A feasibility study checks if a plan, product, or project tool is doable. It asks the questions: Can we finish it on time? Will we deliver as promised?
These are queries that come up in our lives every time we are faced with a task. As a business owner, feasibility studies are your safety net.
Did you know? Many investment projects fail because people don’t realize how important feasibility studies are. They’re like the foundation of a building – without them, the project crumbles.
Our product launch is next month. The first thing that comes to your mind is, Am I ready? How much can be done in a month? Is there a call for panic yet?…
…All the things you need not bother about if you carried out a feasibility study before commencement. Don’t fret, our article answers all your questions about feasibility studies, and then some.
Feasibility studies come in various forms. Knowing the different types and what they involve is key for any business. We classify feasibility studies into two broad classes: market feasibility studies and business feasibility studies.
In market feasibility studies, you’re already a business owner. You’re in the market. But you need to modify a product’s quality. Maybe, you are about to launch a whole new line. This study ensures you leave no stone unturned during the process. A study by GOV.UK found that 80% of projects with a feasibility study were completed, compared to 65% without one.
Business feasibility studies, on the other hand, is what you need to carry out when preparing for a pitch deck. Or when you want to embark on a new business venture. It is broader and more intense than market feasibility studies.
Market feasibility studies analyze the potential demand for a product or service within your specific niche. According to Intangent, companies with precise forecasts have a 10% higher chance of boosting their annual revenue.There are key factors to consider in this study:
This assesses the size of your target market and its growth potential.
This helps you understand existing competitors—their strengths, weaknesses, and market share.
Helps you identify the demographics, preferences, and purchasing behavior of potential customers.
It also evaluates economic factors that may impact market demand. This includes income levels, employment rates, and consumer spending habits.
Helps you consider your regulatory requirements and constraints. Especially if you intend to market your product/service in a new geographical location.
This study type focuses on evaluating the viability of a business idea or concept. According to Investopedia, feasibility studies cost anywhere from $5,000 to $50,000. This depends on the complexity of your project.Business feasibility studies typically cover the following areas:
Assesses the uniqueness and value proposition of the business idea.
Similar to market feasibility studies. Analyzes the target market, competition, and demand for your proposed product or service.
Evaluates the financial viability of the business. This includes startup costs, revenue projections, and potential return on investment.
Examines the practical aspects of running the business—location, staffing requirements, and operational processes.
Identifying legal and regulatory requirements that may impact the establishment and operation of the business, such as permits, licenses, and zoning regulations.
Corporate Finance Institute estimates the global market for feasibility studies to reach $1.5 billion by 2025, growing at a rate of 7.3%. Market Business News reports that 72% of respondents believe feasibility studies help avoid costly mistakes and enhance decision-making.
Consultants are saddled with the task of being “superheroes” to several brands. They help you carry out a pressure-proof feasibility study, armed with a treasure trove of knowledge and skills. They offer you their:
They have years of experience under their utility belts, and they know the ins and outs of feasibility studies like the back of their hands. With their expertise and resources, they work swiftly and efficiently. This helps save your precious time and resources.
They navigate through market complexities with ease, uncovering hidden insights and trends. They bring an outsider’s viewpoint and offer impartial insights free from internal biases.
They are armed with cutting-edge tools used to crunch numbers and analyze data that helps you unveil valuable insights. They leave no stone unturned. Consultants conduct exhaustive analyses to ensure no detail goes unnoticed.
A standard feasibility study report contains:
This is a deep dive into your proposed market trends, customer preferences, and competition. It helps you to understand the lay of the land.
These documents peer into your finances with detailed projections. Your costs, revenues, and return on investment are all evaluated to yield the best result.
This helps you navigate potential risks and challenges. It assesses their impact and provides you with mitigation strategies.
Here are some tips for structuring and presenting your findings with finesse:
Clarify your mission and vision for the feasibility study. Define the scope of your study. Outline what you hope to achieve and the boundaries of your analysis.
Gather information from various sources—surveys, interviews, and existing research. Conduct thorough market research to understand your customer needs, market trends, and competitor landscapes.
Crunch the numbers and assess the financial feasibility of your project. Conduct a cost-benefit analysis to weigh the potential costs against the anticipated benefits of your venture.
Evaluate the operational feasibility of your project. Consider factors such as resource availability, technology requirements, and logistical challenges. Identify potential risks and develop risk management strategies to minimize their impact.
Compile your findings and recommendations into a comprehensive Feasibility Study report. Present your analysis, insights, and recommendations clearly and concisely, ensuring stakeholders can easily understand and act upon the information provided.
In conclusion, feasibility studies serve as a compass to guide businesses through the turbulent seas of uncertainty. Prioritizing these studies helps you chart a course towards success with confidence and clarity.
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