Feasibility Study Essay Sample
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Feasibility Study Essay Sample
For a successful entrepreneur conducting a highly detailed feasibility study prior to entering into a new venture cannot be stressed enough. A feasibility study is an analysis of a proposed venture that includes extensive investigation and research which is used to support the viability of the venture. The amount of time and research that goes into a feasibility study can save an entrepreneur from making big financial mistake. Feasibility studies can also provide an entrepreneur with important information allowing for the anticipation of future problems along with appropriate corrective actions. This process will be demonstrated by examining my own feasibility study. This study is planned around a small scale startup utilizing minimal capital for what I believe is necessary for this venture to be successful. While using my cash on hand I am more interested in attempting to seek out venture capital, partners, and investors rather than committing to a small business loan. The product of interest is an establishment similar to Dave & Buster’s which will be located in Biloxi, Mississippi. Both new and retro arcade games, along with various types of vending game machines, will offer fun experiences. Food and alcohol will be sold in a restaurant style atmosphere. Arcades serving alcohol are limited to Chucky Cheese and two bowling alleys in this area.
In 2005, Hurricane Katrina destroyed the few establishments offering a similar atmosphere. Hurricane Katrina appears to have caused unnatural development of the Gulf Coast area. The closest Dave & Buster’s is eight hours away from Biloxi, Mississippi. Biloxi is a casino town located on the Gulf Coast. The next nearest establishment that is similar is in located in New Orleans, Louisiana over an hour away, the establishment is called Barcadia. Target customers will change with the particular time and day. The establishment will be more geared towards adults, but maintain a family friendly atmosphere during lunch and dinner hours. Late at night target customers will be casino and night life crowds looking for food and fun things to do to occupy their time. Dave & Buster’s was able to successfully establish a name brand. Considering the fact that they do not franchise, I think that opportunities still exist, especially in the Biloxi area. In fiscal year 2011 Dave & Buster’s stores had an average annual revenue of $9.8 million (Katje, 2012). Arcades serving alcohol are limited to Chucky Cheese and two bowling alleys in the Mississippi Gulf Coast Area.
Prior to the Hurricane casinos on the Gulf Coast were only allowed to have gambling areas located on barges that sit on the beach side of the main highway. The casino’s lost their barges on the beach side of the highway during Hurricane Katrina, but maintained their hotel facilities which are located on land, most of which on the opposite side of the highway from the beach. The state approved casinos to relocate onto land in order to better accommodate them (Solis, 2005). This forced all casinos located in this area to remove their arcades and make room for new casino areas within the hotels. Getting more in depth into the company’s description, the specific name of the establishment is currently being left open for consideration, this is for several reasons. It is common knowledge that in the state of Mississippi a doing-business-as name, also referred to as a DBA, is not required unless your organization is a corporation. Any limited liability company will do, and there are no specific requirements, other than the obvious necessity to trademark whatever is later decided upon.
Currently I am seeking investors and partners interested in my venture. Leaving the name open will allow for a little more flexibility. The food and beverage industry in the local area is competitive if you consider the large numbers of restaurants, but the fact still remains that this cannot be seen as direct competition. There are no businesses around that fall into this specific industry. The unique thing about this type of business, in this particular location, is its ability to pull in different crowds. During the week you can count on lunch crowds of military members, base contractors, college students, construction workers, and casino employees. During the weekends for lunch and dinner you will see casino tourist from out of town, families, and young military airman that are in tech school. Late at night on certain days during the week and on weekends, the atmosphere will change to more of a bar environment. Party goers that are going to and coming from the casinos will make up a large late night crowd. Operating a shuttle to take military members to and from the base on these particular nights will bring in a large amount of business.
This is because most do not have vehicles with them while attending tech school. And the ones that do have vehicles will not want to drink and drive while having to drive onto the military base. According to the state, Harrison county tourism was a 1.3 billion dollar industry in fy2011 (“Biloxi market analysis,” 2013). The county is estimated to have over 183,000 residents. Two possible locations have already been determined, both of which are located in the heart of Biloxi. Both locations being previous nightclubs are also setup with kitchens. Both are well over five-thousand square feet with two separate floors. These two locations are priced similar, with the monthly leases being right around three-thousand dollars. Kitchen vents are installed in both facilities along with two large bar areas. One is located on the beach and the other directly outside a military installation that is one block from the beach. Both facilities have electrical setup in a manner that would allow for easy installation of additional outlets for vending and arcade. Parking and street view is appropriate at either location. Considering the Mississippi regulations that are tied to this type of business, there are several items that need to be addressed.
Once location is established the necessary permits and licenses will need to be obtained. A beer permit can be obtained in Mississippi through a short process and a mere thirty dollars. The liquor license will take much longer since the registration process is federally controlled. Building permits for modifications will not be necessary since the facilities need no work requiring a permit. Besides obtaining the required health permit it will be necessary to spin up management on the states Learn2Serve program. The state health department mandates that one person onsite be certified under the program as a food protection manager. As mentioned earlier a business license is not required in the state while operating under an LLC. Now that we have reviewed some of the processes that will prove to be obstacles in startup, focus will now be placed on startup expenses. Big purchase items will be restaurant equipment, arcade and vending machines, and furniture. Vendors have already been established along with a partial food menu to demonstrate that sales prices in the restaurant portion of the business are competitive and profitable.
The restaurant equipment that I will need is minimal considering that both facilities have kitchens already setup. I have priced the equipment that I would need locally at a used price of four-thousand dollars. A family owned company out of Pennsylvania will be providing me with twenty-five fully restored retro arcade machines for eighteen- thousand dollars. I will be leasing the newer machines from a company. The floor layout has been measured and blueprinted in one facility with furniture that I have already chosen. Furniture plus delivery will cost over ten-thousand dollars. Several point-of-sale systems will be required. There are a number of companies that offer the equipment for free with a contract for maintaining the system. All point-of-sale systems will be delivered, installed, and setup as included in the contract agreement. Considering a strategy for success it would be preferable to pay for a one year lease upfront, possibly even getting a better deal. Marketing strategy is important because this type of business depends on attracting a continual volume of passers-by into the establishment, advertising and marketing must also be continual and aggressive (Nixon, 2013). Marketing strategy will utilize advertising through the military base newspaper, local radio stations, and an establishment website. About 90 percent of small businesses today have websites (Hisrich & Shepard, 2010).
A website is an important marketing piece and the best part about it is that I can setup and maintain it for next to nothing. The liquor store that is serving as a vendor for alcohol has agreed upon an alliance partnership in which we will promote one another’s business. This agreement has also been made with another business as well. Volume is a nightclub located a few blocks down from both prospective locations. Since there is no direct competition between businesses they are willing to work together. Possible marketing strategies are plentiful and exist both externally and internally. Rather than simply using quarters, the use of tokens will allow game play to be bundled with food items. Promotion possibilities are nearly endless while considering the use of tokens. With twenty-two thousand dollars cash on hand I have found two venture capital parties through social networking that are interested in my venture. I am looking for eighty thousand dollars from venture capital to fund my business. This money will serve to pay the first years lease in advance, and pay for all startup expenses.
I know who all of my vendors are and I have established a menu with prices. I have included stationary expenses into my cost and profit analysis for all menu items. All prices are easily competitive while compared with other local establishments. I have also put together a small group of family and friends willing to help me pursue this venture. I have someone that I can count on and trust to manage the establishment. Having prior work experience as a general manager of a restaurant, and personal experience with electrical and carpentry, I am in a good position to cut down on cost throughout the startup process. Monthly costs such as utilities are all in line with profits. The biggest expense will be the electric bill. Each machine will cost roughly seven dollars a month if ran nonstop for twenty-four hours.
Successful entrepreneurs are those who conduct a highly detailed feasibility study prior to entering into a new venture and cannot be stressed enough. Understanding how a feasibility study is used to analyze a proposed venture is paramount. Feasibility studies include extensive investigation and research that is used to support the viability of a venture. The more time and effort that goes in to a feasibility study will mean encountering fewer obstacles. Anticipating future problems and developing appropriate corrective actions are one of the biggest advantages gained from conducting a feasibility study. This process was demonstrated by examining my own feasibility study.
Katje, C. (2012). Long-term investors should play with dave and buster’s ipo. Seeking Alpha, Retrieved from http://seekingalpha.com/article/904871-long-term-investors- should-play-with-dave-and-busters-ipo
Solis, R. (2005, October 18). Mississippi casino boats are moving onto dry land. USA Today. Retrieved from http://usatoday30.usatoday.com/news/nation/2005-10-18 casinos-miss_x.htm
Biloxi market analysis. (2013, September). Retrieved from
Nixon, N. (2013, Sept 12). How to start an arcade business. Retrieved from http://smallbusiness.chron.com/start-arcade-business-2084.html Hisrich, R.D. , & Shepherd, D.A. (2010). Entrepreneurship (8th ed.). New York, NY: McGraw-Hill Irwin. ISBN: 978-0-07-353032-1.