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
The founder is Jitrawan Jaroensintaweekul, a Thai entrepreneur, who established
the ice skate business named Spice-ice-skate since 2016. Spice-ice-skate is a place for
ice skating, which opens 1:00 pm- 8:00pm on weekdays and 9:30am - 8:30am on
weekends. We provide a sizeable area of the skating area, includes a site for fitting room,
and also a lounge for waiting and first-aid. It is located in the mall, 4th floor in the kids
educational zone. Spice-ice-skate provides you special and professional coach, and they
will be assigned to take care of those who are injured or those who cannot play. This is
not like those other ice-skate place because they charged for the training session. Yet,
everyone using our service can ask for help and advice for free.

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

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 * 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
* 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?
__8____ Definitely would buy
__3____ Probably would buy
__1____ Might or might not buy
__1____ Probably would not buy
__-____ 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

The Spice-Ice Skate service in Thailand is something that can easily get attention
from the customers because Thailand is a hot country and there is no real natural
rink. It is very popular sports to play in Thailand however most of the kids and
teenagers are interested in trying new things. It is also a good time to start the
business because the temperature is increasing and they all want to find some cool
place to do cool thing.

B. Product/service demand

After the survey, it is obvious that more than half of the customers show very high

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 interest in this service because 8 from 13 people definitely would buy this service
and none of them definitely would not buy. Moreover, we found out from the
research that the existing ice skate services in Thailand become very crowded and
they are asking for some new and more comfortable place to skate.

C. Product/service feasibility (circle the correct response)

Not Feasible Unsure Feasible

D. Suggestions for improving product/service feasibility.

We should have more survey and talk to the potential customers more for other
useful feedback, which we can later adjust to our service.

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

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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
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

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Conclusion (expand fields and report findings, in discussion form, for each area)
A. Industry attractiveness

It can be said that the sport industry is not really attractive due to the moderate
potential. People tend to give importance to this industry but actually they did not
need" or "must have. The average net income is still in a medium level. Also,
there is some new service from this industry but there are not so many of them.
However, the sport industry is currently old and is in a maturity phase in the life
cycle so these factors can be considered as a low potential and make the industry
to become less attractive.

B. Target market attractiveness

There is no low potential factor in the target market. Yet, it is not clear whether it
has high or medium potential but it is in a positive way because there are equal
potentials for both high and medium. There are not many competitors and also the
growth rate is not so fast for a small firm to enter. In addition, we have methods
and ability to create a stronger business that can meet customers needs more than
the existing firms.

C. Market timeliness

The market timeliness is also in the positive side because the customers are
interested in buying and is in a moderate buying mood. It is also true now that the
customers need the new firm to satisfy their needs, which can be a great
opportunity for us to enter the market because theres no lager firm that plan to
enter the market.

D. Industry/market feasibility (circle the correct response)

Not Feasible Unsure Feasible

E. Suggestions for improving industry/market feasibility.

Maybe the ice skate can enter other industry other than sports. (ex: entertainment)

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

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 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
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

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 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
strong Proximity to similar firms (for the purpose of knowledge
sharing)
Neutral Proximity to suppliers
Neutral Proximity to customers
Weak Proximity to a major research university (if applicable)

Conclusion (expand fields and report findings, in discussion form, for each area)
A. Management prowess

The management prowess can be considered to be in a low potential. For the

experience in management and college graduation, I have none of it. I also dont
understand the market as much as I should because I am lack of the experience.
Although I am lack of the experience, I still have a strong potential because I have
passion.

B. Resource sufficiency

Resources are quite sufficient because most of them are available for the business
and none of them is not applicable for the business. The most important resource
for the business is the space to launch the service (in this case is the rink). It is just
only the support of local and state government that is unavailable. And for the
proximity, it is likely to be neutral, not so strong and not so weak.

C. Organizational feasibility (circle the correct response)

Not Feasible Unsure Feasible

D. Suggestions for improving organizational feasibility

Hire an expert or professional to help manage and organize the business.

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

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 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.

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

Total Startup Cash Needed (to Make First Sale)

Capital Investments Amount

Property 1.5m

Furniture and fixtures 500k

Computer equipment 40k

Other equipment 350k

Vehicles 600k

Operating Expenses Amount

Legal, accounting, and professional services 200k

Advertising and promotions 500k

Deposits for utilities 300k

Licenses and permits 30k

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Prepaid insurance 80k

Lease payments 6m

Salary and wages 4.8 m

Payroll taxes 100k

Travel -

Signs 10k

Tools and supplies 1m

Starting inventory 25k

Cash (working capital) 60k

Other expense 1

Other expense 2

Total Startup Cash Needed = 16 m

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
-20,000 is estimate people who buy
service per year (55 people/ day)
-1,100 is the cost per person of the

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 service

Estimate of Year 1 Sales

23,725 * 1,100 = 26m

23,725 is estimate people who buy service per

year (65 people/ day) & 1,100 is the cost per
person of the service

Summary: How proposed annual sales, on

average, compares to similar firms (circle one)

Below Average Average Above Average

Estimate of Year 2 Sales

36,500*1,100 = 40m

36,500is estimate people who buy service per

year (100 people/ day) & 1,100 is the cost per
person of the service

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 __10 ________

Expense: 16 m (it is the start up cash because it

is the first year so we have to pay for everything)

Sales: 26 m

Summary: How proposed net income, on

average, compares to similar firms (circle one)

Below Average Average Above Average

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Estimate of Year 2 Net Income __29.2 ________

Expense: 10.8 m (Lease payment + salary +

prepaid insurance)

Sales: 40 m

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

It requires more cash than I was expected. It requires 16 million to start the
business, which it is seem to be a very high amount but, for the ice skate business,

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 this is a reasonable cost. Because of the service business, the company invest most
of the money in the lease payment and for the salary. The company have to make
sure that there is enough space for the clients to be comfortable, and the staff are
adequate for the clients needs.

B. Financial performance of similar businesses

The first year, the sales and net income are below average because it is the starting
year. However, the sales and net income increase rapidly because the business
require less expense and I expected that the business will become more popular
that the sales increase about 50% from the previous year. Thus, it makes the
financial performance of the business on the second year to be in a standard level
or is in the average.

C. Financial feasibility (circle the correct response)

Not Feasible Unsure Feasible

D. Suggestions for improving financial feasibility

Try to lower the star up cost because it is very risky to invest a very high amount
of money to a business. Sometimes, if we dont have enough money to start a
business, so we are likely to loan from the bank and will waste more money
instead of earning it.

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
Unsure
Feasible
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

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Conclusionbriefly summarize your justification for your overall assessment.

The overall assessment is still unsure. The reason is because 2 of the feasibility
are feasible, whereas the other 2 are unsure. Although, the overall feasibility is not quite
feasible, it does not mean that the business will not success. I expect that the business is
going to do well but it may take more time because I have to improve the organizational
feasibility and industry/market feasibility to make the business more stable and
profitable. I will make sure that the management team that will be hired later is going to
be creative, professional and make the business grow more rapidly.

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