The Impact Of Feasibility Studies In Starting Up A New Business

The Impact Of Feasibility Studies In Starting Up A New Business

Abstract

Impact of Feasibility Studies in Starting Up a New Business: A Case Study of Selected Firms in Enugu State was the topic of this project report. The study looked at the contents of feasibility studies, the connection between them and new businesses, the performance of business firms in Enugu State, and people’s attitudes toward conducting feasibility studies before starting new ventures. The researcher used historical and survey research methods to examine the aforementioned objectives, which allowed them assess current behaviors and offer solutions for addressing deficiencies in the accepted standards. In order to accomplish this, the researchers employed a sample of the entire population; hence, only the sample of 193 respondents—out of a total population of 1538—was examined using the non-probability sampling technique. The researchers’ chosen approach for gathering data is the questionnaire method. The respondents had a very low degree of awareness of the use of feasibility studies during the process of beginning a new firm, which had an impact on their comprehension of its significance and application, according to the study’s findings. And that the respondents are prepared to use it if they are aware of its importance while launching a new business. Nevertheless, the researchers advised widespread public awareness campaigns to raise the necessary understanding of the benefits of feasibility studies and the necessity of undertaking them before beginning a new firm. The researchers concluded by recommending more research in this area, particularly on the subject of “The Importance of Feasibility Studies in the Course of Setting Up a New Business or Project.”

I, CHAPTER

INTRODUCTION

The backdrop of the study, the issue statement, the study’s purpose, its importance, the research questions, the study’s scope and restrictions, and the definition of words are the main topics of this chapter.

Background of the Study, Section 1.1

The Nigerian economy has been in severe economic decline for more than ten years, either as a result of the global financial crisis or for unknown reasons.

The necessity of feasibility assessments prior to starting any project has been brought to light by the ongoing economic crisis. However, many newly established firms between the aforementioned dates collapsed and withered away for a variety of reasons, one of which is a lack of a strong and solid basis. Lacking a strong basis, a company is certain to fail—if not right away, then certainly very soon. Therefore, before starting a new firm, it is essential to have a solid business plan.

The researchers contend that a prospective business owner needs to do a thorough feasibility analysis before creating a strong business strategy. A feasibility study looks more closely at the expenses and possible advantages of a business or project to see whether it is feasible, practical, and profitable to launch it. If this study is done properly, it will lessen the waste and avoidable risks that novice businesses take. When conducted, feasibility studies will reveal if a suggested business opportunity will succeed or fail following a rigorous assessment of all available options in relation to the firm’s objectives. This will assist the owner in minimizing wasteful time, energy, and resource waste when starting such an endeavor in favor of diverting them to any other venture that will be more lucrative.

1.2 Definition of the Issue

In Enugu State, the rate at which businesses fail is alarmingly high. This primarily applies to small enterprises. Nevertheless, many continue to start enterprises just to watch them wilt out without making any money. This ongoing pattern in business must be investigated; were feasibility studies conducted prior to the establishment of the business? Were the provisions of the feasibility studies implemented effectively? Most enterprises have failed because their promoters lacked adequate planning and forethought. Louck (1989:5) asserts that “starting a firm is fairly simple, but maintaining it is really challenging. Everyone who starts a business wants it to be successful and continue to grow, but this is not always the case. What must be done in order to maintain a business? Is there anything that can be done to ensure the longevity of a business? Can reports and research on viability help or make firms survive and prosper? The researchers conducted this research project titled “The impact of feasibility studies in starting up a new business” (a case study of chosen enterprises in Enugu State) in order to obtain the answers to the questions raised above and more.

1.3 Study’s Objectives and Purpose

This study’s goal is to analyze and evaluate the value of feasibility studies when launching a new firm.

The following are some of the study’s particular goals:

(i) To determine the factors that contribute to business failure.

(ii) To determine the extent to which business firms employ feasibility studies as a tool for choosing investment or business prospects.

(iii) List the topics covered in a feasibility study.

(iv) To determine how business performance among business firms in Enugu State relates to feasibility studies.

(v) To connect feasibility studies with starting a new company.

1.4 Importance of the Research

The usefulness of feasibility studies for new businesses will be highlighted in this research project. In particular, entrepreneurs and private persons (young graduates from higher institutions) who may seek to build their own businesses in order to become self-reliant or self-employed will greatly benefit from the work.

However, the work will help to lessen business failure among businessmen and women, an occurrence that had caused many people to feel frustrated and depressed and had over time succeeded in luring many people into crime and other social vices like prostitution, armed robbery, drug addiction, and trafficking to name a few.

In addition to adding to the body of knowledge already available on the subject, it will be a tremendous help to anyone wishing to pursue additional research on it or any other relevant problem or subject.

Finally, the researchers also express the optimism that the adoption and execution of the study’s conclusions and suggestions will undoubtedly play a vital role in improving our economy by encouraging business success among enterprises that use feasibility studies.

1.5 Research Concerns

The following are some of the research questions for this study:

(i) Are individuals aware that feasibility studies are used in business analysis?

(ii) Are people aware that feasibility studies are essential for a firm to operate successfully?

(iii) Are people aware that using feasibility studies can reduce their chances of suffering a loss in business?

(iv) Is there a connection between business performance across enterprises and feasibility studies?

(v) What is the general consensus regarding conducting a feasibility study before opening a new business?

What connection exists between defunct businesses and feasibility studies?

1.6 Study’s scope and limitations

The study’s main focus is the role that feasibility studies play in the launch of a new company. The researchers’ first priority is to understand how feasibility studies relate to a new firm. The study’s scope was constrained by the researchers to a few chosen companies in Enugu State for a variety of reasons.

Limitations of the Study, 1.7

Due to time constraints and a lack of funding, the study only looks at the relationship between feasibility studies and new businesses. It also only covers Enugu State.

It is mostly focused on business firms in Enugu State, despite the fact that some other potential project owners and investors might find it valuable.

Definition of Terms 1.8

The following phrases are bound to be used often in the work, thus the researchers felt it was important to define them for simple understanding and enjoyment of this work. Such terms consist of:

(i) Feasibility Study: This is a more thorough investigation of the expenses and potential rewards of a project or business to determine whether it is feasible, practical, and profitable to embark on such an endeavor.

(ii) Work/Study: This term refers to the content that details this work/study in its entirety.

(iii) Feasibility Report: A written, documented plan or blueprint for how a firm or project will operate.

(iv) Business: This is a place where products are made, purchased, and sold (or an organization that carries out these functions).

(v) A New Business: This is a recently founded organization where products and services are created, purchased, or sold in exchange for money.

(vi) Possibility or Possibility: Something that is likely to happen or that is possible.

vi) Something that has a chance of succeeding.

(viii) Profitable: Capable of providing someone with an advantage, money, or a useful result.