:: Financial Feasibility Studies for Various Types & Projects

Whether you are considering executing a major land development project, opening a new office, or just putting up a single building, a feasibility study is important in projecting cash flow, determining potential profit, and understanding tax implications.

One of the best ways to determine if a potential venture is financially feasible is to conduct an independent analysis of the expected financial results. Our financial feasibility studies will help you address a number of business start-up or expansion situations. These can include the feasibility of new entities, acquisitions of an existing business, introduction of a new product, or expansion of plant capacity.

Financial feasibility studies typically involve a market study or demand analysis to help determine and support assumptions regarding anticipated revenues. This helps company management decide whether or not to commit additional resources and/or borrow funds to finance a venture.

Although we tailor our studies to meet your unique needs, each study follows the same basic format:

• Market study and demand analysis:
  
  • Conduct market research to identify consumer or buyer attitudes and preferences.
    
  • Define and describe the market.
    
  • Document the competitive situation.
    
  • Determine likely market potential and demand.
    
  • Determine potential partnership.
    
  • Identify applicable tax incentives.
    
  • Abide by time-frame considerations.
    
  • Find tax structure alternatives.
    
    
    
• Financial feasibility:
  
  • Facility and construction costs.
    
  • Financing and capitalization.
    
  • Personnel requirements.
    
  • Revenue and operating expense analysis.
    
  • Cash flow and debt capacity.
    
    
    
• Report:
  • Prospective balance sheets.
    
  • Prospective statements of revenues and expenses, cash flow, and debt service coverage.
    
  • Assumptions underlying the prospective financial statements.
    
  • The results of the market study or demand analysis.

Our study will benefit you by:

• providing an independent evaluation of your proposed venture's financial feasibility .
  
• identifying market and financial factors that may have been overlooked in earlier development and conceptual stages.
  
• assuring potential lenders and/or investors that there is a reasonable basis for the assumptions used in the study.

Financial feasibility is tested using proposed or alternative investment scenarios. Return on investment of each scenario is analyzed and evaluated to determine the greatest return for the investor. Our expertise is usually highly appreciated in designing and conducting full-scale studies that consider investment and operating costs, the time value of money, risk and uncertainty, quality of available data, and sensitivity of assumptions.

The procedure adopted by our consultants ensures a precise and accurate approach for all kinds of studies:

1. Concept appraisal

• Review of the client's goals and objectives
  
• Review of client's commitment and purpose for entering the project
  
• Assessment of the client's experience and ability to successfully implement the proposed concept
  
• Assessment of the client's finances and budget in terms of the proposed concept's investment requirement
  
• Review of the proposed concept in terms of current trends
  
• Review of the proposed concept in terms of consumer needs in the selected area
  
• Assessment of the local availability of management and employee talent, skill, and experience required to successfully implement the concept (if needed)
  
• Review of the proposed pricing strategy

2. Concept feasibility

• Identify target
  
• Forecast total sales
  
• Check the competition in the area
  
• Consider the availability of labor and specific skills required
  
• Consider lease, buy or build alternatives
  
• Project sales and operating costs within the selected location
  
• Project all building and furniture, fixture and equipment costs
  
• Evaluate projected results

3. Business plan development

• Review your purpose for planning
  
• Decide on a structure for your plan
  
• Fine tune your vision and mission
  
• Describe your organizational structure
  
• Plan your operational strategy
  
• Describe your marketing strategy
  
• Project your financial results
  
• Find your break-even point
  
• Prepare formal pro-forma financial reports including a cash flow report, income statement and a balance sheet
  
• Determine the investment required
  
• Justify the investment

4. Capital attainment

• Calculate the amount of capital required
  
• Project the return on investment
  
• Investigate potential sources of capital
  
• Consider the advantages and disadvantages of the capital that is available
  
• Prepare a personal financial report
  
• Prepare a loan proposal (if needed)
  
• Determine how the loan will be repaid
  
• Assist clients practice their approach prior to attending the loan meeting

Potential alternatives are often taken into consideration, identifying risk factors, gathering credible economic intelligence, and using quantitative analysis, fact-based research, and/or survey methodology to support theories and findings.

We often bring new ideas which improve the project's overall economics in terms of revenue or through structural and staffing approaches that reduce cost.