MDU BBA NOTES
Feasibility Study And Preparation of A Business Plan
After the selection of a worthy idea, an entrepreneur undertakes various research relating to market selection, competition, location, machinery and equipment, capital, customer preferences, etc. to test the feasibility of the project.
A feasibility study is conducted in the following areas:-
Market/ commercial Feasibility
It involves the study of the market situation, current market, anticipated future market, competition, potential buyers, etc.
This study involves the study of technical aspects related to the business, like the location of the business, layout, infrastructure, plant and equipment, effluent treatment and discharge, foreign collaboration, transportation, resource availability, etc.
Financial feasibility denotes the financial aspects of the business. This study helps to understand the requirements of start-up capital, sources of capital, return on investment, etc. It helps to assess the financial health of the business.
This study is important to determine the extent to which the project is meeting its social economic objectives of development. It involves a social cost-benefit analysis for testing national profitability. It helps to know the contribution of the project toward employment generation,
income distribution, foreign exchange savings, development of backward regions, etc.
Preparation of Feasibility Report
The feasibility report is the conclusion drawn about the business after conducting the feasibility study. The feasibility report includes the confirmation of the proposed project. It gives the detail about technical, economic and financial, environmental, socio-cultural and
operational aspects of the project.
Preparation of a business plan
In this step, an entrepreneur prepares a good business plan and designs and creates the organizational structure for the implementation of his plan. This plan is further used to achieve realistic goals.
A business plan, as defined by Entrepreneur, is a “written document describing the nature of the business, the sales and marketing strategy, and the financial background, and containing a projected profit and loss statement.” It serves as the blueprint for how you will operate your business. It is an effective means of defining your goals and the steps needed to reach them.
Need and purpose of a business plan
A business plan spells out your purpose, vision, and means of operation. It also serves as your company’s resume, explaining your objectives to investors, partners, employees, and vendors.
It serves the following purposes:-
Maintaining Business Focus.
Securing Outside Financing.
Understanding consumers and competitors.
Fuelling Ambitions and Mapping Growth.
Enlightening Executive Talent or understanding employee needs.
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