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Full Feasibility Analysis

From Preparing Effective Business Plans by Bruce R. Barringer

Note: All fields can be expanded to provide additional space to respond to the questions. A
copy of this template, along with each of the assessment tools, is also available in
PDF format at the authors Web site at www.prenhall.com/entrepreneurship.

Introduction
A. Name of the proposed business
- Body mist sunscreen
B. Name of the founder (or founders)
- Pinsinee Mekpanuwat
C. One paragraph summary of the business
- Body mist sunscreen is a new product that gather skin products together.
You will get moisturizer, sun light protecting and smell good. The main
point is the packaging; the product is designed in body mist format. So, it is
convenient to use and easy to carry.

Part 1: Product/Service Feasibility


Issues Addressed in This Part
A. Product/service desirability
B. Product/service demand

Assessment Tools
Concept Statement Test

Write a concept statement for your product/service idea. Show the concept statement
to 5 to 10 people. Select people who will give you informed and candid feedback.
Attached a blank sheet to the concept statement, and ask the people who read the
statement to (1) tell you three things they like about your product/service idea, (2)
provide three suggestions for making it better, (3) tell you whether they think the
product or service idea is feasible (or will be successful), and (4) share any additional
comments or suggestions.
Summarize the information you obtain from the concept statement into the following
three categories:

* Strengths of the product or service ideathings people who evaluated your


product or service concept said they liked about the idea
* Suggestions for strengthening the ideasuggestions made by people for
strengthening or improving the idea
* Overall feasibility of the product or service conceptreport the number of
people who thing the idea is feasible, the number of people who think it isnt
feasible, and any additional comments that were made

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* Other comments and suggestions

Buying Intentions Survey


Distribute the concept statement to 15 to 30 prospective customers (do not include
any of the people who completed the concept statement test) with the following
buying intentions survey attached. Ask each participant to read the concept statement
and complete the buying intentions survey. Record the number of people who
participated in the survey and the results of the survey here.
Along with the raw data recorded here, report the percentage of the total number of
people you surveyed that said they would probably buy or definitely would buy your
product or service if offered. This percentage is the most important figure in gauging
potential customer interest.

One caveat is that people who say that they intend to purchase a product do
not always follow through, so the numbers resulting from this activity are almost
always optimistic. Still, the numbers provide you with a preliminary indication of
how your most likely customers will respond to your potential product or service
offering.

How likely would you be to buy the product or service described above?
____1__ Definitely would buy
____3__ Probably would buy
____8__ Might or might not buy
____0__ Probably would not buy
____1__ Definitely would not buy
Additional questions may be added to the buying intentions survey.

Conclusion (expand fields and report findings, in discussion form, for each area)
A. Product/service desirability
- It is make sense and reasonable because this product can use in real life and it can
be used in every type of people whether man and woman or adult and teenager.
However, it is not the product that excited other people much because we just
combined every function of skin product together, but we did not create a new
function. This product can take advantage of a gap in the marketplace because
there are more than half of costumers that want to buy this product. Therefore, it is
a good time to introduce the product in the market because at this time most of
people in urban have a rush hour that they live hurriedly all the time so this
product create to make people have more convenient.

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B. Product/service demand
- According to the survey, most of people interested in this product that there is 1
people who definitely would buy, 3 people who probably buy, 8 people who might
or might not buy and only 1 people who will not definitely by. So, we can know
that this product will be satisfy and feasible for the majority of people.
C. Product/service feasibility (circle the correct response)
Not Feasible Unsure Feasible
D. Suggestions for improving product/service feasibility.
- This product does not new so it is not excited people much that there are
many brands that sell this kind of product already

Part 2: Industry/Market Feasibility


Issues Addressed in This Part
A. Industry attractiveness
B. Target market attractiveness
C. Timeliness of entry into the target market

Assessment Tools
Industry Attractiveness
To the extent possible, assess the industry at the five-digit NAICS code level your
potential business will be entering. Use a broader industry category (less NCICS
digits) if appropriate (http://www.census.gov/epcd/www/naicstab.htm).
Assess the attractiveness of the industry the potential business plans to enter on each
of the following dimensions.

Industry Attractiveness Assessment Tool


(used to assess the broad industry, rather than the specific target market, you plan
to enter)
Low Potential Moderate Potential High Potential
1. Number of competitors Many Few None
2. Age of industry Old Middle aged Young
3. Growth rate of industry Little or no Moderate growth Strong growth
growth
4. Average net income for Low Medium High
firms in the industry
5. Degree of industry Concentrated Neither Fragmented
concentration concentrated nor
fragmented

6. Stage of industry life Maturity Growth phase Emergence


cycle phase or phase
decline phase
7. Importance of industrys Ambivalent Would like to Must have
products and/or services have
to customers

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8. Extent to which business Low Medium High
and environmental
trends are moving in
favor of the industry
9. Number of exciting new Low Medium High
product and services
emerging from the
industry
10. Long-term prospects Weak Neutral Strong

Target Market Attractiveness


Identify the portion or specific market within your broader industry that you plan to
target.
Assess the attractiveness of the target market on each of the following dimensions.

Target Market Attractiveness Assessment Tool


(used to assess the specific target market, rather than the broader industry, you plan
to enter)
Low Potential Moderate Potential High Potential
1. Number of competitors Many Few None
in target market
2. Growth rate of firms in Little to no Slow growth Rapid growth
the target market growth
3. Average net income for Low Medium High
firms in the target
market

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Low Potential Moderate Potential High Potential
4. Methods for generating Unclear Somewhat clear Clear
revenue in the industry
5. Ability to create barriers Unable to May or may not be Can create
to entry for potential create able to create
competitors
6. Degree to which Satisfied Neither satisfied or Unsatisfied
customers feel satisfied by dissatisfied
the current offerings in the
target market
7. Potential to employ low Low Moderate High
cost guerrilla and/or buzz
marketing techniques to
promote the firms product
or services
8. Excitement surrounding Low Medium High
new product/service
offerings in the target
market

Market Timeliness
Determine the extent to which the window of opportunity for the proposed business
is open or closed based on the following criteria.
Determine the timeliness of entering a specific target market based on other criteria.

Market Timeliness Assessment Tool


Low Potential Moderate Potential High Potential
1. Buying mood of Customers are Customers are in a Customers are
customers not in a buying moderate buying in an aggressive
mood mood buying mood
2. Momentum of the market Stable to losing Slowly gaining Rapidly gaining
momentum momentum momentum
3. Need for a new firm in the Low Moderate High
market with your offerings
or geographic location
4. Extent to which business Low Medium High
and environmental trends
are moving in favor of the
target market
5. Recent or planned Large firms Rumors that large No larger firms
entrance of large firms entering the firms may be entered the
into the market market entering the market market or are
rumored to be
entering the
market

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall


Conclusion (expand fields and report findings, in discussion form, for each area)
A. Industry attractiveness
- For the broad industry attractiveness, this product has many competitors because
lotion or sunscreen already have in the market for a long time. The growth rate of
industry is stable and medium growth so the income also moderate.
B. Target market attractiveness
- The detail has changed a little when the product is in the target market
attractiveness which is the competitor is less than an industry because we focus on
one group of people who have a hurry life that different from other brands that
focus on other groups. So, amount of people can be either satisfied or dissatisfied.
C. Market timeliness
- Even though this product is not a new thing, but it can respond peoples need that
proper with people lifestyle at this time. So, there are some group of people who
are in moderate to buy and it slowly gaining momentum. , it comes in the right
time.
D. Industry/market feasibility (circle the correct response)
Not Feasible Unsure Feasible
E. Suggestions for improving industry/market feasibility.

Part 3: Organizational Feasibility


Issues Addressed in This Part
A. Management prowess
B. Resource sufficiency

Assessment Tools
Management Prowess
Use the following table to candidly and objectively rate the prowess of the founder
or group of founders who will be starting the proposed venture.

Management Prowess Assessment Tool


Low Potential Moderate Potential High Potential
1. Passion for the business Low Moderate High
idea
2. Relevant industry None Moderate Extensive
experience
3. Prior entrepreneurial None Moderate Extensive
experience
4. Depth of professional Weak Moderate Strong
and social networks
5. Creativity among Low Moderate High
management team
members
6. Experience and expertise None Moderate High
in cash flow
management
7. College graduate No college Some college Graduated or

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education education but not are currently
currently in college in college

Resource Sufficiency
The focus in this section is on nonfinancial resources. Use the following table to rate
your resource sufficiency in each category.
The list of resources is not meant to be exhaustive. A list of the 6 to 12 most critical
nonfinancial resources for your proposed business is sufficient.

An explanation of the rating system used in the first portion of the table is as follows:
1 Available
2 Likely to be available: will probably be available and will be within my budget
3 Unlikely to be available: will probably be hard to find or gain access to, and
may exceed my budget
4 Unavailable
5 NA: not applicable for my business

Resource Sufficiency Assessment Tool


Ratings Resource Sufficiency
1 2 3 4 5 Office space
1 2 3 4 5 Lab space, manufacturing space, or space to launch a
service business
1 2 3 4 5 Contract manufacturers or outsource providers
1 2 3 4 5 Key management employees (now and in the future)
1 2 3 4 5 Key support personnel (now and in the future)
1 2 3 4 5 Key equipment needed to operate the business
(computers, machinery, delivery vehicles)
1 2 3 4 5 Ability to obtain intellectual property protection on key
aspects of the business
1 2 3 4 5 Support of local and state government if applicable for
business launch
1 2 3 4 5 Ability to form favorable business partnerships
Ratings: Strong, Neutral,
or Weak
Proximity to similar firms (for the purpose of knowledge
neutral sharing)
strong Proximity to suppliers
strong Proximity to customers

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neutral Proximity to a major research university (if applicable)

Conclusion (expand fields and report findings, in discussion form, for each area)
A. Management prowess
- Im starting business from my passionate that I want to include all of skin
product together to make life is easier and more convenient. Even though, I dont
have industry and entrepreneurial experience at all because I havent graduated
yet, I have discussed about this product with management team already.
B. Resource sufficiency
- Office space is available now that I and my team will meet and discuss there.
Similarly, lab space and space for launch a service business. However, there is a
few employees now, but in the future there will be more employees for sure.
C. Organizational feasibility (circle the correct response)
Not Feasible Unsure Feasible
D. Suggestions for improving organizational feasibility
- Im just start the business so many things are still not stable so I will lightly learn
from mistake and improve it to be better.

Part 4: Financial Feasibility


Issues Addressed in This Part
A. Total startup cash needed
B. Financial performance of similar businesses
C. Overall financial attractiveness of the proposed venture

Assessment Tools
Total Start-Up Cash Needed

The startup costs (which include capital investments and operating expenses) should
include all the costs necessary for the business to make its first sale. New firms
typically need money for a host of purposes, including the hiring of personnel, office
or manufacturing space, equipment, training, research and development, marketing,
and the initial product rollout.
At the feasibility analysis stage, it is not necessary for the number to be exact.
However, the number should be fairly accurate to give an entrepreneur an idea of the
dollar amount that will be needed to launch the firm. After the approximate dollar
amount is known, the entrepreneur should determine specifically where the money
will come from to cover the startup costs.

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The total startup cash needed can be estimate using the following table.

Total Startup Cash Needed (to Make First Sale)

Capital Investments Amount

Property 1m

Furniture and fixtures 70k

Computer equipment 60k

Other equipment 50k


Operating Expenses Amount
Vehicles 300k
Legal, accounting, and professional services 40k

Advertising and promotions 45k

Deposits for utilities 50k

Licenses and permits 10k

Prepaid insurance 50k

Lease payments 600k

Salary and wages 2.4m

Payroll taxes 5%

Travel 5k

Signs 5k

Tools and supplies 100k

Starting inventory 500k

Cash (working capital) 150k

Other expense 1 55k

Other expense 2

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Total Startup Cash Needed = 5,424,000


Comparison of the Financial Performance of Proposed Venture to Similar Firms
Use the following tables to compare the proposed new venture to similar firms in
regard to annual sales (Year 1 and Year 2) and profitability (Year 1 and Year 2).

Comparison of the Financial Performance of Proposed Venture to Similar Firms


Assessment Tool

Annual Sales

Estimate of Proposed Ventures Explanation of How the Estimate


Annual SalesYear 1 Was Computed
Estimate of Year 1 Sales ___1,788,500_______ Selling sunscreen for 490B
10 bottles per day
Summary: How proposed annual sales, on 10*490= 4900/day
average, compares to similar firms (circle one) 4900*365= 1,788,500
Similar firm generates $686.2 million
Below Average Average Above Average in annual revenue

Estimate of Year 2 Sales ____3,577,000______

Summary: How proposed annual sales, on


average, compares to similar firms (circle one)

Below Average Average Above Average

Net Income

Estimate of Proposed Ventures Explanation of How the Estimate


Net IncomeYear 1 was Computed
Estimate of Year 1 Net Income Cost to make 1 bottle = 200
_____1,058,500_____
Profit per bottle = 490-200=290B
Summary: How proposed net income, on
average, compares to similar firms (circle one) 290*3650=1,058,500

Below Average Average Above Average Similar firm generates $9 million in


net income

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Estimate of Year 2 Net Income
_____2,117,000_____

Summary: How proposed net income, on


average, compares to similar firms (circle one)

Below Average Average Above Average

Overall Financial Attractiveness of the Proposed Venture


The following factors are important in regard to the overall financial attractiveness of
the proposed business.
Assess the strength of each factor in the following table.

Overall Financial Attractiveness of Proposed Venture Assessment Tool


Low Potential Moderate Potential High Potential
1. Steady and rapid growth in Unlikely Moderately likely Highly likely
sales during the first one to
three years in a clearly
defined target market
2. High percentage of Low Moderate Strong
recurring incomemeaning
that once you win a client,
the client will provide
recurring sources of
revenue
3. Ability to forecast income Weak Moderate Strong
and expenses with a
reasonable degree of
certainty
4. Likelihood that internally Unlikely Moderately likely Highly likely
generated funds will be
available within two years
to finance growth
5. Availability of exit Unlikely to be May be available Likely to be
opportunity for investor if unavailable available
applicable

Conclusion (report finding for each area)


A. Total startup cash needed
- My total start up cash is 5,424,000 that most of expense include property,
vehicles, lease payment, tools and supplies and staring inventory. For another
expense are advertising and promotions and other equipment.
B. Financial performance of similar businesses
- The price of sunscreen mist is 490 per bottle so if I can sell 10 bottles in 1 day, I
will get annual sales 1,788,500 in year 1. However, my annual sales are on below
average when compare with other firms which is $686.2 million. For net income,

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the cost to make 1 bottle is 200 then profit for 1 bottle is 290 so net income in
year1 is 1,058,500 which has below average than other firms which is 9 million.
C. Financial feasibility (circle the correct response)
Not Feasible Unsure Feasible
D. Suggestions for improving financial feasibility

Overall Feasibility: Summary and Conclusion


Overall Feasibility of the Suggestions for Improving
Business Idea Based on the Feasibility
Each Part
Product/Market Feasibility Not feasible From the survey, most of
Unsure people might want to buy
Feasible my product so if I can
improve the product to be
better, I believe that the
product is feasibility for
sure.
Industry/Market Feasibility Not feasible
Unsure
Feasible
Organizational Feasibility Not feasible
Unsure
Feasible
Financial Feasibility Not feasible
Unsure
Feasible
Overall Assessment Not feasible
Unsure
Feasible

Conclusionbriefly summarize your justification for your overall assessment.

First of all, my product is sunscreen mist that combined all of the skin care
product function together which is lotion, sunscreen and perfume. From other comments,
they said that the product is too original that there are a lot in market right now. So, I will
improve the product from other criticizes to make it better. Secondly, even though the
sunscreen industry have for a long time and there are many competitors, but
my product is different that I focus on only one target that is people in rush hour who
want to have convenient life so this product can be more attractiveness in those group of
people. Therefore, Im starting the business from my passionate that I think many people
have struggle with this problem same as me. So, I already discussed the process already.
Lastly, my start up cash is not too high which around 5,424,000 that I can get money back
in 4 years if an annual revenue is 1,788,500.

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