Setting up a microbrewery – Step-3 – Feasibility study
The main goal of feasibility study is to assess the economic viability of any startup project. The feasibility study needs to answer the question: “Does the idea make economic sense?” The study should provide a thorough analysis of the business opportunity, including a look at all the possible roadblocks that may stand in the way of a successful microbrewery set up. The outcome of the feasibility study will indicate whether or not to proceed with the proposed microbrewery project. If yes, then we can proceed to develop a business plan.(Which will be discussed in next post).
Following are some points which should be addressed in course of doing the feasibility study:
- Defining company, resources, skill, level of expertise, deficiencies, challenges
- Pros and cons of selected marketing strategy
- Reasons of selected technology and equipments
- Potential of targeted market and production capacity, location (Where will the facility be located relative to the potential customers), logistics
- Initial or preliminary design
- Site plan, building layout, different processes to be followed,
- Capital cost estimate
- Construction/equipment set up cost estimate
- Operating cost estimate (This includes the daily costs involved in running the business, such as wages, rent, utilities, and interest payments on outstanding debt etc.)
- Financials analysis, profit & loss, balance sheets, alternative/variable cost analysis
- Based on the estimated revenues and costs, what is ROI (return on investment), tax considerations.
- Who are “Qualified” suppliers – There are many manufacturers, suppliers (raw material like barley, hops, yeast etc. and equipments), even consultants. We need to ensure to get a quality product, whether equipment or service.
In essence the feasibility study should answer all the questions related to market, technical and organizational requirement and also about financial review.
I hope this information will be useful to analyse the various factors, which are important and vital, while doing the feasibility study to setting up a microbrewery.
Stay tuned to get a complete analysis on further steps/functions involved in setting up a microbrewery.
Share your views/feedback/questions.