Chapter four

Part II- Feasibility study and Business plan

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4.2 Feasibility Study
Feasibility is the measure of how beneficial or practical the business concept
will be.An entrepreneur can use a feasibility analysis in order to decide if
there is enough demand for a product or service. Is there Potential?
feasibility analysis is the process that tests a business concept; it allows the
entrepreneur to decide whether a new business concept has potential,
business conditions are appropriate to go forward with starting a business.

A feasibility study is an analysis of the viability of an idea from beginning

to end through a disciplined and documented process of identifying
potential problems and attempts to answer: Will the idea work and should
you proceed with it to develop business plan ?
2
Feasibility Analysis
Considerations

3
Testing the Industry
The broadest level of feasibility analysis looks at the industry in which the
business will operate.
industry a group of businesses with a common interest.
You, the entrepreneur, will examine factors, such as…
• health of the industry
• trends/patterns of change
• major players/ competitors
• Potential customers
 Are there any barriers to entry? If yes, how will you overcome them?
 What are the typical profit margins in the industry?

4
Talking to Customers
The most important part of the feasibility analysis is testing
customers to measure interest and identify the target
customers.

Target Customers : people most likely to buy a business’s

products and services

5
Testing Product or Service Requirements
To consider all the requirements of a product or service, create a
prototype. This is TRUE, even if your business is not manufacturing
products. Prototype: a working model used by entrepreneurs to
determine what it takes to develop their products or services.
o What are the results of concept, speed, reliability
testing? oWhat are results of usability/user interface
testing? oWhat are the features &benefits?

6
Studying the Competition
An easy way to evaluate the Competitive Grid : a tool
competition is to create a
competitive grid. 5 Column for organizing important
that lists the name of your Grid information about a
Competitor and their Customers,
Benefits,Distribution, Strengths/ business venture’
Weaknesses competition s
Name Customers Benefits Distribution Strength/weaknesses
x
y

How is your product/service differentiated from others in the

market?
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Looking at Start-Up needs
In your feasibility study, you Therefore, questions to
answer:
should determine the resources
What are your start-up
needed to your business: capital requirements?
Equipment, Furnishings, a
Facility, Inventory, Supplies,
Employees etc.

8
Analyzing the Value Chain
A business can create a
competitive advantage by value chain is the distribution
improving the value chain or
its products and services. channel(flow chart) through which
a product or service flows from
The value chain includes the producer to the customer.
manufacturers, distributors,
and retailers &customers
The goal is to deliver maximum
value for the least possible total
cost.
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Founding &Management Team

describe the profiles of the describe also what qualities you

business founders and the and any other managers or
ownershi of your venture, advisors to manage and operate
and
p
explain how the business will the business.
be managed on a day-to-day basis.

10
Cont
…
Q uestions to Answer: Founding &M anagement Team

⚫What specific skills or expertise will you need to start

this business?

⚫ What are your team gaps and how will you fill them?

11
Business Model
A strong business model is important to investors because
it describes how you intend to make money(sell the
product, charge licensing etc.) with your business concept.

12
 Types of Feasibility Study
1.Market Feasibility: will customers buy it? it includes description of the
Industry, future market potential, target customers, market price, sales
projection, etc.
• Definition: The process of identifying the price range at which a quantified
market segment is willing to purchase the product and justifying why the
target market will choose the product over the competitions‘.
• Objective: to identify who will buy the product, how many units will they
buy, and how much they will pay.
• Assessment:
o Have you identified the market segments?
o Have you quantified the market size?

13
2.Technical Feasibility--------―Can it be built?‖

• What technical risk is there?

• Is the technology available?

• Is it compatible with our business?

• Do we possess the necessary technical expertise?

 how you will produce a product or deliver service (i.e., materials,

labor, transportation, business location, technology needed,
hardware, software, facilities etc.)should be assessed in detail.

14
 Tech feas…
include all the technical requirements of your business from production to
customer receipt. Having a great idea for a product or business is not
enough; you have to show how you can make money from the idea.
How to Evaluate technical feasibility?
oFunctional design and attractiveness
o Flexibility, durability, reliability
o Product safety/risk to the wellbeing of the user
o Ease and low cost of maintenance
o Ease of processing and manufacturing
o User friendliness

15
Tech
cont…
• Assessment:
oHave you measured how the product will perform/working
principle?
oHave you developed the programme or algorithm?
oDo you have a design for the product, the production
process, layout etc?
oHave you determined manufacturing requirements
oDo you have a working model/prototype of the product?

16
3.Operational Feasibility-----―Will it work/operate/
function/will it be used?‖
• internal organizational structure, technical
and managerial skills,
operations, production methods and equipment you will need
to operate your venture.
• Performance - Does the business provide adequate output
and response time
o how well it will solve the problem?
o how it will satisfy the requirements and how people feel about your
business?
• Efficiency - Does the business make maximum use of
available resources, including people, time, flow of forms,...
• Potential labor objections?
• Will the business be reliable &will the business flexible and
expandable? regulations?
• Government 17
38
4. Economic Feasibility--― Will it generate Profit/be economical?‖
• What are the benefits? Both tangible(increased sale, cost
reduction, efficient use of staff time, etc. and
intangible(higher quality products/ services, better customer
relations, improved staff morale, increased flexibility of operation
etc.)
• What are the development( hardware, software, team, consultant
fee
,installation),operational(material, energy, maintenance) etc.
costs ?
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Economic Feasibility
Analysis(EFA)
Techniques of Economic Feasibility Analysis:
i) Calculate Operating Return on Investment:
• Allows comparison of Operating income of alternative solutions.
𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝐼𝑛𝑐𝑜𝑚𝑒
ROI= *100%
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠/𝐼𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡

ii) Calculate Break-Even point- the point at which a business operation no

longer loses money and can begin to make a profit. It may be in terms of #
units needed to be sold to cover costs or time- how long will it take (in years)
to payback the accrued costs.
Decision rule: if the # Break-Even units make sense then go & it is feasible
otherwise try to improve the Break- Even point or change your business idea.
 Cont…
𝐹
BP=𝑈𝑆𝑃
𝐶 −𝑈𝑉
Where, FC-Fixed Cost, USP-Unit Selling Price and UVC-
𝐶
Unit
Variable Cost
How to improve the Break-Even point- ?
Is it Feasible?
1) By decreasing the 𝐹𝐶(𝐷𝑒𝑠𝑖𝑔𝑛𝑖𝑛𝑔 𝑛𝑒𝑤 𝑙𝑎𝑦𝑜𝑢𝑡,rent small
land and produce effectively and efficiently
2) By decreasing the UVC(by minimizing material quantity,
cost and labor time and
3) By increasing the Unit Selling Price

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BEA
Graphically
Techniques
…
iii)Payback period
It Considers the length of time required to ―payback‖ (recapture) the
original investment from the annual cash inflow produced.
Payback is usually measured in years.
Decision rule: Take the project with the shortest payback period.
Amount invested
1st method: Payback period= Expected annual net cash inflow
 PAYBACK
CONT…
2 method: trial & error: it is better than the 1
nd one
st

N.B: Net Cash is found from investment cash flow statement.

iv) Net Present Value
•It is the difference between the Present Value of a project and its Initial
Cost
•NPV= Total Present value - Initial Cost

 Project the costs and sales/revenue/benefits over time, e.g. 3-5 years
 Calculate Net Present Value for all future costs/benefits
• determines future costs/benefits of the project in terms of
today's dollar values
• A dollar earned today is worth more than a potential dollar earned
next year
NPV
cont…
Decision rule: If NPV is positive, the project
is viable/feasible
Numerical Examples
Techniques of Economic Feasibility Analysis:
i) Calculate Operating Return on Investment:

𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝐼𝑛𝑐𝑜𝑚𝑒
ROI= *100% E.G. Let a firm‘s Operating Income =100,000 Br & Total
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠/𝐼𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡
asset/Investment = 920,000 Br then find ROI?
N.B: 1.Operating Income is found from income statement & total asset from balance sheet
2.Disadvantage: it depends on income not on cash

Solution:10.87% .if the average industry ROI=13.2%.It is evident that the firm‘s return on total invested
capital is less than the average rate of return for the industry. This implies the firm is generating less income
on each birr of the assets than are its competitors.
Decision : the firm should know why the return is below the average. Maybe the assets are not used
efficiently.

25
In other way ROI formula is: 
Net Profit / Total Investment * 100 = ROI.
Let's apply the formula with the help of an example.
You are a house flipper. You purchased a house at the courthouse auction for
$75,000 and spent $35,000 in renovations. After sales, expenses, and
commission, you netted $160,000 on the sale of the renovated house. What is the
ROI?
Your net profit is going to be what you netted ($160,000) minus what you spent
($75,000 + $35,000), so it is $50,000. Your total investment is also what you
spent ($75,000 + $35,000), which is $110,000.
ROI = Net Profit / Total Investment * 100
ROI = 50,000 / 110,000 * 100
ROI = .45 * 100
ROI = 45%
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• The fundamental accounting equation

Profit = Revenues - Costs

Revenue = SP*units sold ,SP = selling price
Costs = FC + VC(units manufactured)
FC = fixed cost
VC = unit variable costs.
• We are assuming that units manufactured equal
units sold

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 What if we want to know how much product we must sell to
break even?

•The breakeven point is the point where profit is zero,

so Profit /Loss = 0 = Revenue - Cost
= SP*units sold - FC - VC*units sold
= (SP - VC)*units sold - FC

units sold = FC/(SP - VC)

•We will call units sold at Profit /Loss = 0: BE units

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 Cont…
ii) Calculate Break-Even point
𝐹
BP= 𝐶
𝑈𝑆𝑃−𝑈𝑉
𝐶

e.g. let the fixed costs(rent, land, interest loan, insurance, equipment,
advertising expenses ,property, etc.) be $50,000; USP= $ 20 and UVC of
direct material, labor, energy be $10. Determine the BP.

F𝐶
Solution: BP(Q)= = 50,000 = 5,000 Units
𝑈𝑆𝑃−𝑈𝑉 20−10
𝐶

5
 EXERCISE
John sells a product for $10 and it cost $5 to produce (UVC)
and has fixed cost (FC) of $25,000.

a) How much will he need to sell to break-even?

b) How much will he need to sell to make a target profit of

$1000?

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Solutio
a) Revenues – Variable cost – Fixed cost = profit
n
(USP x Q) – (UVC x Q) – FC = profit
$10Q - $5Q – $25,000 = $ 0.00
$5Q = $25,000
Q = 5,000 units
b) What quantity demand will earn $1,000?
$10Q - $5Q - $25,000 = $ 1,000
$5Q = $26,000
Q = 5,200 units

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The break-even point can be calculated in terms of:
 Volume of production at break even point
 Sales revenue at break even point
 Factory Capacity; and
 Sales Price

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Example 1
ABC company is working in the following business environment
Maximum Capacity= 25,000 units per year
Total Fixed Cost = ETB 30,000
Sales Price =ETB 10
Variable Cost = ETB 7
Calculate the break even point in
a) Volume of Production at break-even point
b) Sale revenue at break-even point
c) Capacity utilization
d) Using the same data give above, ABC plans to produce and
sell 15,000 units and wishes to know the minimum price below
which it should not sell his product. 33
 a) Volume of
Production

BEP =

= = 10,000 units

You need to sell 10,000 units to break even points

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b) sales revenue

sales revenue = Production units X Sales price

= 10,000 units X 10 ETB= 100,000 ETB

OR = X unit price = X 10 = 100,000 ETB

The result can also be calculated based on the equation that at

break even sales revenue and all costs (fixed and variable) are the
same, i.e.
Sales revenue = total fixed cost + total variable costs
= 30,000 ETB + (10,000 X 7) = 100,000 ETB
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 C) Capacity
Utilization

Capacity Utilization=

= 40 %

This is the most popular method of expressing break-even.

In this example, if you are able to make use of at least 40% of
your theoretical production capacities ( and sell the products),
then you are break even.
If you produce more, you make a profit. It is a quick indicator
for steering your business.
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D) Minimum acceptable price

The break-even analysis can also be utilized for guiding the

minimum acceptable price to a business at a particular level of
production.

It can be calculated as follows:

Price = =

= = 9.00 ETB

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 Con’t…..

The minimum price will be lower if production is more, say

20,000 units

i.e. = 8.50 ETB

The reason for reduction in the break-even price is that the
fixed costs are spread over a large number of units; hence the
cost per unit goes down.
Thus, the higher the safety margin, sales price being the
same, the higher will be the scope of profit.
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Example 2:
A small street side café offers fresh traditional coffee to the
general public. Total variable cost per coffee (including coffee
beans, water, fire wood and sugar) amount to be ETB 1.60 per
cup. The selling price is ETB 4.00. The café has fixed costs per
week of ETB 360.00, being the rental of the place.
Capacity = 300 units
Calculate:-
1) Volume of production at break-even point
2) Sales at break-even point
3) Capacity Utilization (%)
4) What is the minimum acceptable price, if the café plans
to produce 250 cups.
5) diagrammatic presentation of the break – even
analysis
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 Techniques
…
iii)Payback period

1st method: Payback period= Amount invested

Expected annual net cash inflow

Example 1: Amount Invested =15,000 Br & Expected Net Annual

Cash Inflow=4500 Br.
Payback period= 15,000 = 3.33years
45,000

OR, pay back period = Total outflow

Inflow every year
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PAYBACK
CONT…
What Is Net Cash Flow? 
 Net cash flow is the difference between a company’s cash inflows and
outflows within a given time period.
 After paying for all operating costs and debt payments, a company has a
positive cash flow when it has excess cash. If a company is paying more
for expenses than it earns, it has a negative cash flow.

41
PAYBACK
CONT…

Payback period for uneven cash flow = Year before full recovery +
unrecovered cost at beginning of the year
Cash flow during the year

42
PAYBACK
CONT…
2 method: trial & error: it is better than the 1
nd one st

N.B: Net Cash is found from investment cash flow statement.

Home exercise
The initial investment is 15000 br

43
 Techniques Net Present Value (NPV) is the value of all
future cash flow (positive and negative) over the

cont…
iv) Net Present Value
entire life of an investment discounted to the
present.
NPV= Total Present value - Initial Cost
E.g. Assume a company invest $ 9000 in a project today and the project is
expected to have a life of 4 years. The expected cash inflows at the end of
each of the next four years are $2000,$3000,$3000 and $4000.
Cash Flow Diagram

44
NPV
cont…
PV formula: Determine the NPV

45
Conclusion

46
5. Financial Feasibility: Estimate the total capital requirements,
Estimate equity and credit needs and determine financial sources,
Budget expected costs and returns/revenue of various alternatives…
It looks at how much cash is needed, where it will come from,
and how it will be spent, Who benefits from a project?; Will the
beneficiaries be financially better off compared to what they will be
obligated to pay?
It determines whether we are able to pay for a business and have the
capability to raise the necessary funds.
The test of financial feasibility is passed if (a) beneficiaries are able
to pay costs within payment period, (b) sufficient capital is
authorized and available and (c) estimated revenues are sufficient to
cover allocated costs over the repayment period.
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6. Legal Feasibility- It includes study concerning contracts,
liability, violations, and other traps frequently unknown to the
technical staff.
Study Conclusion: it contains the information you will use for deciding whether
to proceed or not with creating the business

48
FEASIBILITY STUDY (PROOF OF BUSINESS CONCEPT)
OUTLINE/FORMAT
 Executive Summary
 Product or Service  Business Model
 Market Feasibility
o Competition
o Industry/Market Environment  Intellectual Property
o Marketing and Sales Strategy
 Technical Feasibility/Technology  Regulations/Environmental Issues
 Operational Feasibility
 Production/Operating Requirements
 Critical Risk Factors
 Management and Personnel Requirements
 Timing Considerations
 Economic Feasibility
o Cost -Benefit Analysis
o Break-even Analysis  Capital Requirements & Strategy
o Payback period
o Net Present Value  Study Conclusion/Final Recommendation
 Financial Feasibility
o Income Statement Projections
o Balance Sheet Projections
o Cash Flow Projections

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 4.3 Business Plan: Your Road
Map to Entrepreneurial Success
A business plan is a written document, which is used as a guideline
& a game plan, prepared by the entrepreneur that describes all
the relevant internal and external elements and strategies for
starting a new venture or expanding an existing business.

It should explain the key variables for success or failure, thereby

helping you prepare what could go right & wrong and then to make
the right decision.
.

50
Cont
…
A business plan is also called a feasibility plan that encompasses the
full range of business planning activities, but it requires the depth or
detail of research expected for an establishment enterprise.
A business plan presents your basic business idea and integration of operating,
marketing, financial, managerial, human resources considerations etc.

It should explain your idea, describe where you are, point out where you want
to go, and how you propose to go there.

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Why Should I Write a Business Plan?-The
Purpose of Business Plan
1.It provides direction by making you discuss where you want to take the
business(qualitative expression of the objectives with quantifiable targets )
and helps to monitor performance .

2.It serves as an operating guide and provides structure to your thinking and
helps you focus on your idea and make sure you‘ve covered all of the
important areas

52
3. It can convince investors that the entrepreneur has identified high growth
opportunities.

4.It prompts you to think about the future. A good business plan will

include ideas for dealing with new competitors in your market.

5.It entails taking a long-term view of the business and

its
environment(growth and expansion of the business).

53
6.It emphasizes the strengths and recognizes the weaknesses of the
proposed venture.

7.A business plan will help you attract or communicate your idea, not
only to financers(to get fund), but also to employees, potential
employees, suppliers, and customers. As a communication tool, a
carefully developed plan will provide something that other people can
react to. You can use their insights to help you develop a more
successful venture.

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The Format of a Business
PlanCover Page
Competitive Analysis
Title Page
Product/Service & Marketing Plan
Table of Contents
Operations Plan
Executive Summary
Mission and Vision Statements Organizational Plan

Company Description
Financial Plan
Management Plan
Growth Plan
Industry Overview
Contingency Plan
Market Analysis
Supporting Documents
The Business 62 55
Plan
Cover Page, Title Page, Table of
Contents,
Every business plan should have a cover page, a title page & a table of
contents

56
Executive Summary
Executive Summary - a brief
To save time, investors and
report of the key points contained
in a business plan lenders rely on the executive
summary to help them decide
The Executive Summary
include
should the most important whether business plan is
information from each section the following.
worth
of the business plan. Try to fit it
on
1 to 3 pages.
57
Executive Summary
Cont…
It should give highlights at least for the following features:
• The product or service
• The market and its potential
• The marketing plan
• The organizational plan
• The management team
• Key elements of your operations
•Funding requirements, and profit and cash forecasts(financial
statements)
• Return to the investor.

58
Vision and Mision Statement
The vision statement and A mission statement communicates the
mission statement state the
guiding principles by which a purpose and principles of what you‘re
company functions. doing and why you‘re doing it?
Vision Statement a declaration of
the scope and purpose of a The goals you set, actions you take, and
company the way you spend your time will be
guided by this statement
Mission Statement a declaration of
the specific aspirations of a
company and the major goals for
which it will strive.
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Company/business Description
This section outlines:
• Business name & location
• the company‘s background information if it already exists,
• a definition/type of the business—is it a manufacturer,
retailer, service or else,
• basic business concept
• why are you starting the business?
• details of share or capital structure

60
 Management Team Plan
It presents team members name & a. Existing management
qualifications.  Outline of background
investors prefer ‗ A‘‘ mgt team experience, skills , knowledge
& &traits
‗ B‘ product to ‗ B‘ mgt b. Future requirement -gaps in
team& skills and experience and how
‗ A‘ product. will be filled ,- future
You must describe how your
management team has the recruitment
they & training plans
capabilities to
business
execute plan in terms of: your
61
Industry Overview

• It presents your research into the industry, those companies providing

similar, complementary, or supplementary products or services.
• Historical and Future Trends including Market growth
rate, New products and developments, demographic
trends
• Major players within the industry
• Factors driving dynamics
• Legislation and Policies Driving the Industry

62
 Competitive

Analysis
you should assess competitors  It should demonstrate that propose
with a critical eye on their the business has a d over

strengths and weaknesses advantage

competitors. its

compared to your own.  Consider competitors‘ Market share, number

Relationship with customers, Advertising
 Address how your competitors
plan, Price, Product/service features, quality,
fill those needs and what you, in
Distribution, packaging, Financial
turn, will offer.
strength/cost position, and Length of time in
business.
63
 Market
Analysis
It describes the market‘s characteristics(industry overview-health,
competitiveness, opportunities, threats etc),forces(buyers‘ power-
buyers can switch to alternative products, Suppliers‘ power) your
target customer‘s profile(Who will be your customers; what do they
want from you?

It also describes the type of competition it will face, and how you
plan to gain an advantage over them to create a successful venture;

The results help you determine your overall marketing and sales
strategies.

64
Mkt Analysis
cont…
Target Customer Profile

• Are your customers local, regional, national, and/or International;

young, old, male, female, high income, low income, etc.; Are there
behavioral characteristics that differentiate your customers? (for
instance price sensitive)

•Are there cultural considerations, social connections, or other personal

factors that might shape your customer‘s needs, wants, and buying
behaviors? 65
Marketing &Product / Service Plan
A marketing plan describes product offered in detail by identifying its unique
features (drawing, life span, color , beyond the product itself, like packaging
etc.);why people will buy the product; legal protection- patents, copyrights,
trademarks and dangers of technical or style violence.
The market niche- methods of identifying & attracting customers; types of sales
force; pricing(why below or above market price), company image, marketing
tactics(How will you reach your customers?), promotion(e.g. a media plan),
distribution system(efficiency, timeliness, freshness, customer service, customer
access) and a marketing budget.
A marketing plan discusses promotional efforts(are designed to communicate the
values of your product to your customers, the plan should focus on target
customers
and budget). 66
73
Production Plan or Operational
It describes all the processes involved in the production and delivery of
Plan
the product or service to implement your idea.

It explains the type of production system/method, facilities (location,

space & equipment),labor, raw material, production/service capacity,
lead time quality control methods, inventory & operation control
methods, sources of supply, & purchasing procedures. It also describes
how you will manage your business. A manufacturer will want to
describe how raw materials will be obtained and transformed into a
finished product. A service provider will want to describe where, when,
and how the service will be performed. 67
Organizational Plan
The organizational plan section of a business plan looks at the people
aspects, identification of partners, authority of principals and the legal
form of the business(sole proprietorship, partnership, corporation).

68
Financial
Plan
The plan should demonstrate how much money will it need(amount of
financing), and where will you get the necessary funds?

The financial plan includes its repayment terms, financial statements

(income, cash , balance sheet, potential return on investment/ profit
potential and break-even analysis) and It presents forecasts of future
financial statements.

69
The financial portion of your business plan will be examined closely by
those interested in joining you, investing in the venture, or lending you
money, so it must be thorough. They will want to know how you will
use invested funds to create a successful venture.

70
Growth Plan
The growth plan describes how the business will expand in
the future. Investors and lenders like to see that a business has
plans to grow in a planned and controlled way.

71
Contingency
Plan
The contingency plan section of the business plan looks at the
risks to business, such as changing economic conditions and
lower-than-expected sales. It then suggests ways to minimize
the risks.

72
Appendix of Supporting Documents
It provides materials to supplementary to the business plan such as:
Resumes of key investor ,owners, Management team biographies;3D or
photographs of products, facilities, buildings, facility layout, detail
marketing research studies, signed contracts of sales, Draft marketing
brochure with or without pricing , firm‘s ethics code etc.

73
Common Mistakes in Preparing Business Plans
1.Not Creating a Plan(due to not having enough time, don‘t believe it will
be useful, not sure where to start, and so on)is a main reason for business
failure. ‗People never plan to fail, people only fail to plan! ‘.
2.Incomplete Market Research (your business should be market-driven
rather than product-driven).
3.Projecting exaggerated growth levels
4. Claiming/Exaggerating your performance above industry averages
5. Underestimating the need for capital
6.Making Unrecognized Assumptions-you must update your assumptions
by comparing with actual situations.
7.Including useless data-It should be a selling document that is concise,
clear, and logical; it should contain measureable and quantitative rather than
only qualitative information.
9.Skipping Steps
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10. Missing Linkages -inconsistent plan
This is a mistake where the different stages described above are not
interrelated, where the assumptions made in one section are different from
assumptions made in another. The marketing budget should contain the same
number used in the financial projections. The pricing policy chosen should be
consistent with your market position. Your market research should guide the
marketing plan and the financial projections.
11.Not making SWOT analysis for you and your competitors( Strengths,
Weaknesses, Opportunities ,Threats ).
12. Not making the business plan draft

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 Feasibility Studies Versus Business Plans
Feasibility Studies demonstrate to a prospective project owner or
investor that a given concept is viable and whether further study and/or
a business plan is warranted.
A good rule of thumb is to never commission a business plan until a
feasibility study has been completed first. A feasibility study is a
relatively inexpensive way to safeguard any wastage of further
investment (will it work or won’t it). Feasibility serves as a valuable
tool for a winning business plan. If a project is seen to be feasible from
the results of the study, the next logical step is a full business plan.

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On the other hand, a business plan is designed to ―plan‖ in advance how a
business or project will be started, implemented and managed. Business
plans are commissioned for reasons such as: Reorganization,
investment/funding or a management blueprint for operation. In addition, a
Business Plan is a more detailed and in depth document that incorporates the
information gained from a feasibility study(based on calculations, analysis,
and estimated projections of a business opportunity) plus detailed budgets
with forecasts, tactics, a detailed strategy etc. to be implemented in other to
start, grow and sustain the business.

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Conti…
Strategy: a plan of action that coordinates the resources and
commitments of an organization to achieve superior performance.
Target Audience
Feasibility studies are for the entrepreneur's benefit, to determine whether
it's worth proceeding with the business. Business plans are targeted at
investors, lenders and future executives to explain how the business works.
Feasibility studies usually compare several possible scenarios for how a business
might work. Business plan describes a specific business.

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