Stage 6 Conducting a Feasibility Study Part 1: Technical and Market Assessment

1. Stage 6Conducting a Feasibility StudyPart 1: Technical and Market Assessment

2. How to Do a Financial Feasibility Study By Ameen Ahsan

3. Start a new business Develop the concept for your venture Develop a preliminary marketing plan Evaluate technical feasibility How will product be produced Research customers and markets Test your product or service Determine fixed production costs Determine variable production costs Assess market size, segments and trends Evaluate the competition Establish a price structure for your product or service Develop a sales forecast Flesh out your marketing plan Market through traditional distribution channels Market direct to the consumer Market to the government Market in foreign markets Market through specialty channels Develop a detailed marketing program for each channel you plan to use Conducting a Feasibility Study: Part 1

4. Feasibility Study Contents • Explain clearly and concisely the principal concept underlying your venture and what sets it apart from other businesses. Concept for your venture • Indicate the degree of innovativeness of your venture idea and the risks associated with it. • Does it need to be subjected to some form of technical evaluation or assessment? Technical feasibility of your idea • Describe the profile of your principal target customers. • Indicate current market size, trends and seasonal patterns. • How do you plan to test your idea? • Describe any market research or customer surveys you plan to conduct. • Assess the nature of your competition. • Estimate your expected sales and market share. Market assessment Continued A Typical Feasibility Study

5. Feasibility Study Contents • Detail the marketing strategy you plan to use. • Describe your marketing plan, including your sales strategy, advertising and promotion plans, pricing policy, and channels of distribution Your marketing plan • How do you plan to assure continuing access to critical supplies of raw materials and component parts at reasonable prices? • Will you produce or subcontract your production? Managing the supply situation Continued A Typical Feasibility Study (Continued)

6. A Typical Feasibility Study (Continued) Feasibility Study Contents • Determine the funds required to set up your business. • Develop short-term financial projections including: • Cash flow forecasts • Pro forma profit and loss statements • Pro forma balance sheet • Breakeven analysis Conduct cost and profitability assessment • What are the strong and weak points of your venture idea? • Did your assessment indicate the business was likely to be profitable? • Is it sufficiently attractive to proceed with the development of a complete business plan? Plan for future action

7. Technical Feasibility

8. Is Market Research Important?

9. How to Write a Market Research Questionnaire?

10. Do-It-Yourself Market Research • Some things you should keep in mind • In conducting a survey, your information is only as good as your sample • Design your survey or questionnaire carefully • Keep your survey or questionnaire as short as possible • Always provide some opportunity for the respondent to provide detailed answers

11. Do-It-Yourself Market Research • Work out how you intend to record the information and analyze the data in advance • Before you give the questionnaire, establish the criteria you will use to make decisions based on the information • Market research is needed at all stages of a business’ life

12. Some Guidelines forMarket Research Questionnaires Continued

13. Some Guidelines for Market Research Questionnaires (Continued)

14. How to Market Test Your Idea

15. What is a Customer?

16. Things to Consider If Planningto Rent or Lease Your Facilities • The duration of the agreement • The rent • The ownership of any additions or improvements to the facility • Any restrictions of the use of the property • Whether you are permitted to sublet some or all of the property • The nature of any default and penalty clauses

17. Retail Pricing Strategies

18. Pricing Strategies • Cost-based Pricing • The cost of your product is determined and used as the base, and then a markup is added to determine what the selling price should be. • Value-based Pricing • The price of the service or product is based on the estimate of the market’s perceived value. • Competition-based Pricing • Base your price largely on competitors’ price with less attention to your own cost or expected demand.

19. Why Advertise? • Create an image for the company and/or its product(s) or service(s) • Reposition your competition • Try to stand apart from or above the competition • Build an audience for future sales calls and mail advertising

20. Why Advertise? • Make announcements • Introduce your company’s name • Introduce new products or services • Publicize job openings and promotions • Report your company’s performance • Enhance the morale and pride of your employees • Clarify your company’s position or philosophy on an important issue

21. Why Advertise? • Take advantage of positive publicity or counter negative publicity • Regain the loyalty of customers • Keep existing customers • Open communication with customers or clients • Give important information to your customers or clients • Reinforce the message made via sales calls and letters • Generate more leads and prospects • Increase sales volume • Increase sales in the off season

22. Why Advertise? • Enter new markets and/or promote new uses for existing products • Develop and acceptance of your product or service • Enhance the morale and pride of employees

23. The Most CommonAdvertising Methods

24. What are TwoAdvantages and Disadvantages of Each Advertising Method?

25. A Model for Small Business Growth

26. A Model for Small Business Growth • Stage 1: Inception • Key Issue • Obtaining customers • Product and Market Research • None • Product Market • Single basic product line • Emphasis of Marketing Plan • Limited channels of distribution, cost-plus pricing, heavy sales promotion

27. A Model for Small Business Growth • Stage 2: Survival • Key Issue • Increasing competition • Product and Market Research • Little • Product Market • Single product line and market but greater scale • Emphasis of Marketing Plan • Reach expanding markets, broader channels of distribution

28. A Model for Small Business Growth • Stage 3: Growth • Key Issue • Expansion into new products or markets • Product and Market Research • Some new product development • Product Market • Broader but limited product line, single market • Emphasis of Marketing Plan • Emphasis on cost-efficiency, penetration pricing, build market awareness and distribution

29. A Model for Small Business Growth • Stage 4: Expansion • Key Issue • Greater external emphasis • Product and Market Research • New product development, market research • Product Market • Extended range of products, broader markets • Emphasis of Marketing Plan • Greater focus on customer needs and adapting the marketing plan (including promotion) to meet those needs

30. A Model for Small Business Growth • Stage 5: Maturity • Key Issue • Finding growth opportunities • Product and Market Research • Production innovation • Product Market • Contained product lines, multiple markets • Emphasis of Marketing Plan • Major investment in the marketing effort, phase out weak products, cut prices, focus on profitable niches.