A REQUIREMENT FOR STARTING A NEW COOPERATIVE BUSINESS IN NIGERIA: FEASIBILITY STUDIES
The project is focused on feasibility studies: a requirement for starting a new cooperative business in Nigeria. The importance of a well prepared feasibility study in the cause cooperative information and investment drive cannot be over emphasized. A well prepared feasibility study can be used to obtained loan from banks and thus attract other investments. Cooperative projects backed by good feasibility studies are difficult to wind up easily. The drive for investment can only take place when there is sufficient money or resources. For any project there are the alternative technology, production equipment, building and other investments. This study takes a look at cooperative formation and investment drive among registered co operative in Enugu East, Enugu South, Enugu North and Enugu central). The computation of sample size was based on Tao Yamani Technique of which a sample size of 193 was selected. The simple percentage analysis and test of hypothesis were used in treating the data. And recommendations and conclusion were drawn from the findings f the data analyzed.
1.1 BACKGROUND OF THE STUDY
For over a decade now, the Nigerian economy has been in dire strait or doldrums. The continued economic crunch has highlighted the need for feasibility studies before embarking on any project.
Feasibility studies involved closer examination of cost and benefit of a project with a view to ascertain whether it is feasible, viable and profitable to undertake such a venture.
The aim of this study is to let business operator and the general public know the importance of a feasibility report, in any business venture most especially cooperative business venture. The drive for investment can only take place when there is sufficient money or resources. The importance of a well prepared feasibility studies is a requirement for starting a new cooperative business. A well prepared feasibility studies can be used to obtain loan from banks and thus attract other investment. A co-operative business backed by good feasibility studies are difficult to wind up easily says Banmbank (2012). Having the right goods at the right place at the right time and prices is the accepted objective. He also believes that control is indispensable. The whole idea of a feasibility study is compliments and facilitates two important functions which is business planning and control. Thus a feasibility study shows whether a propose business opportunity will succeed or fail after a careful consideration of alternative against the firms objective. Different views on why people are motivated to form or join a cooperative society. Cooperative societies create an alternative way of doing business for the socio-economically disadvantaged people. It is clear naturally that the intention or motive for establishing a sole trade, partnership or joint stock company are similar but not same for starting up a new cooperative business in Nigeria.
According to Omuoha (2013) profit motive is the motivating factor for private entrepreneurs while service to member is the motivating force for cooperative, the necessity for making a choice between investment alternative arises frequently in business decision (Ude 2012). Accordingly, it is necessary to appraise your project to determine whether it is worth going into the business or not. For any project, there are alternative technologies, production equipment, building and other investment. As each decision is concluded the next issue is the problem of selecting the most viable of the various alternatives.
1.2 STATEMENT OF THE PROBLEM
The spate of business failure in Enugu state is on the increase. According to Louck (2011) “to start a business is very easy but to stay in business is very difficult. Most businesses have failed due to lack of proper planning foresight by their promoters. This is most in the case of small scale business which are characterized by owner and personnel. The importance of feasibility studies in the course of starting up a new cooperative business cannot be ignored. The failure of some cooperative business venture deserve to be questioned: were feasibility studies prepared? How good were the feasibility studies? Were the provisions well implemented? What is the nature of the staff quality?
The day to day operation of the cooperative business is usually in the hands of the people who may not possess the requisite skills and technicality.
It is against this background that the wants to embark upon the research topic titled “feasibility studies: a requirement for starting a new cooperative business in Nigeria.
1.3 OBJECTIVE OF THE STUDY
The major objective of this study is to x-ray the usefulness of feasibility studies in the course of starting a new cooperative business in Nigeria.
The specific objective includes:
1. To find out whether cooperative executives carryout a well feasibility studies before starting a new cooperative business.
2. To identity the causes of business failure among cooperatives.
3. To identify the extent of the use of feasibility studies as a tool for investment selection among the cooperatives.
4. To ascertain the relationship between feasibility studies and business performance among cooperatives.
5. To recommend steps of carrying out a proper feasibility studies for efficient business performance among cooperatives.
1.4 RESEARCH QUESTIONS
1. Do cooperative executives carryout a well feasibility studies before starting a new cooperative business?
2. What are the causes of business failure among cooperatives?
3. To what extent is feasibility studies used as a tool for investment selection among the cooperatives?
4. What is the relationship between feasibility studies and business performance among cooperatives?
5. What can be recommended steps for carrying out proper feasibility studies for efficient business performance among cooperatives?
1.5 RESEARCH HYPOTHESIS
H1. Cooperative executives do carryout a well feasibility studies before starting a new cooperative business
H0. Cooperative executives do not carryout a well feasibility studies before starting a new cooperative business
H2. The causes of business failure among cooperatives is attributed to improper feasibility studies.
H0. The causes of business failure among cooperatives is not attributed to improper feasibility studies
H3. Feasibility studies is used as a tool for investment selection among the cooperatives to a large extent
H0. Feasibility studies is used as a tool for investment selection among the cooperatives to a small extent
1.5 SIGNIFICANCE OF THE STUDY
This study will highlight on the relevance of feasibility studies in starting up a new cooperative business in Nigeria.
This will be immense benefit to these wanting to engage in new venture.
It will also helping minimizing business failure among cooperatives, since people will appreciate the need to embark on feasibility studies in the course of cooperative formation/ investment drive.
Again apart from contributing to the existing literature on this topic, it will be of immense benefit to those who might like to undertake further studies on this topic or related issues.
It is also hope that the adoption and implementation of the finding and recommendations of this study will in no doubt help significantly in boosting our economy through business success engendered by the use of feasibility studies among cooperatives.
1.6 SCOPE AND LIMITATIONS OF THE STUDY
This study is centered on feasibility studies; a requirement for starting a new cooperative business in Nigeria. It also, covers the requirement for carrying out a sound feasibility studies for high business performance. This work also delve into the causes of business failure among cooperatives and how these failure can be prevented and controlled.
The researcher in the course of this work seriously encountered financial and time constraints. Exorbitant, unreasonable, high and great transportation cost, apathy, limited cooperative books, journals, and other publications. Higher level of risk of traveling by road and the geographical spread of the data base constituted limitations in themselves.
1.7 DEFINITION OF TERM
A closer examination of the costs and benefit of a project to ascertain whether it is feasible, viable and profitable to undertake as a venture.
A written documented plan or a blueprint of operation of a business project.
Commitment of fund in the purchase of assets intended to yield future returns.
Plan to invest money in the purchase of assets or a combination of assets intended for installation to yield return in the business concern.
Cooperative Business Formation
This has to do with ways by which cooperative business can be start up. It is the steps involved in starting up a new cooperative business.
It is association of persons who have voluntary joined together to achieve a common end through the formation of a democratically contributed enterprise, making equitable contribution of the capital required and accepting a fair share of the risk and benefit of the undertaking in which members actively participate.