Just like in any other business it is important that you carry out a feasibility study on your business idea. No matter what aspect of agribusiness you decide to venture into; doing this helps you not only to ascertain the needs of your business but gives you an edge. It helps you develop a unique selling point that enables you to be different from others and optimize the available market. It is also essentially of a critical part of your business plan.
In this post, I share with you practical steps you can take in carrying out your feasibility.
Economic Analysis: I believe this is where your feasibility study should start from. What is the essence of carrying out market research when the economy does not favor entrepreneurship or private ventures? Analyzing the economy will help you align your planned business with the economic situation on ground. Economic feasibility should include analysis on government fiscal and monetary policies, import and export rate, inflation rate, and currency exchange rate and so on.
Market Analysis: The next thing you should be analyzing is the market of your proposed business idea. Carrying out a feasibility study on the market will enable you know if there is actually a need or market for your business idea. Market analysis will also help you to determine the size of the market, demographics and psycho graphics of the market, level of competition and the size of the market you can compete for.
Technical Analysis: This part of a feasibility study deals with the technological requirements of the business. Technical analysis will enable you determine the method of production to be employed, equipment, spare parts and tools, site development, supporting facilities, the nature of the factory building, fencing and so on.
Location Analysis: This is carried out with a view to determine the best location for the business in terms of nearness to high traffic roads, nearness to infrastructure, ease of transportation of raw materials and finished products, cost of land acquisition and so on.
Manpower Analysis: This part of a feasibility study deals with the process of estimating the level of skill, professionalism and number of employees to be hired by the business. The salary scale, incentives and pay package are also estimated at this point.
Financial Analysis: Financial analysis will be dealing with the estimation of the total capital involved, capital expenditures, working capital, and profit and loss analysis, pricing of products, cash flow projections, projected sales revenue and the entire project viability. Everything concerning finance should be dealt with at this juncture.
Sensitivity and Risk Analysis: This is the last part of a feasibility study. After all other factors have been analyzed and proven viable, now sensitivity and risk analysis can come in. Before any business idea is taken to the marketplace, its risk to reward ratio is analyzed, the sensitivity to competition is determined and the liquidation rate of companies in the industry of your proposed business venture is calculated. With results obtained from sensitivity and risk analysis, growth and survival strategies can be developed for your proposed business.
ALWAYS bear in mind that carrying out a feasibility study on your business idea will give you a competitive advantage and increase your chance of success.
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