CARRYING OUT A
FEASIBILITY STUDY
An idea for a business is not a sufficient reason to begin
production straight away. It is essential to be aware of the different aspects involved in actually
running the business. To reduce the risk of failure, producers should first go through the following
aspects and finally develop a business plan.
1. Assess yourself as an entrepreneur
The success of any business depends largely on the entrepreneur’s personal characteristics, skills
and financial situation. To be a successful entrepreneur you need to:
• Have a strong commitment to your business
• Have strong motivation to own your business
• Be able to take considered risks and to make important decisions
• Have the support of your family and friends
• Have the necessary technical skills to produce the product of your business
• Have enough business management skills, such as selling, record keeping and costing, to
run a business of your own
• Have sufficient knowledge of your line of business
• Have sufficient personal funds.
2. Conduct a feasibility study
To reduce the risk of failure it is necessary to decide whether the idea is feasible. This involves
carrying out a short market survey and feasibility study. The following are the stages of a
feasibility study:
1st stage: Market feasibility
• Market research
• Selling strategy
• Expected market size/share
• Competitors
2nd stage: Technical feasibility
• Scale of production needed to meet
market share
• Equipment, materials, services and
labour needed for scale of
production selected
• Quality control
• Distribution
3rd stage: Financial feasibility
• Start-up costs
• Loan required
• Cash-flow for one year (income and
expenditure)
• Business development over three years
• Profitability/sustainability
DECISION
Practical Action, The Schumacher Centre, Bourton on Dunsmore, Rugby, Warwickshire, CV23 9QZ, UK
Practical Action is a registered charity and company limited by guarantee.
Company Reg. No. 871954, England | Reg. Charity No.247257 | VAT No. 880 9924 76 |
Patron HRH The Prince of Wales, KG, KT, GCB