The Impact of Feasibility Study on New Business Ventures

CHAPTER ONE

INTRODUCTION

 BACKGROUND OF THE STUDY

According to Audu (2014), A feasibility study is a research conducted to determine the economic viability of any proposed firm. Every firm has the potential for success or failure. As a result, it is the obligation of a prospective entrepreneur to be extremely knowledgeable about the industry. The amount of knowledge a person possesses before embarking on a given endeavour can affect whether or not a firm will succeed or fail. Odufalu (200) further explained feasibility study as an evaluation of a project or business opportunity to determine if it is worthwhile to pursue. It assists the investor in sharpening his judgment rather than replacing it.

A feasibility study is an examination that evaluates all important elements for a project, including economic, technical, legal, and scheduling issues, to determine the chance of the project being completed successfully.Whether or not a project is practical may be determined by a number of variables, including the project’s cost and return on investment, which refers to whether or not the initiative earned enough income or sales from customers (Aruwa, 2006). A feasibility study evaluates the viability of a given plan or project. A feasibility study examines a project’s viability to assess if the project or endeavor is likely to succeed. The research is also intended to identify potential challenges and problems that may occur as a result of the project’s implementation.

A good feasibility study looks for information on all parts of the firm, including the product, the market, labor needs, capital requirements, legal requirements, credit practices in the trade, fund service requirements, tenders requirements, and technological requirements. When doing a feasibility study, it is also critical to determine how profitable the company idea is at the time. The production of a feasibility study is widely acknowledged to be a crucial early stage in the life cycle of any business venture (Aruwa, 2006). The feasibility study method is also commonly considered to be multi-phased and iterative

A business is an undertaking performed with the goal of profit. Business undertakings entail some operations that are fraught with various types of risk. As a result, before starting a firm, it is always important to do some sort of assessment of its viability. The feasibility study is the process of determining a company’s viability. Some types of information are necessary to conduct a feasibility study. As a result, the first study unit’s topic concentrates around assessing company viability and various methods of obtaining the necessary information for a feasibility study.

Sahlman, (1997) further explained that business ventures are formed particularly for the goal of producing goods. As a result, it is critical for the entrepreneur to develop a production management strategy for such a business. The objective for such a strategy is to bring the entrepreneur’s manufacturing process, method of production, location, and financial ramifications to the forefront.

 STATEMENT OF THE PROBLEM

Sahlman, (1997) opined that new business ventures mostly do not understand the need for feasibility studies. Business ventures that operates without feasibility studies are prone to fail.

Typically, early evaluations of business ventures potential are meant to analyze the project’s major technical and economic features, with successive assessments designed to validate assumptions and minimize the uncertainty associated with the development to an acceptable level. References to feasibility studies are frequently prefaced with phrases like ‘order of magnitude,’ ‘preliminary,’ ‘indicative,’ and so on. For business ventures to be successful, plans like business ventures plans need to be put in place (Sahlman, 1997).

OBJECTIVES OF THE STUDY

The primary aim of this study is to examine the impact of feasibility study on New businesses ventures. Other objectives of this study are:

a)       To compare the businesses with feasibility studies to those without.

b)      To find out the problems of new business ventures.

c)       To find out the problems associated with feasibility studies

d)      To find out the types of feasibility studies

 RESEARCH QUESTIONS

a.        Are businesses with feasibility studies more viable than those without?

b.       What are the problems of new business ventures?

c.        What are the problems associated with feasibility studies?

d.       What are the types of feasibility studies?

 SIGNIFICANCE OF THE STUDY

This study will be of great significance to businesses as it will show the impacts of feasibility studies on business ventures. It will also be of benefit to new business owners as it will make them know.

This study will serve as an existing literature for future reference and further research.

 SCOPE OF THE STUDY

This study will be focusing on the impacts of feasibility studies on new business ventures, types of feasibility studies, find out the problems of new business ventures and problems associated with feasibility studies.

Furthermore, this study will use selected new business ventures in Bayelsa state as enrolled participants.

LIMITATIONS OF THE STUDY

This study will only focus on the impact of feasibility studies on new business ventures and nothing else. It will not be proferring solutions to other problems of new business ventures. This research will be carried out in Bayelsa State and as such the results of this study cannot be used in other states in Nigeria or the rest of the world.

 DEFINITION OF TERMS

Impact: a marked effect or influence

Feasibility studies: an evaluation of a project or business opportunity to determine if it is worthwhile to pursue

Business ventures: a new business formed with the expectation or plan that financial gain will follow