Full Project – Feasibility study as a tool for entrepreneur success

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CHAPTER ONE

• INTRODUCTION

1.1  BACKGROUND OF THE STUDY

Feasibility study as a tool for entrepreneurial success have been widely studied and disused by various outstanding scholars in the world over. Matson (2002:22) states that feasibility study as a tool for entrepreneurial success is but one part, although an integral one in the development process of a business project. Whether this project is the creation of a new one or the expansion of an existing one into a new venture, the project cycle is planning process shows how a successful business will operate under an explicitly stated set of assumptions.

These assumptions include the technology used (the facilities, types of equipment, manufacturing process etc) and the financial aspects of the project (capital needs, volume cost of goods, wages etc).

Rose (2001:90) stated that it takes time to succeed because success is merely the natural reward of taking time to do anything well. Rose reaffirmed that feasibility study helps us determine where we are going, how we know when we get there and also how we will know when we have arrived.

Okereke (2003:18) believes that every rational decision to make a new investment is preceded by an investigation of the economic feasibility of the project, larger the project, the greater the investment. The more formalized will be the investigation.

Okerek reaffirmed that the investor would want to assure himself that the market exists or can be developed that the local service vital to the project can be assured, that the local services vital to the project can be assured that the overall costs for plant equipment, labour and raw materials inputs will be of a certain order most importantly he will seek assurance that income will exceed cost by a margin enough to reinforce the inclination to undertake the project.

Business development sources in Maine (2002:102) state that feasibility study as a determinant of entrepreneurial success has three objectives to be met in order for the study to be of value

1. To learn more about your prospective customers needs
2. To clearly define the product or services that you wish to offer these clients (in other word find a need and fill it)

• Determine how much revenue this product or service will generate feasibility study is indeed a tool for business success, a useful tool and valid for many kinds of projects.

Feasibility studies can help groups/firms determine whether to expand existing services build or remodel facilities, change method of operation, and new product or even merger with another business. A feasibility study can assist decision makers whenever they need to decide among alternative development opportunities.

This analytical tool operates under an explicitly stated assumptions, the technology used, (the facilities, types of equipment, manufacturing process etc) and the financial aspects of the project capital needs, volume, cost of goods, wages etc. The feasibility study represents the first time in a project development process that the pieces are put together to create a technically and economically feasibility concept. The study also shows the sensitivity of the business to change in these basic assumptions. A feasibility study serves as an analytical tool to present the basic assumptions of the project idea, shows how results vary when these assumptions change, and provides guidance as to critical elements of a project. It provides project specific information to assist in making decisions feasibility studies contain standard technical and financial components, the exact appearance of each study varies, depending on the industry studies and critical factors for that project, the method chosen to conduct the feasibility study find the study budget.

Developing a new business venture is difficult. Taking a project from the beginning of the idea through the operational stage is a complex and time consuming effort most ideas to not develop into the operational stage, the majority of them then fail within the first six months because most entrepreneurs do not carry out feasibility studies of their projects perhaps the most crucial problem one will face expressing an interest in starting a new business or capitalizing on an apparent opportunity in an already existing business will determining the feasibility of ones idea. Some argue that it is expensive to carry out a feasibility study, while others feel that it is not necessary.

Getting into the right business at the right time is a simple advice, but is extremely difficult to implement the products in Nigeria, indicate that very few ideas result in successful business ventures even when introduced by well established firms because of their reluctance to carry out feasibility studies.

Feasibility study as a tool for entrepreneurial success cannot be over emphasized. It can be dedicated that a comprehensive, it deals with projects and their probability of success with a minimum of bias it seeks to determine profitability and return on investment it is indeed a necessary for small business success in Nigeria generally and imo metropolis in particular.

• STATEMENT OF THE PROBLEM

There are many small scale industries in owerri metropolis, but many of these industries are not viable. The entrepreneurs enter into business so convinced of their merits that they fail to evaluate their potentials thoroughly. These small scale investors do not appreciate the need for a thorough feasibility study, prior to set up. This has lead to the collapse of many small scale industries in Owerri metropolis.

• PURPOSE OF THE STUDY

The purpose of the study is to ascertain to what extent small scale businesses in owerri metropolis undertook feasibility studies prior to set up specifically, it will attempt to;

1. Ascertain whether business owners in owerri embarked on feasibility studies prior to commencement of business
2. To determine of consultant or others handle the feasibility studies in owerri metropolis ensure this availability of raw materials prior to commencement

• To determine the benefits derived ascertain whether small scale businesses by use of feasibility to start in owerir metropolis considered existing business competitors prior to commencement

1. To find the problems all concrete with ascertain to what extent small scale the use of feasibility study in businesses in owerri metropolis ensure starting business adequate financing prior to commencement
2. Ascertain whether small scale businesses in owerri metropolis considered the location chosen for their business in terms of transportation facilities prior to commencement.
3. Ascertain whether small scale businesses in owerri metropolis ensured the availabilities of public utilities vital to the project prior to commencement.

• RESEARCH QUESTIONS

The following research questions were postulated to guide the study;

1. How does feasibility studies influence business operations?
2. What are the costs involved in feasibility studies?

• How does feasibility study reveal business environment?

1. What is the relationship between feasibility study and capital requirement of business
2. What factors militate against the use of feasibility studies by entrepreneurs.

• STATEMENT OF HYPOTHESIS

Ho: Feasibility studies do not lead to entrepreneurial success

Hi: Feasibility studies leads to the success of entrepreneurial ventures

Ho: There are no factors that militate against the use of feasibility studies by entrepreneur

• SIGNIFICANCE OF THE STUDY

The outcome of the research will be beneficial on the operator in the beverage industry and also students individuals, organization stakeholders in Nigeria.

The research will also be increase benefit to the management of private sector. Organization in term of streamlining it feasibility study as a tool for entrepreneurial success up coming research conducting research in similar topic will benefit from this research as it will help them improve on their research work. It will also help private sectors organization achieve better customer satisfaction and hence increase sales volume. It will also help other company to do same research on their product.

• SCOPE OF THE STUDY

The study on feasibility study as a tool for entrepreneurial success focus on some selected private firms. But due to the limiting time, the research only covered short area such as Emerald, N, WASCO, Agad pure water company and Aranze computer accessories in selected private firms in Owerri, imo state.

• LIMITATION OF STUDY

A work of this nature is not simply to accomplish the objective of the study but to use it for academic purposes. But in the course or this research work the researcher encountered these problems.

• The uncooperative attitude of the respondents who thought that the researcher is out to take undue advantage of their business information not knowing it was for academic purpose.
• Time constraints, the researcher is working to beat the time stipulations which might affect the authencity of this work.

• DEFINITION OF TERMS

To avoid any technical ambiguities the terminologies used in this study are expanded as follows;

FEASIBILITY STUDY: A comprehensive analysis (research) embarked upon before establishing a business or provided by the owner/manager.

PROJECT: A group of connected activities with a defined starting point, a defined finishing print and need the centre intelligence to direct it, so as to achieve organizational goals).

PRODUCT: This is physical entry or object that is made in a factory and capable of being copied or limited by competitors.

ENTREPRENEUR: Entrepreneur is a person who starts and organize a commercial enterprise, especially one that involves financial risk.

SMALL SCALE INDUSTRY: Small scale industry is that industry with total cost (including working but excluding cost of land) above one million but not exceeding #40, million with a labour size between 11 and 35 workers.

MANAGEMENT: A team of people responsible for planning, organizing, staffing, directing and controlling an organization, human and materials resources to accomplish its goals.

TECHNOLOGY: This is the scientific knowledge used in practical ways in industries.

EMPLOYMENT: This is the act of employing people and paying them when money and incentive for work done

CREATIVITY: This involves the use of skills and imagination to produce something new.

PRODUCTIVITY: This is the rate of which the worker or company produces goods and the amount produced.

INDUSTRY: The people and activities involves producing a particular thing or service.

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Full Project – Feasibility study as a tool for entrepreneur success