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Project IdentificationProject identification is the first step
for an entrepreneurial activity. It is concerned with collection,
compilation and analysis of economic data for the eventual purpose
of identifying possibilities of feasible and promising investment
opportunity and developing it.
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Project IdentificationProject Identificationbased on identified
activities, goals and time framesEnvironmental
Assessment(technical, social, economic feasibility)Project
Development
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Project ChoiceTheoretically infinite choices are
availableImportant dimensions are;
Product/ ServiceMarketTechnologyEquipmentScale of
productionLocationIncentives andTime phasingGovt.
PoliciesInfrastructureSkills
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Types of OpportunitiesAdditive; Least Risky
Utilize existing resourcesMin. change in business
characterComplementary;Risky
Innovative ideasShift in business characterBreakthrough;Most
Risky
Fundamental change in structure andCharacter of business
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Idea Evaluation The IdeaHow Do You Get It? Dealing with problems
yours or others Brainstorm with friends Mentors can help! Ask
others if they heard of any good ideas From your travels The
engineering and other universities, etc.Remember, a great idea does
not guarantee success
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How the founders of the Inc. 500 got their ideas While working
in the same industry 43% Hobby or advocation 16% Saw somebody else
do it 15% Saw an unfilled niche 11% Did a systematic search 7%
Don't know 5%
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Be the First... Our best business missions are based on those
ideas that often emerge out of our deepest personal motivations and
interests.Warren Avis in "Take a Chance to Be First"
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Opportunity IdentificationIntelligence to Observe, Innovate
& Deduct;During routine occupational workIdentifying dearth of
an article or serviceFaced with un-identified situationAvailability
of a particular skillAvailability of specific materialNeed of
improvisation in existing processReports & records of
professional bodiesJournals & Bulletins of Research
InstitutionsStrategic Plan documents of the GovernmentSuccess
stories of friends/ relatives/ others
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Opportunity Identification
Repeat business, not one-time sell. Business instead of a
practice. Not built on a persons talent, but orgn. Regional or
national potential, rather than local. Less labor intensive, the
better Already a market other companies doing it. Demographics or
lifestyle changes creating the need, and thus, the market.
Emotionally appealing to the customer. The more unregulated, the
better. A proven team, not an untried idea. team is more important
than idea. Recession-proof. Success is not built on one client, one
product, or customer. Payment at time of service or before.
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Criteria for Project SelectionInvestment Size - Small, Medium,
LargeLocation -Ease of Liaison, transport, immunitiesAvailability
of raw material, skilled personsTechnology Proven,
IndigenousEquipment Capacity, Quality, Futuristic,
IndigenousMarketing Retail/ industrial, import/export, ancillary/
parentCurrent Demand/ Supply positionIdentification of specific
nichesHow much competitionFrequency of consumption
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ImportanceCatalyst for economic developmentEmployment and income
generationFramework for future activities & developmentInitiate
infrastructure developmentDevelopment of society in long
termAccelerate socio-cultural activities
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Project FeasibilityFeasibility analysis helps to identify the
strengths and weaknesses of the project after establishment of
project objectives,
it includes;Market analysisTechnical analysisFinancial
analysisSocial profitability analysis
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Market analysisA market analysis is a method screening project
ideas in terms of market, it includesMarket area, methods &
cost of transportation and channels of distributionAnalysis of past
& present demand, rate of consumption and consumers of the
productSupply position, competitors & competitive products,
prices, quality and marketing practices
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Technical analysisServes as basis for estimation of cost and
consideration about infrastructure demand, employment, payment
systems & Ecology.Description of product including physical,
mechanical and chemical properties & specs.Machinery &
equipment, Manufacturing process, flow charts etc.Plant location,
plant size, production schedule, volume of productionRaw material,
labor requirements, Waste managementProduction cost
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Financial analysisPreparation of financial statement to evaluate
measures of commercial viability and magnitude of required
financeStatements of total project cost, initial capital
requirements, cash flows and projectionsCollection period of sales,
inventory, payment periods of purchases and expensesROI, break even
analysis, cost benefit analysis and price analysis
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Project FormulationProject Formulation is the step to critically
examine and make decision for choosing a project idea for
implementation.A process whereby the entrepreneur makes an
objective and independent assessment of various aspects of an
investment proposition of a project idea for determining its
impact.It aims at achieving the project objectives with min.
expenditure and adequate resources in a limited time.
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Sequential stages of Project FormulationFeasibility
AnalysisTechno-Economic AnalysisProject Design & Network
AnalysisInput AnalysisFinancial AnalysisSocial Cost-Benefit
AnalysisPre-Investment Analysis
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Project ReportPrepared by an expert / consultantServes as a
guide to ManagementImportant for financial institutions &
BanksA project report give details about;Merits & demerits in
resource allocationInputs & outputs of the projectExtent of
opportunities available
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ObjectivesThe objectives may be in terms of social or economic
or both;GeneralExpected achievementsOperationalExpected results
These objectives help in quantifying physical, financial, human
and other resource requirements;
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Project Report - ScopeEconomic Aspects:Market AnalysisTechnical
Aspects:Financial Aspects:Production Aspects:Managerial
Aspects:
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Project Report - ContentsObjectives & scope of the
projectProduct Characteristics, specification etcApplication/ Use
of productStandards & Quality
Market position and trendsAnticipated demandProduction
capacityPrice structureImport/ Export prospects
Raw Material requirementsAvailability, Sources, PriceProperties
of raw material
Manufacturing ProcessProcess selectionProduction schedule
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Project Report - ContentsPlant & MachineryEquipment/
Instrument requirementsPower, Water & other infrastructure
Land & BuildingArea, Building & Location
etc.Construction schedule
Financial implicationsFixed & working capital
investmentProject cost & Profitability
Marketing strategyPersonnel RequirementsStaff requirements &
availabilityLabor & wages provisions