Being an entrepreneur is not an easy task. Right from planning to executing entrepreneurs have to make sure that each process is in line.
Before all that an entrepreneur need a feasible idea to map investments. Ideas have to go through multiple tests to ensure maximum profit is gained while minimum resources are spent.
As in reality, the case is quite different. A major constraint faced especially in developing countries is the resource constraint. Hence it becomes imperative that certain project ideas are only taken up or pursued in preference to others.
For the proper execution, one needs to perform a project formulation.
A project is considered to have crossed the identification stage when:
- Initial screening is made from the alternatives
- Policy issues affecting the project have been resolved
- Project costs and benefits, on the basis of estimates are justified
- Project receives support from the beneficiaries as well as political authorities
- Prospects of funding are available from local and external sources
- Specific project plan is established
Project Formulation, techniques help us in making a choice.
It helps you compare your project idea to other alternatives. Once your idea goes through the formulation process you start getting a big picture of all the loop hole and drawback. It helps you analyse your idea from the point of view of input as well as output.
Such an analysis helps decision makers to point out technical feasibilities and financial viabilities.
Entrepreneurs in this way get a chance of taking a first look carefully and critically at a project idea by an entrepreneur to build up an all-round beneficial to project after weighing its various components.
The prime benefits of this pre-feasibility study through project formulation are:-
- Investing opportunity is promising– entrepreneurs get ensure of their idea success rate. Each parameter is examined and profits are calculated.
- The Project justifies detailed analysis
- Support /functional studies are needed for a feasibility study
- Establish viability of project from investor point of view