The Impact Of Feasibility Studies In Starting Up A New Business
This project report studied the Impact of Feasibility Studies in Starting up a New Business, A Case Study of Selected Firms in Enugu State. The study examined the content of a feasibility study, the relationship between feasibility study and a new business, ascertain the relationship between feasibility study and business performance among business firms in Enugu State, and identify the attitude of people towards carrying out feasibility studies before starting up a new business. In studying the above objectives, the researcher adopted the historical and survey research method which helped them evaluate existing practices as well as suggests way of overcoming flaws observed in the prevailing norms. To do this, the researchers used sample of the total population, hence, out of a total population of 1538, only the sample of 193 respondents was studied using the sampling technique of non-probability sampling. The method of data collection used by the researchers is the questionnaire method. In the process of the study, the researchers made the following findings; that the level of awareness of the respondents regarding the use of feasibility studies in the course of starting up a new business is very low and this has affected their understanding of its importance, and its use. And that the respondents are ready to use it, if they know that it is vital in the course of starting up a new business. Nonetheless, the researchers recommended massive awareness campaign to the masses in order to create the requisite awareness of the uses of feasibility studies and the need to embark on it before starting up a new business. Finally, the researchers recommended further research in this area, especially in the topic “The Importance of feasibility studies in the course of setting up a New Business or project.
This chapter focuses attention on what forms the background of the study, statement of the problem, purpose of the study, it’s significance, research questions, scope and limitations of the study and definition of terms.
1.1 Background of the Study
For over a decade now, the Nigeria economy has been in dire economic doldrums either as a result of global economic melt-down or other reasons not known yet.
The continued economic crunch has highlighted the need for feasibility studies before embarking on any project. Nevertheless, within the above date range many new businesses that were set up crumbled and withered away for many reasons of which one of them is lack of proper and a solid foundation. When a business like a building lacks a solid foundation, it is bound to crash; if not immediately at its inception very soon. This situation, therefore, calls for a very good business plan before one sets a new business.
To make a very good business plan, the researchers believe that potential business owner must undergo a proper feasibility study. Feasibility study involves closer examination of costs and potential benefits of a project or a business with a view to ascertain whether it is feasible, viable and profitable to undertake such venture. If this proper study is done, it will reduce the unnecessary risks and wastages incurred by inexperienced businesses. The feasibility studies when undertaken will show whether a proposed business opportunity will succeed or fail after a careful consideration of alternatives against the firm’s objectives has been made. This will help the owner to minimize unnecessary wastage of time, resources and energy in embarking on such venture instead channel them to any other venture that will be more profitable.
1.2 Statement of the Problem
The rate at which business fails in Enugu State is becoming very alarming. This is mostly as it concerns small scale businesses. Yet people still set up businesses only to watch them wither away without any profit. This continuous trend in businesses need to be questioned; were feasibility studies prepared before starting up the business? Were the feasibility studies and its provisions well implemented? Most businesses have failed due to lack of proper planning foresight of their promoters. According to Louck (1989:5) “to start a business is very easy but to stay in business is very difficult. Every one who goes into business wants the business to stand, grow and succeed, but often, it does not work exactly like that. What is to be done for one to sustain his/her business? is there anything that can be done for a business to be sustained? Can feasibility studies and report make or help businesses to stand and thrive? It is based on the above questions and more that the researchers undergo this research work entitled” The impact of feasibility studies in starting up a new business” (a case study of selected firms in Enugu State) to find answers to the questions.
1.3 Purpose / Objectives of the Study
The purpose of this study is to examine and x-ray the usefulness of feasibility studies in the course of starting up a new business.
The specific objectives of this study includes:-
- To identify the causes of business failure among businesses.
- To identify the extent of the use of feasibility studies as a tool for investment or business opportunities selection among business firms.
- Identity the content of a feasibility study.
- To ascertain the relationship between feasibility studies and business performance among business firms in Enugu State.
- To relate feasibility studies with setting up a new business.
1.4 Significance of the Study
This research work will highlight on the relevance of feasibility studies on a new business. The work will be of immense benefit to those who want to go into or to establish a new business, especially, entrepreneurs and private individuals (the young graduates of higher institutions) who may wish to establish business of their own to become self-reliance or self-employed.
Nonetheless, the work will help to minimize business failure among business men and women, an incidence that had lead many to frustration and depression, which has over time now succeeded in letting many into crime and other social vices such as prostitution, armed robbery, drug addiction and trafficking to mention but a few.
More so, apart from contributing to the existing literature on this topic, it will be of immense use to anyone who may like to undertake further studies on this topic or any other related issue or topic.
Finally, the researchers also hope that the adoption and implementation of the findings and recommendations of this study will no doubt help significantly in boosting our economy through business success engendered by the use of feasibility studies among business firms.
1.5 Research Questions
The research questions in this study include the following:
- Are people aware of the use of feasibility studies in business analysis?
- Do people know that the use of feasibility studies is necessary for successful operation of business?
- Do people know that the use of feasibility studies can minimize the risk of sustaining lose in business?
- Is there any relationship between feasibility studies and business performance among firms.
- What is the attitude of people towards carrying out a feasibility study before starting up a new business.
- What is the relationship between moribund firms and feasibility studies?
1.6 Scope/Delimitation of the Study
The study centers on the impact of feasibility studies in starting up a new business. The relationship between feasibility studies and a new business is of paramount concern to the researchers. For many reasons, the researchers limited the scope of the study to some selected firms in Enugu State.
1.7 Limitations of the Study
The study does not go beyond the relationship between feasibility studies and a new business and due to time constraint and lack of fund, it did not go beyond the confide of Enugu State.
Nevertheless, even though some other prospective project owners and investors may find it useful, it is mainly conducted with special focus on business firms in Enugu State.
1.8 Definition of Terms
For easy understanding and appreciation of this work, the researchers considered it pertinent to define the following terms as they are bound to be used consistently in the work. Such terms includes:
(i) Feasibility Study:
This is a closer examination of the costs and potential benefits of a project or business to ascertain whether it’s feasible, viable and profitable to undertake such a venture.
This refers to the material that contains every thing about this work/research.
(iii) Feasibility Report:
A written documented plan or blueprint of operation of a business/project.
This is an establishment where goods are produced, bought and sell (an organization that undertake these activities).
(v) A New Business:
This is a newly established out fit where goods and services are either produced bought or sold in exchange for money.
(vi) Feasibility or Feasible:
Something that is possible and or likely to be achieved.
Something that can be successful.
Ability to give somebody advantage, money or useful result.
Summary, Conclusions and Recommendations:
This chapter summarizes the findings on the impact of feasibility studies in starting up a new business using selected firms in Enugu State as case study. The chapter consists of summary of the study, conclusions, and recommendations.
5.2 Summary of the Study
In this study, our focus was on the impact of feasibility studies in starting up a new business using selected firms in Enugu State as case study. The study specifically was aimed at identifying the causes of business failure among businesses, identifying the extent of the use of feasibility studies as a tool for investment or business opportunities selection among business firms, identifying the content of a feasibility study, ascertaining the relationship between feasibility studies and business performance among business firms in Enugu State and relating feasibility studies with setting up a new business.
The study adopted the survey research design and randomly enrolled participants in the study. A total of 150 responses were validated from the enrolled participants where all respondent are staff of the 20 selected businesses in Enugu State.
Based on the findings of this study, the researcher made the following conclusion.
- People are not aware of the use of feasibility studies in business analysis.
- People knowledgeon the necessity of using feasibility studies for successful operation of business is low
- People don’t know that the use of feasibility studies can minimize the risk of sustaining lose in business.
- There is a relationship between feasibility studies and business performance among firms.
- Peoples attitude and reasons for/towards carrying out a feasibility study before starting up a new business include; they feel lack of clear understanding of feasibility study, they feel it is expensive and can not bear the financial burden, they don’t have the knowledge on how feasibility is carried out, they don’t see the need to carryout feasibility study on their business, they only want to run the business for a short time and they don’t want to expose their business idea to the public.
- Thereis a relationship between moribund firms and feasibility studies.
Based on the findings and conclusion the researcher recommended massive awareness campaign to the masses in order to create the requisite awareness of the uses of feasibility studies and the need to embark on it before starting up a new business. Finally, the researcher recommended further research in this area, especially in the topic “The Importance of feasibility studies in the course of setting up a New Business or project.
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