Feasibility study report writing

Transcription

1 Feasibility study report writing Martina Kopsová

2 What is a feasibility study? Defined as a controlled process identifying problems and opportunities, determining objectives, describing situations, defining successful outcomes and assessing the range of costs and benefits associated with several alternatives for solving a problem. The Business Feasibility Study is used to support the decision-making process based on a cost benefit analysis of the actual business or project viability.

3 The importance of a business feasibility study

4 Business feasibility study and dimension of business viability Framework of the dimension of business viability: 1) Market Viability 2) Technical Viability 3) Business Model Viability 4) Management Model Viability 5) Economic and Financial Model Viability 6) Exit Strategy Viability

5 Business feasibility study outline Cover Sheet Executive Summary Table of Contents - Introduction - Product or Service - Technology - Market Environment - Competition - Industry - Business Model - Marketing and Sales Strategy - Production/Operating Requirements - Management and Personnel Requirements - Intellectual Property - Regulations/Environm ental Issues - Critical Risk Factors Financial Projections - Balance Sheet Projections - Income Statement Projections - Cash Flow Projections - Break-Even Analysis - Capital Requirements & Strategy - Recommendation & Findings - Conclusion

6 Executive Summary It is a summary of all key sections of the Business Feasibility Study and should work as a separate, standalone document. KEY POINTS: Write after content of BFS is completed. Written last, but present first. No more than one page long.

7 Table of Contents Product/Service For description use simple language. Description of how customers would use and buy product/service. Describe key components or material used. Describe plans to test the product to ensure it works. Describe plans to upgrade product or expand product line.

8 Table of Contents Technology As necessary, provide further technical information about product/service. Describe additional or ongoing research and development needs. Use understandable technical terms.

9 Table of Contents Intended Market Environment a) Target Market Define and describe the target market(s). Be clear how end users and customers benefit. b) B2B Market Know your industry. Estimation of market size, market share, etc. c) B2C Market Know relevant demographic, psychographic and behavioural factors.

10 Table of Contents Competition Describe direct & indirect competition. For key competitors give market share, resources, product and market focus, goals, strategies, strengths and weaknesses. List all key entry barriers. Describe how unique is your product in comparison with competitors. State how difficult is copy your product. How will be reaction of your competitors to your launch?

11 Table of Contents Industry Clear definition and description of the industry. Describe demand and supply factors and trends. Describe the largest forces that drive the market.

12 Table of Contents Business Model Describe the proposed enterprise s business model. Describe the model in enough detail to support financial projections presented later.

13 Table of Contents Marketing and Sales Strategy Lay out the basic marketing and sales strategies. Discuss any strategic partnership in place or planned. Describe distribution strategy. Describe pricing strategy. Outline other issues eg. warranties. Quantify the marketing budget.

14 Table of Contents Production/Operating Requirements Describe how and where will be product produced. What physical premises are required? Will space be owned or leased? Need of renovations? How complex is the manufacturing process? Do you need outsourcing?

15 Table of Contents Management and Personnel List proposed key managers, titles, responsibilities, relevant background, experience, skills, costs. Sketch personnel requirements.

16 Table of Contents Intellectual Property Briefly describe patents, copyrights and trademarks obtained and in process.

17 Table of Contents Regulation/Environmental Issues Outline non-economic forces that might affect your business case: - Government regulations - Environmental problems - Political stability - Any other regulatory or political issues

18 Table of Contents Critical Risk Factors Use tools as: - SWOT - Porters Five Forces - PEST Analysis

19 Financial Projections Capital Requirements & Strategy How much funding will you need and when? What sources will provide the funding? What ration of debt to equity financing will occur? When will investors begin see a return?

20 Financial Projections - How to Conduct a Break-Even Analysis? - SP Selling Price - VC Variable Costs - CM Contribution Margin - FC Fixed Costs - X Units Units sold at break-even: SP (X) = VC (X) + FC Break-even revenue: Break-even revenue ($) = Break-even units x Selling Price

21 Final Findings & Recommendations A significant component of the findings should related to the likelihood of success, projected return on investment and how any identified risks should be mitigated.

22 Sources of help Business Enterprise Centres Accountants Solicitor Bank Business Advisors/Consultants Potential Suppliers Sources of Information Competitors University Libraries and Online Entrepreneurship Resources

23 Thank you! This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, [insert legal name of the PwC firm], its members, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it PricewaterhouseCoopers Česká republika, s.r.o. All rights reserved. In this document, PwC refers to PricewaterhouseCoopers Česká republika, s.r.o. which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity.