Feasibility Planning

 Entrepreneurs have to plan  Entrepreneurs may establish a plan but may not be possible always to strictly adhere the plan  For planning is essential, a reasonable planning is done to know the changing paradigms of comprehensive business plan  This reasonable planning is called Feasibility Planning

Entrepreneurs plan the ventures & do the preliminary work of obtaining resources Entrepreneurs position their venture in a market & make necessary adjustments for survival Rapid development & growth when the venture undergo major changes in market, financial, resource allocation Evolution of venture into large company where professional management is more important than entrepreneurial views Pre start-up stage Start-up stage Early-growth stage Later-growth stage

The following activities are followed in this stage: 1. Defining business concept- what is the purpose of the venture, what does entrepreneur wants to accomplish in business 2. Product-market study- product research, feasibility of product, market research, buyers, competitors 3. Financial planning- capital required, income generation, money for operational activities, investments vs. expenses 4. Pre start-up implementation- resource allocation, inventory management, planning, facilities, licenses, permits

It is the initial period of business. It has no definite time frame but have two benchmarked considerations: a) Meeting operating objectives b) Position the venture for long-term growth Start-up operating activities: 1. Sales 2. Revenue 3. Growth 4. Position

This is a period of intense monitoring. Growth can occur at different rates and for long time too. It can range from slow growth to explosive growth depending upon the sales and based on quantum change in the consumer demand. Growth stages: 1. Very slow 2. Comfort zone 3. Very rapid growth

 The growth is much slower.  The venture find itself in competition with others in the market.  Companies often go for stock offerings in public.  Family fortunes turns into corporate equity positions and private investors convert holdings into publicly traded securities.

Every business is unique and feasibility plan is an outline of potential issues to address a set of guidelines to help entrepreneurs take better decisions. 1. Developing a good plan - honest, well-supported information's, no emotional phrases, prepared in quality manner 2. Protecting the business – strong nondisclosure statement, patented, copyrighted 3. Making the plan readable – short, strong, loaded up with facts & figures, future projections, cleared statements

Any feasibility plan includes eight common elements to complete it: 1. Executive summary 2. Business concept 3. Product or service 4. Market research or analysis 5. Market plan 6. Operation 7. Entrepreneurial team 8. Financial documentation

The five elements for executive summary: 1. Venture defined – purpose, for whom, by whom, what, why, partnership, corporation, sole proprietorship 2. Product/Service – new product/service, design, research, distinctive competency 3. Market characteristics – market size, geographic characteristics, market demographics, customer age, group, regional trends 4. Entrepreneurial team – founder of the venture, key personnel essential for success, individual’s qualifications, skills, abilities 5. Financial summary – start up estimations, costs, cash- flow requirements, profits or losses

 Purpose of the venture and the major objectives of it’s founders  Evolutionary steps that led to the business formation  Defining nature of market demand  Firm’s technological profile  Description of machines, manufacturing units  Description of whole sale networks  Description of license, foreign collaboration (if any)

 Distinctive characteristics of the product/service  Materials used for manufacturing  Cost, methods of development  Copyrights/Patents  Approval from the concerned govt. authority e.g. in case of food (approval from FCI)  Staging of product/Service – how it is to be introduced in market, the step by step process

Based on the fact that market exists for proposed venture. Activities of market research/analysis: 1. Potential customers – demographic features, buying habits of customers 2. Markets – market trends, forecasting future market potential 3. Competitors – analyze competitors product/service, future competitors, industry struchere 4. Assumption of new venture - market niche, pricing system, method of distribution, sales forecast

Elements of market plan: 1. Product/Service – quality, reliability 2. Pricing system – pricing methods, discounts, quantity, bulk pricing 3. Promotional mix – advertising, displays, events, demonstrations 4. Distribution channels – retailing, wholesale, merchandising, telemarketing 5. Services/Warranties – after sales services, repair, guarantees 6. Marketing leadership – responsible roles, strategically competent ideas

The elements of operation plan: 1. Physical facilities – purchase, lease, renovation, parking, transport 2. Inventory – opening, purchasing system, inventory management, supplies 3. Human resources – operating personnel, skills developments, supervision 4. Operations - R&D, manufacturing process, service structure, quality control, safety, maintenance 5. Legal issues – insurance, legal protection, patents, trademarks, security

Effective in terms of risk takers:  Skilled and qualified for the job  Good track record of success  Faster decision making abilities  Influencer  Leadership attributes  Team member

Financial projections showing monetary involvement, growth, assumptions, profit forecast:  Income statement, profit/loss statement  Cash-flow, Fund-flow  Budget outline  Start-up costs  Assumption of financial growth  Estimated balance sheet for at least five year