FEASIBILITY STUDY: A Practical Guide in Writing

LESSON PROPER

What is a Feasibility Report/Study?

A feasibility report is a testimony that attempts to create some sort of action.

Feasibility reports are created to persuade/help the decision makers to choose between
available options. Remember that your option is not the only one, the decision makers
will probably have many to choose from. A feasibility report also determines whether or
not the investigated task can be done with the amount of resources available OR how
many resources will be necessary in order to complete the task. A feasibility may be
useful in a lot of different situations such as event planning, finances, or even
remodeling your home.

What is a feasibility study?

A feasibility study is a way to evaluate the practicality and desirability of a project.

Before a company invests time and money into a project, they need to know how
successful the project will be before investing. Sometimes companies want to
understand input costs, the amount of research that will need to be done, or even the
marketability of a project. With input prices, it is essential that companies understand,
(even before they put time and research into the project), how much it would cost to go
through with their product. Companies also like to know if they put time into research
and go through with their change or promotion of a product, how the public/people will
react to the change. Will people be fighting over the new product or will it fall through?
The purpose of feasibility studies is to provide companies information and analysis on
whether or not you or your company should pursue this course of action.

Feasibility reports are usually used to sway decision makers towards one
direction or the other. Many times there is only one course of action but, there needs to
be a second course of action.

What to consider in creating feasibility studies/reports?

It remains important to consider alternatives when you are creating a feasibility

study. Decision makers in companies want to understand why they have to make a
choice, and then why they should choose this certain option. Feasibility reports need to
include detailed information on the problem that has presented itself to provide decision
makers with a reason to consider further options.

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Is your argument important and appropriate?

When deciding on whether or not your feasibility study is important you must first
recognize the target audience or reader. For professional organizations people want
your argument or study to be based around needs or aims of the organization and their
future. In professional settings, it is believed that those guiding points or criteria should
be known by the people judging your study. In other words, make the study reasonable
and have it relate to what you are looking at implementing or the change you want to
see happen.

Facts can make your argument important. However, decision makers want to
know that your sources are reliable. They want to be assured that the information they
are receiving is from a credible source in the industry. This may turn out to be the most
important aspect of any feasibility study and report. Due simply to the fact that any
information you gather, no matter the presentation, can be ruined if you’re lacking
information about your sources or in the worst case if your sources are not credible.

What to consider about your alternatives?

It is important to understand how your alternatives compare to the criteria you set
in place. In most cases your readers will want to understand how your results compared
to others. This allows them to make an educated decision based simply around facts
and results. Anderson considers this to be the heart of any feasibility report.

What have you found against your alternatives?

Based on experiments and finding results about possible alternatives and how
they fare, it is important to draw conclusions about the alternatives. This is not made to
bash other options or products, but is made to set your product or idea apart. You
should include general knowledge or conclusions about what each product does well.
This remains an important part because once again decision makers need a basis for
comparison, they need a reason to select your idea compared to the alternatives and
may already be set in place, or in the near future.

What should you throw into a conclusion?

Include in your conclusion how you’re going to go implement your ideas for the
company and how it will enrich the company. Explain why the company should choose
your course of action. Compare statistics and data and help the readers understand the
logical choice and the course of action that would aid in selecting one option over the
other. Explain your expertise on the subject matter and help them realize that your idea
is the choice they are looking for. Based on your experiences they will most likely take

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your side if you present the argument efficiently. The company will select your course of
action, based on the key points you outline in your feasibility study.

Important Features of a Basic Feasibility Report

Below are the seven elements of a feasibility report:

 Introduction – You need to persuade the decision maker to even consider any
sort of alternative. You need to convince them to even read your report first. Tell
them what they will gain personally or as an organization by considering your
work.
 Criteria/Constraints – You must specifically map out the criteria of what the
ideal outcomes are. This will allow you to make practical and logical decisions.
You can present the criteria in your feasibility report in one of two ways. First, you
can separate the criteria into its own section. This is best when you have a
extensive report and you need to go in-depth with the explanation. Second, you
can incorporate the criteria throughout your report as the criteria become
relevant. However, it is important to realize that whichever strategy you chose
make sure that the criteria is introduced early in the report. It is also very
important to map out the constraints of your suggested solutions. This will show
the audience that you understand and acknowledge the fact that no solution is
perfect. This will also make sure that the audience makes the decision in their
best interest.
 Method – It is very important to present facts that are accurate and relevant. You
should state the reliable sources you used and what method they came from
(internet,interview, book, etc.). Without a credible research method or credible
sources your document itself will lack credibility.
 Overview of Alternative Options – You must underline the key features of each
possible option. Make sure they are easy to understand and presented in a
friendly layout. Keep in mind that the goal is to allow your audience to make the
best decision.
 Evaluation – This should be the bulk of your report, you must evaluate the
options using the criteria you created. Add graphs, charts, etc. to show that you
have studied your options, and have come up with statistics that back up your
reasons as to why your alternative beats the competition.
 Conclusions – You need to state the conclusion you have came up with. How
did you evaluate the alternatives? And then from there, which alternative best fit
your organization.
 Recommendations – You need to use your experience and knowledge in order
to state which option you think should be adopted.

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 Note: All seven element outlined do not need to be included in the feasibility report
depending on audience, circumstance, mission, etc. Also the elements do not need to
be in the exact order outlined above. Specifically the conclusion should be mentioned
more than just at the end of the report. It should also be summarized in the beginning of
the report and in the case the the feasibility report is long, it can be mentioned in the
middle as well.

Executive Summary

An executive summary should be included at the beginning of the report. In 2-3

pages, the main points of the feasibility study are summarized for a quick review by
busy administrators and school board members. The executive summary provides the
reader with an overview of the feasibility study and will help them see the entire picture
before they read the details. Some decision-makers may only read the executive
summary. Thus, the executive summary should be concise and include the major
findings of the study followed by a recommendation.

Introduction

The purpose of the introduction of a feasibility report is two-fold:

 To answer the readers’ question: “Why do we need to look into these

alternatives-do they matter?”
 In order to answer this question, it is necessary to identify the problem that your
report will help resolve or what your report is aimed at accomplishing.
 To talk about the other options that you have looked at and analyzed, as well as
to tell how you went about researching and analyzing them.

Note: Usually, the introduction to a feasibility report briefly discloses some of the
important conclusions and the most feasible options for change. Other elements of a
report of this nature, such as the criteria, method, or any other kind of general
background, may also be concisely noted and mentioned in this portion of the report.

Criteria Constraints

What to consider in your feasibility study/report. As you begin formulating what

you would like to consider you should realize that usually criteria works around one or
more of the following questions.

Will your plan or course of action really do what is desired?

This is often seen on the technical sides. What you have to ask yourself is
whether or not your implementation or change really makes that much of a difference.
Lets say you are looking to improve an aspect of your company. Will your change really

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improve the proficiency and speed of what their trying to do. Or will you find in your
study that the change actually slows down production or the efficiency of the company’s
workers. This is important to predict beforehand because sometimes an improvement in
the workplace is not always an improvement in how a company works. But many of
these factors you will not notice until after you complete your study. And in the worst
case you may not see negative ailments until after the plan is implemented.

What will it take to implement your course of action?

Even though your plan of action may seem correct and efficient on paper, it may
not be practical towards your line of work. You must take into account the
circumstances that arise in every aspect of a professional setting. What you may find is
that in one field your plan may be extremely successful, but in another may be a bust.
This can also take place from company to company. As you work at different companies
along the same field, you will begin to understand what can be successful in one
workplace that may not work in another. Sometimes you have to take into account the
amount of changes that will need to be implemented for your plan. Do you need to go
through extensive changes in operations, or make upgrades to current equipment or
materials that are currently in use or in stock? Sometimes the amount of money that
needs to be put into a new project may be much more than the actual amount of benefit
that would be received from the changes. You must consider your plan as a cost-benefit
analysis.

Cost of implementation.

This may become the biggest factor in any business decision. How much will it
cost? In not only business, but any professional field, the benefits must outweigh the
costs in any decision. This is even the case when deciding to work on one aspect of a
project compared to the other. When forming criteria for a feasibility report, you must
understand the costs if all went as planned. Then you might even want to find out what
the cost would be if you had minor or major setbacks. It is important to understand the
costs because unless the benefits outweigh the costs, a company will most likely not go
through with your proposed plan of action. Also it is important to look into the future of
the company. Maybe your plan of action will not be beneficial for the first year in
existence, but what about the years following that? This must be considered because
like any other decision in business, the original fixed cost may be high but the marginal
gains may be high. In that case it may be a good decision for the company to make a
change if it is beneficial for the future. Think about health care companies. Would it be
beneficial for a company to invest in new equipment even though the upright payment is
very high?

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Is your idea/product desirable?

This is as simple as is your plan going to sell. Will people want to overextend
themselves for change, or will they reject what you are trying to do? Sometimes a
change or solution must be more than just effective and affordable. You must consider
the consumers and people that will be changing. Sometimes many feasible courses of
action do not succeed simply because they create effects that drive the consumers
away. Because of this, the product or plan does not sell. These undesirable side effects
can be as simple as tearing away employee morale. Sometimes even though a plan is
promoting and expected to increase productivity, how will the employees react? Many
times companies overlook how their employees are going to react to change. But the
fact of the matter is that the only way to increase production is to keep employees
happy. If they are not pushed to improve the company and their own status then they
simply will not find change necessary.

Method

Things to keep in mind:

This section of your feasibility report is one of substantial magnitude and

importance. This part of your paper demonstrates to the reader what you discovered,
through your research, actually matters and has reliability. By telling your audience how
you came to know what you have found out and know now, you are demonstrating to
them that your results are trustworthy and that they truly hold significance in meaning.
With strong methods for finding out your facts, your readers will then feel comfortable
and confident to make the necessary changes.

It’s all about the source

The question of what sources to use completely varies from study to study. There
are several different types of sources that you could use to find your facts-it all just
depends on what you are trying to find answers to. Sources can include (but are not
limited to):

Academic journals or reports

 Library research
 Phone calls
 Face-to-face interviews
 Meetings with those who are knowledgeable about the topic or are in your
company/organization
 Surveys (Survey Monkey!)
 Usability Testing

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  Lab testings

How much is enough?

The length and density of content will vary from each report to the next. You
should take into consideration your audience as well as the context and purpose, for
which your paper is written. The main goal is to purely get the point across to the
readers that what you are reporting has validity, by describing how the means of
attaining your information are sound and secure. Make sure that your writing is reader-
centered and that they would be satisfied. Doing thus will ensure that your method is
long and descriptive enough.

Where does it fit?

The placement of this section of your report will also depend on the type of report
that you are writing. If there are only a couple of different methods used throughout your
research, it might be a good idea to fit them into the beginning of your report, writing a
paragraph for each technique. If you have several, unrelated methods, however, it
would be good to place those paragraphs throughout the report, where they would best
accompany your analysis or data.

Important note

Sometimes, if it is really obvious how you went about your research, then there
might not even be a need to talk about your methods. It is key, though, that your
readers always have a clear understanding of the way you obtained your facts and that
they are worth trusting.

Revision Checklist

Once your feasibility study is complete analyze the checklist to ensure every
topic has been addressed.

Introduction

 Does it tell your readers why you conducted this study?

 Does it provide background information the readers will need or want?
 Does it identify the action or alternatives you investigated?
 Does it persuade readers to use this study as a valid document?

Criteria

 Does it identify the standards by which the action or alternatives were evaluated?

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Method

 Does it explain the way you obtained the facts and ideas presented in the report?
 Does it persuade the readers that this method would produce reliable results?

Overview of Alternatives

 Does it present a general description of each alternative?

Evaluation

 Does it evaluate the action or alternative in terms of criteria?

 Does it present the facts and evidence that supports each evaluative statement?

Conclusions

 Does it explain the significance from the reader’s viewpoint of your facts?
 Does it state the conclusion plain and simple?

Recommendations

 Does it advise which course of action or alternative you recommend?

 Does it present recommendations which stand out?
 Does it suggest specific steps your readers may take to act on each of your
recommendations?

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 CHAPTER ONE INTRODUCTION

Background of the Study

This section provides the historical background of the project or business. It

provides a brief but comprehensive description of the product or services in the
feasibility study. In addition, this section provides the main characteristics of the project.
This involves the reason to write the project, the necessary prerequisites and the
possible results for the completion of the project.

The main purpose of the background of the study focuses on providing a general
idea or overview about the study. The background has to provide the main prerequisite
of the study. This process involves a clear and focused background of the project. The
following are the key information to include in the background of the study.

 Primary focus of the project. This involves what the project is planning to tackle
or address.
 A list of important prerequisites and main reasons to initiate the feasibility study
 An ordinary description of how to conduct the feasibility study.
 A brief explanation of the possible desired outcome of the project.

In general, the background of the feasibility study is a simple and brief statement
about the project. It provides the rationale to conduct the study. At the same time, the
background provides the underlying problems that need to be addressed.

Illustration of the Background of the Feasibility Study

The subject of business incubation has been a prominent and ongoing subject
under discussion. The introduction can be traced in the 1950 and has gained traction in
the last decade (Mckenzie, 2017). This practice has been focusing on improving the
skills in business especially entrepreneurship and starting small business especially
start-ups. At the same time, it has also been gaining traction in the manufacturing sector
where by appropriate training is provided to ensure the effective and efficient production
of goods and services.

The whole process of business incubation involved providing a safe and

nurturing space for small entrepreneurs and potential entrepreneurs to start and operate
their business. This involves providing entrepreneurial knowledge, skills, expertise and
possible experiences in different areas confronting entrepreneurs. In addition to this, the
expertise and experience provided will help these potential entrepreneurs to navigate
the unknown treacherous environment of entrepreneurial activities (Monista, 2019).

In developed countries, business incubators have been the norm for any small
size business endeavor. Specifically, Silicon Valley in SanFrancisco in USA has been

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an epicenter for start-up business activities. This involves providing financial assistance
and expertise in starting and operating the business (Cirdonom 2018). Other areas are
following trend like London, Tel-aviv and other global cities who have been promoting
business incubators.

From an African point of view, South Africa, Nigeria and Kenya have been
leading the way on business incubators (Ozolo, 2020). Other countries like Rwanda
have made significant strides to create a knowledge based economy (Nkurunzinza,
2019). In this case, Tanzania has been lagging behind. For this matter, this is a
feasibility study to determine the viability to open a business incubator in Tanzania.

Statement of the Problem

This section explains the underlying problem or challenges that have prompted
the feasibility study. Specifically, problem requires explaining or describing the
underlying reality of the problem. At the same time, the problem includes the negative
consequences of the underlying problems or challenge. It is also appropriate to provide
authoritative references, sources and statistics to substantiate the underlying problem.
Ultimately, this explanation should draw the necessity and importance of solving the
problem.

Illustration of Writing the Statement of the Problem

The rising concern of business survival is a subject of great concern in Tanzania.

Recently, we have seen the business initiatives and a lot of funds dedicated for those
projects or activities. However, there are limited success stories of these businesses.
Most of these businesses are plagued by inadequate knowhow and experience in
conducting a business. Given these challenges and problems, these issues normally
threaten the survival of small and medium sized businesses in Tanzania.

Recent statistics indicate that one in ten businesses survive in the current
business environment in Tanzania (Masinda, 2018). Further data provided by the
Tanzanian Bureau of Statistics indicate that most of the businesses fail between 3rd
and 6th month from inception (Masanja, 2020). Moreover, reports from SMEs in
Tanzania reveal that the majority of the entrepreneurs lack the basic skills required to
successfully operate their business and therefore realized the full potential of the
business.

Based on various sources and statistics above which indicate a clear lack of
appropriate knowledge and experience of business in Tanzania, this study intends to
determine the viability of starting a business incubator to groom small and medium
business owners and operators in Arusha.

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Objectives of the Study

The objectives states what the researcher intends to achieve or accomplish in

the feasibility study. These objectives can be categorized as general objectives and
specific objectives. The general objective is the main purpose or goal of the feasibility
study.

The specific objectives are short-term and mostly narrow in nature. They are
formulated to achieve the general objective of the feasibility study. Specifically, the
specific objectives might be financial, marketing, operational or production,
management or organizational goals. All these objectives have the sole purpose to
achieve the overall goal or general objective of determining the viability of a certain
project or business.

On the process to developing objectives, it ensures that the following must be

integrated in the formulation of objectives in a feasibility study.

 The objectives should be specific. The objectives should be precise to what they
intend to achieve.
 The objective should be measurable. The objectives should be quantifiable
 The objectives should be achievable. Any objective should be attainable.
 The objectives should be realistic. It is imperative to set objectives which reflect
the reality.
 The objectives should be time specific. In other words, these objectives can be
attained at a specific period of time.

Financial objectives

Financial objectives are goals or targets of a feasibility study that can be

described in monetary terms. This means that financial objectives affect the financial
income, assets, liabilities, equity and cash flow of the feasibility study. In other words,
the goals have a direct or indirect effect on the financial statements including income
statement, balance sheet and cash flow statement of the feasibility study. The following
are few examples of the most common forms of financial objectives in feasibility study.

Marketing Objectives

Marketing objectives are goals or targets set by a project to promote its products
or services to certain customers or stakeholders in a given period of time. In other
words, marketing objective provides the promotional or advertisement strategy to attain
the project or feasibility study objectives. It leads to awareness and provides information
about the project or feasibility study.

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Operational or Production

Objectives Operational or production objective refers to goals or targets to

execution or implementation of the main purpose of the feasibility study. It refers to
targets on the daily execution of the project or feasibility study. In addition, it focuses on
the producing goods or services in a specific project.

Management or Organizational Objectives

Management or organizational objectives provides targets about the mission and

vision of the feasibility study. These objectives provide the direction of the project and
therefore they are critical for the success of the project. Furthermore, these objectives
state the form of business, organizational structure and management of human
resources during the execution of the feasibility study.

Significance of the Study

The significance of the study provides the benefits of the study to different parties
and stakeholders. In other words, the significance provides an explanation on how the
study will be advantageous to various beneficiaries especially the society. The following
issues are important in writing the significance of the study.

 The significance of the study provides the contribution of the problem or broad
problem in education and knowledge in general.
 The significance of the study will illuminate the contribution to the current
literature.
 The significance of the study states who will benefit from the feasibility study.
This includes who will benefit from the study and what they hope to benefit from
the feasibility study.

Scope and Limitation of the Study

This section provides the coverage and the boundaries of the feasibility study. It
refers to the parameters and the areas the feasibility study will explore and investigate.
This includes the location to conduct the investigation and the time framework to
complete the feasibility study. Moreover, the scope and limitation provides the type of
information to be included in the study. At the same time, the limitations might include
the constraints beyond the ability of the researchers which might jeopardize the
execution of the feasibility study.

Methodology

The methodology provides the specific procedures or techniques applied to

collect and analyze the data of the study. This methodology permits the reader to

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critically analyze the authenticity of the research results or findings. To authenticate the
research results involves determining the validity and reliability of the survey or
questionnaire, methods of collecting data and the analysis and interpretation of the
study.

This section provides sources of data used in the study. This includes the use of
primary and secondary data. The methodology includes the research design, sampling
procedures, and treatment of data.

Research Design and Framework

The research approach will be quantitative and the research design will be
descriptive and exploratory in nature. The descriptive research design will be used to
describe the different characteristics and attributes of the small and medium sized
entrepreneurs in Arusha. At the same time, exploratory design will be used to examine
the need and demand of small and medium sized entrepreneurs in relation to
knowledge and expertise in establishing a sustainable business plan and model.

The research frame provides the illustration of the research design to be applied
in the feasibility study. Specifically, it provides the detailed step by step procedures to
conduct the research.

Sampling Procedure

The study managed to acquire appropriate data from the Chairman of the
Association for small and medium size business in Arusha. There are a total of 48321
small and medium businesses located in Arusha. Due to the large number of the
targeted small and medium businesses, the study applied the sampling formula to
determine the sample size of small and medium entrepreneurs who will participate in
this feasibility study. According to Masanja (2018) the sampling formula is provided
below.

Treatment of Data

The data collected from the questionnaire administered to small and medium size
entrepreneurs were checked and cleaned. Data cleaning involves the process of
modifying data to remove irrelevance and inaccurate information. Specifically, this
activity involves identifying incorrect, irrelevant, and incomplete answers from the filled
questionnaires and replacing or removing those responses from the data coded. The
whole process of data cleaning improves the efficiency of the results for data analysis
and therefore improves the data quality.

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 The following are some of the financial ratios and capital budget techniques that
are applied to analyze and evaluate the financial viability and sustainability of the
feasibility study.

Profit Margin

Profit margin refers to common profitability ratios which indicate the proportion of
each sales shilling earners as new income or alternatively the profitability based on
sales. It is an indicator to determine a project or business endeavor is making money. In
other words, it represents the percentage of sales that have been translated into profits.

Review of Related Literature

Business incubator is an integral part in any business development. Most

businesses have realized the importance business incubators in the growth and
sustainability of business and entrepreneurial activities around the world. This has lead
to the rise of the number of business incubators in different regions around the world.
Specifically, the issue of business incubators is a topic of discussion in the business
arena today.

In order to gain a broad and deep understanding of business incubator, it is

imperative to define and explain the concept. In particular, business incubator refers to
an organization established to promote the expansion and growth of entrepreneurial
activities through an application of business support resources and services that include
financial, social, moral, and physical support that creates sustainable business
activities. These programs are normally supported by private

Management and Organizations

The management and organization of small and medium sized business is

normally a daunting task for most of the entrepreneurs. This involves navigating the
legal requirements to open a small or medium business. More so, the financial and
technical hurdles required to open a sustainable business. In this case, a business
incubator can provide appropriate and adequate guideline to navigate these
treacherous business environments. In this case, a business incubator will offer the
following services to new and existing entrepreneurs.

Financing

It is mutually understood in developed and developing countries that small and

medium size businesses have limited access to financing. These financial constraints
limit the operations and expansion of these businesses. In Tanzania, 16% of small and
medium size business gain access to loans and funding from financial institutions
(Mashimba, 2018). At the same time, those few business who have access to loans and

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funding are subjected to a long bureaucratic process that tend to discourages small and
medium entrepreneurs. The lack of funding has a detrimental effect to the survival and
growth of the business.

Technical/Production

Cost of Operation/Maintenance

The entrepreneurs from small and medium sized business must apply for
admission in the program. The admission criteria vary depending on the nature of the
business. However, the main criteria depend on the business idea and the
implementation of the business plan.

Business incubators provide entrepreneurs with office space and administrative

services for business ideas in the initial stages. These services are associated with the
cost of operations of the business incubator. The cost of operations can vary depending
on the services offered by the business incubator.

Definition of Terms

This is a list of main or common words used in the feasibility study. The
definitions of terms provide the operational definition of the main and common words or
terms used in the study. The definition provides an explanation and understanding of
how these terms or words are applied in the feasibility study.

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