Once the marketing, organizational, and technical analyses have been completed, the third and final step of a feasibility analysis is to look at financial issues.
The list of considerations below should help identify key issues that will require additional research.
Note that some of the areas below-specifically revenue projections-are directly based on the market analysis (the first step in the feasibility study), in which a proponent estimates the amount of product or services that they can sell. If that part of the feasibility study is not done thoroughly, the financial analysis will be inadequate.
A strong financial analysis is one of the backbones of a good feasibility study. A good feasibility study will give the organization a clear idea whether the proposed PPP in hospital management is a sound business idea.
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| Table A4: Key Areas in Financial Analysis |
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| Start-Up Costs | These are the costs that will be incurred in starting up a new business, including capital goods such as land, buildings, equipment, etc. The business may have to borrow money from a lending institution to cover these costs. |
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| Operating Costs | These are the ongoing costs, such as rent, utilities, and wages, that are incurred in the everyday operation of a business. The total should include interest and principal payments on any debt for start-up costs. |
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| Revenue Projections | These can be based on how a proponent will price his goods or services. He may assess what the estimated monthly revenue will be. |
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| Sources of Financing | If the proposed business will need to borrow money from a bank or other lending institution, the proponent may need to research potential lending sources. |
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| Profitability Analysis | The "bottom line" for the proposed business. Given the costs and revenue analyses, the proponent may ask the following questions: (i) Will the public-private partnership business bring in enough revenue to cover operating expenses? (ii) Will it break even, lose money, or make a profit? (iii) Is there anything we can do to improve the bottom line? |
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| Source: University of Wisconsin Center for Cooperatives. 1998. Cooperatives: A Tool for Community Economic Development. Madison. www.uwcc.wisc.edu/manual/chap_5.html |
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3 University of Wisconsin Center for Cooperatives.