Feasibility report writing in financing

Before
loans and advances are made to an investor, that investor must present a
feasibility and viability report. The report must be well articulated and must
take into consideration remote possibilities (socioeconomic and political
factors), which could positively or negatively affect the business.
Feasibility
report is therefore futuristic and has factual forecast as its basic
foundation. The document should not be forged or written on mere assumptions.
Olaleye
(2003) presents here an articulation of procedural steps to be followed when
drawing up a feasibility report
·        
A clear statement of the amount of the loan required
·        
A clear statement of the purpose of the loan
·        
A report of an authentic financial report of the performance of your
business (for business already in operation)
·        
An articulation of your management background, skills and experience to
manage the enterprise
·        
The financing institution will be interested in your plan to repay the
loan hence a cash flow plan is necessary
·        
A security you may wish to or required to make i.e. a collateral
However, good as the Olaleye’s format is or may
seen, the National Directorates of Employment (NDE) adopting a  simplistic international format for its
trainees seeking financial assistance to set up small scale businesses, advises
and recommends to following formats in pages
Page one should contain.
EXECUTIVE SUMMARY
·        
Name of business
·        
Types of business (i)manufacturing (ii)service operator (iii)retailer
(iv)wholesaler
·        
Product or service
·        
Customers
·        
Owners
·        
Number of staff
·        
Sources of start up capital
·        
Total sum required in Naira
Page two should contain
MARKETING PLAN
Product services or range of products
·        
Quality
·        
Colour
·        
Size
·        
Packaging
·        
Spare parts
·        
Repairs
·        
Other features (please state)
Page three should contain
BUSINESS IDEA
Name of business
The business is going to:
] provide the following product or product
] provide the following service or services
] run the following type of shop
The customers will be
…………………………………………………………..
The business will sell in the following way
……………………………………………………………….
The business will satisfy the following needs of the customer
Page four should contain
MARKETING PLAN
(PLACE)
·        
Location – hence describe the plan location of the business
·        
This location is chosen for the following reasons
·        
Method of distribution
The business will sell to:
(1)  Individual (2) wholesalers (3)Retailers (4)Others
This way of distribution is chosen for the
following reasons:
…………………………………………………………
Page five should contain
MARKETING PLAN
(RICE)
For manufacturer and service operators
                    Product or
Services
·        
Cost
·        
How much customers are willing to pay
·        
Competitors’ price
·        
Reason for setting this price?
·        
Discount will be given to the following categories of customers…
·        
Reason for given discount
·        
Credit will be given to the following customers or types of customers
·        
Reasons for giving credit
Page six should contain
MARKETING PLAN
(PROMOTION)
Types of Advertising                     Details                   Amounts (N)
·        
Sign post
·        
Leaf lets and posters
·        
Type of sales promotion
Types of Advertising                      Details                   Amount (N)
Page seven should contain
FORM OF BUSINESS
·        
The business will operate: As an Enterprise [], partnership [] etc
·        
The reason for choosing this form of business is …….
·        
The owners will be: Name: …………………………….
·        
Description of your skills…..
·        
Relevant experience…
(please articulate)
Page eight should contain
STAFF
Task                                 required skills and experience
performed by
Total number of staff? ………………………
Page nine should contain
Legal responsibilities and insurance
·        
The following taxes apply to the business
(please state)
·        
The following regulates apply to the employees
·        
The business will need the following licenses and permit
·        
The business will have the following insurance
(please note)
Page ten should contain
Product costing form
(for manufacturing and service operators)
Product…….
1.     
Direct material cost per item
2.     
 Direct labour cost per item
3.     
Indirect cost per item
4.     
Total cost per item
Page eleven should contain
SALES AND COST PLAN
Details
Jan
Feb
March
April
May
June
July
August
Sep.
Oct.
Nov.
Dec.
Sales
Direct Material cost
Direct labour cost
Gross profit
Indirect cost
Net profit
Page eleven should contain
CASH FLOW PLAN
Jan. Feb. Mar. April. May June
1
Cash at start of the month
2
Cash in from sales
3
Any other cash in
4
Total cash in
5
Cash out for direct material cost
6
Cash out for direct material cost
7
Cash out for over heads
8
Cash out for planned investment
9
Any other cash out
10
Total cash out
11
Cash at the end of the month
N.B This cash is used and transposed as cash at the start of a new
month
Page twelve should contain
Sources of start up capital
Total start up capital:
…………………………………………..  xxxx
·        
Required start up capital                                     xxxx
·        
Sources of start up capital
¯  Owner’s equity       xxx
¯  Relatives                xxx
¯  Bank loan               xxx                               xxxx
·        
Other sources (if any )
(please state)
·        
Expected NDE loan                                              
xxxx
(Total must be the same as required start
capital) xxxx
Collateral (if applying for a loan)
1)……………………….
2)……………………….
3)……………………….
Page thirteen should contain
INVESTMENTS
Business premises
Construction or purchase of building        +…………..
Equipment
……………………………………………….               +xxxx
……………………………………………….               +xxxx
……………………………………………….               +xxxx
                                                                    
= xxxx =            xxxxx
Working Capital
·        
Stock of raw material of finished goods       xxxx
·        
Promotion                                                  
   xxxx
·        
Wages                                                           xxxx
·        
Rest                                                         
    xxxx
·        
Insurance                                                   
xxxx
·        
LGA Trade permit                                       xxxx
·        
Sign – post level                                         xxxx
·        
Business registration fee and other            xxxx
·        
Depreciation and miscellaneous                 xxxx
·        
TOTAL START UP CAPITAL                     Nxxxxx =   xxxxx

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