Organizational and Financial Feasibility of a Venture, Essay Example

What is the difference between organizational and financial feasibility of a venture? What is the importance of these two types of feasibility? Which type of analysis do you feel is most important to the success of an entrepreneurial venture? Explain your answer.

The organizational feasibility of an entrepreneurial venture refers to the availability of all elements of its proposed structure (Wolfe). These elements include the different professionals and managers who will comprise the organization’s hierarchy, the equipment and facilities that the organization intends to use, and provisions for the fulfillment of all the legal and regulatory requirements that the organization is to be under. This type of feasibility is important to any venture because it may be inferred from it if the venture can be done. On the other hand, financial feasibility refers to whether or not the entrepreneurial venture can be expected to bring in sufficient revenue to cover its expenses and provide investors with acceptable returns on their investments (AGV). This feasibility involves an approximation of expected revenues versus expected costs across a certain time period, including the identification of a point in time (or sales) in which the venture would have already recovered all of its initial investments in profits. This feasibility is also important to any venture because it is able to tell if the venture should be done. While both types of feasibility are critical to the success of an entrepreneurial venture, financial feasibility is more important than organizational feasibility. This is because an entrepreneurial venture’s goal is essentially to make profits. No matter how organizationally feasible a venture is, if it will not make enough money, it should not be done. Once it is established that a venture is not financially feasible, an organizational feasibility study need not be made.

What is the relationship between idea generation, opportunity, and feasibility analysis?

Under the context of entrepreneurial ventures, idea generation refers to the formulation of an entrepreneurial thought. That is, it forms the basis for the development of a plan to make money. It is what an entire business proposal is built around. An opportunity is a situation wherein it becomes possible for entrepreneurs to generate revenue. It is a set of circumstances that makes an environment favorable for conducting business. A feasibility analysis is a study on whether or not a proposed business venture should and can be executed in a given environment. These three concepts are highly intertwined. The recognition of an opportunity can trigger the generation of an idea, which should then be developed and tested for feasibility. Another possible relationship is that an idea may first be generated, and then when an opportunity opens up where the generated idea can be applied, the idea is further developed and tested for feasibility. It is also possible (although not necessarily advisable), for an idea to be tested for feasibility under various situations while there are yet no opportunities in which to apply the idea in. This way, as soon as an opportunity is recognized, it will be immediately determined whether or not the application of the idea is feasible under the circumstances that the opportunity presents. Clearly, the three concepts are essential to the success of a venture. Without an idea, the venture itself cannot exist. Without the opportunity, the venture cannot be realized and will remain theoretical. Without feasibility analysis, an executed idea for a given opportunity has unbound risks.

Works Cited

AGV. Financial feasibility assessments (FFAs). 2007. November 2, 2010 <http://www.australiaglobal.com/finfeas.htm>

Wolfe, L. Feasibility Study Course Lesson 5 – Organizational Structure Feasibility Study. 2008. November 2, 2010 <http://womeninbusiness.about.com/b/2008/05/28/feasibility-study-course-lesson-5-organizational-structure-feasibility-study.htm>