Feasibility Study Assignment
When preparing your feasibility study, be sure to follow chapter 3 in your text. In particular, you will want to look at Appendix 3.2 on the website. (a feasibility study is a slightly abbreviated business plan that demonstrates market and financial feasibility)
The feasibility study is to be well-researched and well-written using correct grammar and spelling (SEE WRITING RUBRIC AT THE END OF THE SYLLABUS). While a feasibility study is not a requirement to start a business, it is almost always required by lenders or investors and entrepreneurs find developing a feasibility study especially helpful when growing or expanding their business venture. Obviously, your feasibility study must be for a legal, ethical, and realistic business and approved by your professor.
Follow the typical feasibility study outline in your text website, Appendix 3.2. The financials should include 3 years pro-forma income statement, balance sheet, and statement of cash flow, and also include break-even analysis.
Your feasibility study will be graded both on content and construct, so be sure that your paper is well-organized and well-written, free of grammar and spelling errors, and is referenced as necessary. Do not be tempted to copy a business plan from the internet as that will result in a zero grade for the project and an F for the course.
Be sure to use good quality references (academic journals and business publications) from good sources----beware of internet sources! Use the SE library and reliable electronic sources such as "Google Scholar". Another good source for financials would be one of the financial reference books in the Reference section of the library that provides industry norms and financial ratios.
The feasibility study is to be a minimum of 10 pages of narrative, excluding cover page, table of contents, appendices, etc. and the paper will be submitted electronically under Blackboard "Safe Assignments". Don't forget to use spell and grammar check and proofread your work. The paper is to be written using 12 point, Times New Roman font, with 1 inch margins all-around. Use APA format for your references, citations, and other formatting.
Your Feasibility Study is due Monday, November 17th at 8am uploaded into Safe Assignments
As a reminder, late work is not accepted and plagiarized papers will receive a grade of F
Notes:
Financials
We do these pro-forma (forecast) for 3 years as the typical small business does not break even until their third year of business.
Statement of Cash Flow shows a firm's sources of cash as well as uses of cash
Think of this in terms of your own personal budget----what money comes in and what money goes out and especially when money goes out as revenue and expenses seldom occur at the same time. Before your business opens and starts to make sales, you have probably spent a lot of money for rent, inventory, insurance, salaries, and other items.
The Balance Sheet provides a snapshot of a firm's financial position at a specific point in time. The statement includes assets=debt + owner's liability
The Income Statement (a.k.a. Profit and Loss Statement) indicates the amount of profit or loss over a given period of time-----monthly, quarterly, or annually.
Sales-Expenses = Profits
Break-even analysis helps you to calculate when your business will actually start to earn a profit. You can also use this to calculate profit on an individual item. You would be surprised how many small business owners do not know what their business break-even is! The formula is price-variable cost, divided by total fixed cost, so a shirt selling for $20.00 with variable costs of $3.25 and total fixed costs for the store of $125,000 would mean that the breakeven is 7,462.6 (7,463 as you always round up---you cannot have part of a shirt!)
Marketing Feasibility
In marketing, we do not agree with the movie line "If you build it, they will come".
Market feasibility demonstrates that there is an actual market for your product or service and is demonstrated through research. For example, you probably would not open a children's clothing store in a town with few children, or if the number of children in that town is declining.
A good source of demographic data is census data https://factfinder2.census.gov/faces/nav/jsf/pages/index.xhtml
Census data will give you basic data with regard to age, income, occupation, gender, marital status, race, etc.
You can also get some good marketing information at this website when you enter the zip code of the town you plan to locate