findings, in discussion form, for each area)

A.

Management prowess

B.

Resource sufficiency

C.

Organizational feasibility (circle the correct response)

Not Feasible                                         Unsure                                        Feasible

D.

Suggestions for improving organizational feasibility

 

Part 4: Financial Feasibility

            Issues Addressed in This Part

A.

Total startup cash needed

B.

Financial performance of similar businesses

C.

Overall financial attractiveness of the proposed venture

 

            Assessment Tools

Total Start-Up Cash Needed

·         The startup costs (which include capital investments and operating expenses) should include all the costs necessary for the business to make its first sale. New firms typically need money for a host of purposes, including the hiring of personnel, office or manufacturing space, equipment, training, research and development, marketing, and the initial product rollout.

·         At the feasibility analysis stage, it is not necessary for the number to be exact. However, the number should be fairly accurate to give an entrepreneur an idea of the dollar amount that will be needed to launch the firm. After the approximate dollar amount is known, the entrepreneur should determine specifically where the money will come from to cover the startup costs.

·         The total startup cash needed can be estimate using the following table.

Total Startup Cash Needed (to Make First Sale)

Capital Investments

Amount

Property

Furniture and fixtures

Computer equipment

Other equipment

Vehicles

Operating Expenses

amount

Legal, accounting, and professional services

Advertising and promotions

Deposits for utilities

Licenses and permits

Prepaid insurance

Lease payments

Salary and wages

Payroll taxes

Travel

Signs

Tools and supplies

Starting inventory

Cash (working capital)

Other expense 1

Other expense 2

Total Startup Cash Needed =

Comparison of the Financial Performance of Proposed Venture to Similar Firms

·         Use the following tables to compare the proposed new venture to similar firms in regard to annual sales (Year 1 and Year 2) and profitability (Year 1 and Year 2).

Comparison of the Financial Performance of Proposed Venture to Similar Firms Assessment Tool

Annual Sales

Estimate of Proposed Venture’s

Annual Sales—Year 1

Explanation of How the Estimate

Was Computed

Estimate of Year 1 Sales __________

Summary: How proposed annual sales, on average, compares to similar firms (circle one)

Below Average       Average       Above Average

Estimate of Year 2 Sales __________

Summary: How proposed annual sales, on average, compares to similar firms (circle one)

Below Average       Average       Above Average

Net Income

Estimate of Proposed Venture’s

Net Income—Year 1

Explanation of How the Estimate

was Computed

Estimate of Year 1 Net Income __________

Summary: How proposed net income, on average, compares to similar firms (circle one)

Below Average       Average       Above Average

 

Estimate of Year 2 Net Income __________

Summary: How proposed net income, on average, compares to similar firms (circle one)

Below Average       Average       Above Average

 

 

Overall Financial Attractiveness of the Proposed Venture

·         The following factors are important in regard to the overall financial attractiveness of the proposed business.

·         Assess the strength of each factor in the following table.

Overall Financial Attractiveness of Proposed Venture Assessment Tool

 

 

Low Potential

Moderate Potential

High Potential

1.

Steady and rapid growth in sales during the first one to three years in a clearly defined target market

Unlikely

Moderately likely

Highly likely

2.

High percentage of recurring income—meaning that once you win a client, the client will provide recurring sources of revenue

Low

Moderate

Strong

3.

Ability to forecast income and expenses with a reasonable degree of certainty

Weak

Moderate

Strong

4.

Likelihood that internally generated funds will be available within two years to finance growth

Unlikely

Moderately likely

Highly likely

5.

Availability of exit opportunity for investor if applicable

Unlikely to be unavailable

May be available

Likely to be available

 

Conclusion (report finding for each area)

A.

Total startup cash needed

B.

Financial performance of similar businesses

C.

Financial feasibility (circle the correct response)

Not Feasible                                         Unsure                                        Feasible

D.

Suggestions for improving financial feasibility

Overall Feasibility: Summary and Conclusion

Overall Feasibility of the Business Idea Based on Each Part

Suggestions for Improving the Feasibility

Product/Market Feasibility

Not feasible

Unsure

Feasible

Industry/Market Feasibility

Not feasible

Unsure

Feasible

Organizational Feasibility

Not feasible

Unsure

Feasible

Financial Feasibility

Not feasible

Unsure

Feasible

Overall Assessment

Not feasible

Unsure

Feasible

Conclusion—briefly summarize your justification for your overall assessment.

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