4.

FINANCIAL FEASIBILITY
4.1 Total start up cash needed
4.2 Financial performance of similar businesses
4.3 Overall financial attractiveness of the proposed venture
4.1 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 roll out.
 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 amount that will be
needed to launch the firm. After the approximate amount is known, the entrepreneur should
determine specifically where the money will come from to cover the startup costs.
 The total startup cash needed can be estimated using the following table.
Capital investment
Capital Investment Amount (RS.)
Computer equipment 10000
Property 2000000
Tanks 600000
Internet 5000
Fans 6000
Furniture 50000
Biodiesel Processor 300000
Operating expenses
Operating expenses Amount (RS.)
Advertising and promotions 1030000
Deposits for utilities 3320000
Salaries 1020000
Travel 148000
Rent 200000
Tax 516000
Production Consumables
Product Amount (RS.)
Waste vegetable oil 0
Ethanol 3000
Catalyst (KOH) 1000
Sulfuric acid 700
Total start up cash needed= RS. 9209700
Detail of Salaries
Detail of Salaries of year 2020 (Monthly)
Position Required Salaries of each (RS.) Total
Managers 1 20000 20000
Chemist 1 15000 15000
Sweeper 1 6000 6000
Security guard 1 8000 8000
Office boy 1 6000 6000
Labor 2 12500 25000
Total 7 80000
Detail of Salaries of year 2021 (Monthly)
Position Required Salaries of each (RS.) Total
Managers 1 23000 23000
Chemist 1 17000 17000
Sweeper 1 7000 7000
Security guard 1 9000 9000
Office boy 1 7000 7000
Labor 2 13500 27000
Total 7 90000
Detail of Salaries of year 2022 (Monthly)
Position Required Salaries of each (RS.) Total
Managers 1 25000 25000
Chemist 1 20000 20000
Sweeper 1 8000 8000
Security guard 1 10000 10000
Office boy 1 8000 8000
Labor 2 14500 29000
Total 7 100000
Income Statement
Description 2020 2021 2022
Revenue 5990800 7144800 8594400
Raw material 2187200 2668800 3063648
Fixed utility expense 300000 360000 420000
Depreciation 38533 38533 38533
Promotional expense 960000 1080000 1200000
Rent expense 240000 240000 240000
Salaries expense 960000 1080000 1200000
Transport 120000 144000 180000
Tax 408000 573600 867568
Net expense 5309733 6292933 7295069
Net profit 681067 851867 1289331
Cash Flow Statement
Description 2020 2021 2022
Sales 5990800 7144800 8584400
CGS 2561733 3115333 3582217
Salaries 720000 780000 840000
Advertising 960000 1080000 1200000
 Utilities 540000 600000 660000
Transport 120000 144000 180000
Tax 408000 573600 867568
Total cash out 5309733 6292933 7295069
Total profit 681067 851867 1289331
Balance Sheet
Description 2020 2021 2022
Tanks 600000 570000 540000 510000
Drums 36000 32400 28800 25200
Sieve+ filter cloth 15000 12000 9000 6000
Computer 10000 9000 8000 7000
Fans 6000 4800 3600 2400
Furniture 50000 45000 40000 35000
Cash in hand 0 90000 200000
Total assets 673200 719400 785600
Owner’s equity 673200 629400 585600
Labilities 0 90000 200000
Labilities + owner’s equity 673200 719400 785600
Risk management
An entrepreneur always take a calculated risk. At the start of the business, entrepreneur calculate
the risk of that business and also finds the solutions to solve that problems.
Management and labor Risk
Management and labor team always plays a key role in the success of business. If somehow any
business suffer with the strike or unavailability of the labor then there must be an alternate
present to solve that problem.
We have an active HRM department which will actively solve the issues of our employees on
time to avoid any inconvenience.
Market risk
Production of biodiesel is the new idea in the field of fuels. It is also a risk of us because may be
our idea will not hit the mind of customers, which will not produce the required amount of sales
or the production of biodiesel. There is also a risk in adopting the tools for the promotion of
biodiesel which will effectively hit the mind of the customers.
Good promotional strategy will help us to achieve the customer’s attention.
Operational Risk
Operational risk is always present in the production process of anything. May be in the
production process some raw material gets wasted or other mishandling may occur which will
decrease in the production of biodiesels.
To avoid that risk we will hire the team of good and experienced labor which are good in
handling. In some cases our production quantity become less, we have taken the margin of
quantity in calculating the sales.
Legal Property Issues
There is also some risk that someone may copy the name or trade mark of biodiesel. It is a big
risk and may damage the reputation and sales of GO GREEN biodiesel.
To avoid this risk we register our brand name, logo and slogan with IPO registration. If someone
copy our brand name, logo or slogan then legal action will be taken against them.
4.2 Financial performance of similar businesses
Attributes PSO Shell
Product/service Petrochemicals Petrochemicals
Price 97 97
Channel of distribution Petrol stations Petrol stations
Promotion Techniques TV, Billboards, Newspaper TV, Billboards, Newspaper
etc. etc.
Strengths 1. Brand established 1. Brand established
2. Countrywide 2. Countrywide
distribution distribution
Weaknesses Do not launch biodiesel Do not launch biodiesel
4.3 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
Attributes Low Potential Moderate Potential High Potential
Steady and rapid growth in sales Unlikely Moderately Likely Highly Likely
during the first one to three years
in a clearly defined target market.
High percentage of recurring Low Moderate Strong
income-meaning that once you
win a client, the client will provide
recurring sources of revenue.
Ability to forecast income and Weak Moderate Strong
expenses with a reasonable degree
of certainty.
Likelihood that internally Unlikely Moderately Likely Highly Likely
generated funds will be available
within two years to finance
growth.
Availability of exit opportunity for Unlikely to be May be available Likely to be
investor if applicable. unavailable available