Feasibility study for startup company

Any business to be established starts with an ideas. In order to make sure that these ideas are applicable in the market and enable the entrepreneur to make profits and thus give the possibility of development and continuity, studies must be conducted. Statistics, surveys and scientific basis show the right decision of implementing or cancelling the idea of that business. The totality of these actions and studies undertaken by the entrepreneur to ensure the applicability of his/her idea is called feasibility study. This thesis defines the concept and importance of feasibility studies. The steps of preparing the feasibility studies at all stages is explained then in a simple and clear manner. In order to be easier for novice entrepreneur to choose the type of company that better suits him to start his business, the types of companies accredited here in Finland also are reviewed. Marketing feasibility studies and their importance is introduced to accomplish the next steps of the feasibility study. The marketing feasibility study includes a study of the market, the size of the demand and the market gap for the product or service to be introduced in that market, the size of competition and the characteristics of the consumer. Moreover the marketing study also includes how to estimate the size of the demand and influencing factors on it. After that is explained the steps of preparing the technical and engineering study which includes selecting the project site, determining its production capacity and the appropriate size, determining the method of production, raw materials and labour requirements. The total cost of the project is also estimated by determining the opportunity cost, implicit and explicit costs and production costs as well as investment costs. In the financial feasibility study, areas of funding sources and costs are identified and an appropriate financial structure that balances the profits and risks associated with the financing structure. Cash inflows and outflows of the project and their components are also defined. In the commercial feasibility study some basic terms are explained and shown how they are calculated, such as determination of payback period, average rate of return, profitability index, internal rate of return, sensitivity analysis and break-even point. Since most of the projects that new entrepreneurs want to establish are small projects, so small projects are also discussed in this thesis. When I chose the feasibility study as a subject of my thesis, I could not find in libraries here in Finland any integrated reference about preparation of feasibility studies, so my insistence was on proceeding with the preparation of this thesis to be an initial reference for all who wish to establish their own project with best wishes for success