The article will show you how to write a feasibility study for a betting centre in Nigeria. It will begin by defining the purpose of a feasibility study and then move on to explain the main steps involved in carrying out one. This includes selecting a suitable location, determining the demand for the product or service, and estimating the financial requirements.
What is the Purpose of a Feasibility Study?
A feasibility study is a type of analysis that determines whether or not an idea, product, or service is viable. It is essentially about assessing the market size and commercial potential of an undertaking. A feasibility study can be used to examine the economics of an idea, product, or service and assess whether or not it is viable. The objective is to determine whether or not the proposed venture is financially viable and likely to succeed in the marketplace.
Why Should You Conduct a Feasibility Study?
An entrepreneur may come up with an idea for a new product or service, or identify an existing product or service that has the potential to become more profitable or to encompass a wider market. Before embarking on a new venture, the entrepreneur will want to make sure that there is a large enough market for his product or service, that the product or service will be profitable, and that the risks associated with the project are manageable. These are the types of questions that a feasibility study answers. A feasibility study verifies whether or not an idea, product, or service has sufficient commercial appeal to be worthwhile pursuing.
What Should You Include in a Feasibility Study?
There is no set formula for what should go into a feasibility study; it depends on the nature and scope of the analysis. However, you can include the following items in a feasibility study:
- The mission statement—This sets the context for the study. It should be concise and easy to understand.
- Objectives—These should be measurable and specific.
- Background data—This includes information about the industry, economic history of the region, etc.
- Synopsis of the problem—This is basically the summary of the entire study. It is usually a short description of the project objectives and the background information.
- The market size analysis—This includes how many customers will be in the market for your product or service, and how much you expect to profit from the sale.
- Pricing Strategy—This is very important from the standpoint of making a profit. You have to decide whether or not you want to sell the product or service for less than what you paid for it, or whether or not you want to make a profit. If you decide to charge a higher price, you will have to determine how high you want to go, as well as the minimum price you are willing to accept. This is where you should include the profit margin. You also need to decide whether or not you want to sell multiple units to make up for the loss of a single sale. This is called volume discounting.
- Operations—This includes the steps you will take to produce or deliver the product or service, as well as the locations where you will do so. It also includes the time allotted for each step.
- Financing— This includes the source of funds for the project, including any debt or equity financing and the terms of that financing. It should also include the projected return on investment, as well as the profit or loss from the venture.
- Management team—This should include a project manager, economic analysts, marketers, and brand managers. It should also include an accountant and a lawyer.
- Operational risks—These are the issues that could arise that would affect the viability of the business. Be specific and include the potential risks in your study. For example, if you are opening a restaurant, you might list water contamination as a risk. This could lead to serious problems since the restaurant will need to use fresh water to prepare and serve its food. You also need to determine how you will deal with these risks. Will you lease premises that are larger than you need? Will you hire extra help? Will you diversify your sources of income?
- Market share analysis—This includes the percentage of the market you expect to occupy. It also includes the competitive analysis of your major competitors. Your study should include both historical analysis and a forward-looking assessment of the future market share. The historical analysis can be dated back three to five years while the forward-looking analysis should be well-articulated and supported by relevant data. This is especially important if you are applying for government grants or loans as part of the development process. The market share analysis will then be used as a basis for strategic planning.
- Pricing Strategy—This is repeated from above.
- Operations—This includes the steps you will take to produce or deliver the product or service, as well as the locations where you will do so. It also includes the time allotted for each step.
- Financial Analysis—This includes the balance sheet, income statement, and cash flow analysis. The balance sheet will show you the assets and liabilities of the business. The income statement will tell you how much money you have coming in each month, as well as how much you are spending. The cash flow analysis will then show you the money coming in and going out of the business. You should have a cash flow projection that shows you how much cash you will need to get started, as well as how much you can expect to earn. The cash flow analysis should then be compared to the income statement to get an idea of how much money you will actually have at the end of the year. This will then be compared to the beginning of the year to get an idea of the variation in cash flow. The variation should then be explained in the financial report. If you find that the flow of cash is highly volatile, this could mean that you have a greater risk of running out of money. This is why it is important to include the financial analysis in your feasibility study.
- Market analysis—This includes a market size analysis, market share analysis, and competitive analysis. These are essential parts of any business plan. They form the basis for the development of marketing, sales, and production strategies. A market analysis can also be used to examine various markets and potential niches within those markets.
- Product/Service Description—This is the part of the business plan that contains all the technical details about your product or service. Be very thorough and don’t cut corners here. Your product/service description should be very clear and comprehensive, and it should include the following information:
- The main product/service features
- The advantages of your product/service over your major competitors
- The specific target market
- The market size (approximate numbers)
- SWOT Analysis (Strengths, Weaknesses, Opportunities, andThreats)
- The pricing strategy
- Operations
- The equipment and facilities needed
- The type of licenses you will need
- The legal structure of the business
- The timeline for the project (Include both near and long-term goals)
- The investment needed (This includes money as well as other resources such as land or buildings. Be very careful how you define investment. You should include everything related to the project, including the cost of raw materials, wages for labour, interest on loans, etc. as part of the investment)
- The revenue projections (This includes both near and long-term projections of how much money you will make)
- The key management team (This includes your CEO, CFO, and other significant employees)
How to Select a Suitable Location for Your Business
When selecting the location for your business, there are various things that you need to consider. These include the physical environment (climate, pollution, etc), as well as the legal, financial, and political climate. This will then determine the kind of tax and regulatory regimes that exist in the area. One thing to note though is that you cannot just look at the regulatory climate; you also need to consider the economic and legal climate. This is because not all regulation is bad; it can actually be a source of revenue for the government. The article will then discuss several factors that you should consider before selecting the location for your business.
Is It Worthwhile Pursuing this Opportunity?
The article will discuss two questions: