Feasibility study establishes the desirability of any business. Have you ever had a business idea and after you launched, you just discovered that the pasture was not as green as you thought? In most cases, the profit margin is low while in other cases, your competition is intense. These happen because seeming opportunities are not necessarily the way they appear.
It requires some further understudies to uncover them. One of such studies is the feasibility study.
In this post, we will take a walk through some steps you can take to uncover the seeming opportunities in every need you may encounter either doing by yourself or through the aid of a professional.
- What feasibility study is;
- When feasibility study is required;
- Steps to performing a feasibility study; and
- Action steps at every stage of the study
What Is a Feasibility Study?
A feasibility study is the complete study of a business/project in terms of its cost, benefits, what, who, when, where, for whom and how as well as its desirability. It is a detailed report of the desirability of a project. The feasibility study is the bedrock for business plan as well as market planning.
Embarking on a project or a business without studying its workability is like going into a dark jungle to face a lion with bare hand. This explains why granting organizations request for either a business plan or a feasibility report. This can otherwise be called project evaluation.
When Is a Feasibility Study Required?
The study of the feasibility of a business opportunity or desirability of a project is necessary at various times and areas.
Before ever starting a new business and when expanding into new market, it is necessary to have a proper study. This takes different forms depending on the specific stage or task but the processes are the same. A feasibility study can either be technical, market based, commercial, risk assessment based, or purchasing an existing business.
Feasibility study is time and resource demanding. Whatever the goal is, there exists the same procedures. However, if you are skilled enough, you can handle it following the clear and simple steps treated below.
Stages of Feasibility Study; Steps-by-Step Process
For simplicity, this is going to be broken down into simple steps and commensurate actions required. This is useful in generating the information built into the planning.
Preparatory Stage
At the preparatory stage, you must determine the workability of the business. Will it work? Before ever proceeding, you need to assess the worthwhileness of the seeming opportunity.
Ask yourself, “What do I want out of this business and will I get it?”
Steps to Evaluating the Viability of a Business
- Establish the main goal or the desired outcome
- Examine the behavior of your potential consumer in terms of the response to changes in the market price and other factors that affect it (elasticity of demand)
- Review the uniqueness of your idea in relation to the price, location and usefulness
- Investigate the risk level
If you are satisfy with the findings on the workability, you can proceed to setting the study on course.
Establish the Comprehensive Outlook of the Study
If you have determined the worthwhileness of the project or business then, you determine what to measure. Design the study to capture relevant data.
Steps to Designing a Feasibility Study
Set specific objectives of the study –these can involve the following,
- Identify the target markets to determine the location
- Identify the various parts of the business and its requirements
- Examine the present market situation in terms of the costs and benefits
- Examine the buying behavior of the target consumer.
- Determine the projected sales and the prospective market penetration
Now that the study has an outlook with definite objectives, it’s time to get on to knowing your competition.
Competitive Analysis -Match Your Products/Services against the Competition
It is aimless to develop a product or service that is sub-standard or expensive. Simply, develop your product to match the needs and income of your target market.
- Survey your market prices and the competition
- What are the advantages and disadvantages your product/service has over others?
- Examine the risks of taking a step up above your competitors
- Specifically identify what your customers’ needs are and how your new product/service will meet them.
If your product stands in the competition favourably, great! Is’ time to understand the financial requirements.
Cost-Benefit Analysis; Understanding the Financial Requirement
Alright! It is time to look deeper into the cost required. Remember, competitiveness is vital to profitability as well as the competitiveness. This is where every effort gains relevance. Concern yourself with the following,
- The resources required for implementation
- The sources of financing
- Specific benefits of the project
- Time required before breaking even
- Chances of risking more money than planned
- In the event of project failure, can the financial position of the business still sustain the business? This defines the cost of failure.
Hurray! Your study is almost complete, but, one thing is left, review.
Review the Entire Study
At this point, the analysis of the whole process is required.
- Is the competition still the same?
- Are there any risks you did not take notice of previously?
- Have the market conditions changed?
- Is your business situation still the same, in terms of operations and economic situation?
Clearly, you can see that it is not just enough to spot a business opportunity; it is also important to evaluate the worthwhileness of the opportunity. Many failed businesses encounter failure because fundamental things questions were not asked. This requires time, but it uncovers potential losses and untold risks. When it is accomplished, business planning becomes easy.
Ready To Start and Grow Your Business
With Us?
Get your ready-to-use template here. We provide all the technical and professional supports you need to get that dream come through.
