Feasibility Study and Business Plan Basics

What is a Feasibility Study?

• A close examination to help decide if a business will succeed
• It looks at product/service, market, industry, and finances
• Helps make a "go/no-go" decision

What is a Business Plan?

• Often used when a company begins
• Helps define initial goals and objectives
• Includes company structure, services, financial resources, staffing, and operational basics

Importance of a Business Plan

• Saves time and money
• Key to raising capital
• Serves as an operations guide

Business Plan Components

• State Business Objectives
• Describe the business
  • Explaining what the business will be, how the idea for your business was conceived and how the business is expected to develop
  • Or for an existing business, business name, registration date and place, history, owners/partners and major investors.
• Describe Products or Services
  • Detailed description of the product or service
  • Competitive advantage
  • Identify competition
  • Advantages and disadvantages of your product/service
• Identify Your Potential Market
  • Determine potential market size
  • Group your customers into age, gender, income, education, and other demographic factors.
• Identify Your Competitors
  • Identify businesses likely to be competitors
  • Competitors' assets and sales volume
  • Competitors' profitability
  • Competitors' operating methods (including pricing, quality, methods of selling/distribution, credit terms, advertising)
• Pricing Policy
  • Define the pricing structure based on production cost, distribution cost, and competitors' pricing.
  • The goal is to maximize profit in the long run.
• Determine Marketing Methods
  • Promotion/advertising strategies
  • How to sell the product and channels of distribution
  • Customer feedback and how to improve the image as an enterprise.
• Key Personnel
  • Names and addresses of the owners and managers
  • List partners or directors' details
• Material Requirements & Sources of Supply
  • List of direct materials needed, and where they will come from
  • Main supplier and reason for choosing them
• Production Process & Equipment
  • Detailed explanation of the production process (include equipment and materials)
  • Diagram of workflow
  • Assign jobs and estimate the number of people required for each position
  • Set salary rate.
• Prepare a Sales Forecast
  • Include a sales forecast for at least two years
  • First year: monthly sales
  • Second year: yearly sales
  • Explain the reasoning and assumptions behind the figures.
• Budget
  • Create a budget for manufacturing (materials, labor, services, manufacturing overhead) or service operations (operational costs, sales costs, general and administrative expenses)
  • Prepare monthly projections for the first year, and quarterly projections for the second and third years.
• Set Your Plan to Work
  • Raise funds
  • Obtain licenses, purchase facilities and supplies
  • Hire and train staff
  • Begin operating
  • Commit to working long hours and being dedicated to the business
• Determining Financial Requirements
  • Fixed Capital: land, building, machinery, equipment, furniture, fixtures (one-time expenses)
  • Working Capital: money needed to run the business until it becomes self-supporting (1-6 months or longer)
    • Includes raw materials, worker pay, transportation, and utilities.
  • Pre-operating Capital: money spent before the business begins operation
    • Registration, accountant fees, lawyer fees, consulting fees.

Registering your Business

• Register with the Department of Trade and Industry (DTI)
• DTI Bureau of Trade Regulation and Consumer Protection (BTRCP) handles business name registration
• If single proprietor using a name different than your own, it must be registered with the DTI.
• Business name registration with DTI is optional for partnerships and corporations.

Registration Requirements:

• Single Proprietorship: DTI, Municipal/City Offices, Picture Registration Fee.
• Partnership: Partnership Agreement, SEC Filing Fee, Legal Affairs Release.
• Corporation: Articles of Incorporation and By-Laws, Articles of Incorporation Registration Fee, Release,
• Cooperative: Economic survey, Articles of Incorporation, By-Laws, Registration Fee.

Hiring and Training Personnel

• Importance of employees for business success.
• Employees' rights:
  • Equal work opportunities: male and female employees are entitled to equal compensation, promotion, and training opportunities. It is unlawful to discriminate against female employees
  • Security of Tenure: No employee can be dismissed from work except for just cause and only after due process.
  • Work Days and Hours: 8 hours per day, with breaks or rest periods.
  • Wage and Wage Related Benefits: Overtime, night differential, rest day, holiday, and 13th month pay.
  • Safe working conditions
  • Rest days and holidays
  • Right to self-organization and collective bargaining
  • Worker’s participation and tripartism

Getting Your Business Started

• Pay decent wages/salary
• Provide value to customers
• Compete fairly
• Learn from mistakes
• Be prepared for challenges ahead

This quiz explores the fundamentals of feasibility studies and business plans. It covers their importance, key components, and how they contribute to business success. Understand the essential elements that shape a solid business strategy.