We can conduct a feasibility study for any business in just 6 simple steps. However, you should have a good understanding of what is a feasibility study. Here we go, let's get you to know the top-to-bottom of the feasibility study through this article.
A Feasibility Study is a thorough analysis that considers the crucial factors of a declared project to evaluate the possibility of its success. It determines the potential of a project to assess its success. The feasibility study is designed to find the possible issues in the project.
The feasibility study includes a Cash flow analysis, to measure the cash level generated from profit against the operating costs of the project. You need to complete the risk evaluation to assess if the return is enough to balance the risk in the venture.
This session discusses how to design a feasibility study for a business.
What is a Feasibility Study of a Business?
A feasibility study of a business is an analysis of the viability and potential success of a proposed or existing business venture. It is an evaluation of the potential market demand, operational and financial viability, competition, and any other factors that may impact the success of the business. The purpose of a feasibility study is to determine whether the business idea is worth pursuing and to help entrepreneurs make informed decisions about the viability of their ventures.
A business feasibility study report is prepared to support decision-making according to the cost-benefit analysis of the business or project productivity. The feasibility study is performed in the deliberation phase before the Business Plan is designed. It is an evaluation tool, including guidelines and limitations, used to help the decision-makers while assessing the possibility of the Business Concept.
What is a Feasibility study report? A Feasibility Study Report (FSR) is a document aiming to identify, explore, and assess the potential solutions of the project to save time and money. This report provides a brief description of the project and some relevant information.
When should we Conduct a Feasibility Study?
A feasibility study is conducted after launching the project, and before starting any project-related work. The feasibility study is an integral part of the project planning process and is done along with the SWOT (Strength-Weakness-Opportunity-Threat) Analysis or project risk assessment, based on the project.
The feasibility study helps:
- To establish market opportunities before executing a project
- To reduce business alternatives
- To document the benefits and drawbacks of the launched project
- To provide additional information before decision-making
An important aspect to note is the feasibility study is not about executing a project. When executing, you assess if the project is ideal for your company and if the goals are compatible with the total strategic plan.
Elements of the Feasibility Study
A feasibility study considers various factors and establishes the probability of completing the project and assessing the profitability.
Here are the elements of the Feasibility study:
- Technical feasibility
- Financial feasibility
- Market feasibility
- Operational feasibility
Technical Feasibility
This study analyzes the technical resources suitable for the project. The study assesses the right tools and technical expertise to fulfill the project objectives. For instance, if the project plan launches to produce 50000 products every month, but can produce only 30,000 products per month, you can conclude that the project is not technically feasible.
Financial Feasibility
This study establishes the monetary or financial feasibility of the project. A financial feasibility report will have a cost/benefit assessment of the project. The study also estimates an approximate Return On Investment (ROI) and reveals financial risks. The ultimate goal of this study is to understand the economic benefits driven by the project.
Market Feasibility
This study evaluates the team’s expectations of the deliverables to perform in the market. The report includes a market analysis, competition evaluation, and sales projection.
Operational Feasibility
This study determines if your company will be able to complete the project on time. The study includes staffing or human resources, organizational framework, and certain legal requirements. In the last phase of this study, your team will have a clear understanding of the availability of resources, skills, and skills to complete the work.
How to conduct a Feasibility Study?
Preparing a Feasibility Study includes market analysis to research the target market and determine demand, as well as an evaluation of the technical aspects of the business, such as equipment and resources required. A financial analysis should also be performed, which involves examining projected costs, revenue, and profitability. The results of the study should provide a comprehensive and thorough analysis of the business idea. Here are the steps to conduct a feasibility study,
- Describe the project
- Define the possible solutions deriving from the project
- List the criteria to assess these solutions
- State the most feasible solution for the project
- Conclude with a statement
There are various firms that offer quality feasibility study services to write the most precise feasibility report for your business. If you are a business person who wants to initiate a project or a business, you can make these services useful.
1. Describe the project
This is the first part of the project, which includes the description of the project to be completed. You need to highlight the purpose and the integral components affecting the success.
2. Define the possible solutions deriving from the project
In this step, you discuss with the team creating potential solutions that derive from the project. This could help you eventually when assessing the solution that provides maximum benefits.
3. List the criteria to assess the solutions
In this stage, you need to list the rules for the team to evaluate the solutions. Consider certain criteria such as revenue potential, better productivity, improved communication across various departments, customer satisfaction, etc.
4. State the most feasible solution for the project
Once you plan with your team, state the solution to which you guide the project. It is important to include a description of why you choose this solution above other options.
5. Conclude with a statement
Here, you write a conclusion that helps to summarize the crucial aspects. Begin by repeating the statement, with the description and reason to start the project. Then mention the solution you wish to achieve as you complete the project, and why this solution is more vital than other solutions.
Steps to conduct a Feasibility Study for any Business
You may not conduct a feasibility study yourself, yet would be requested to provide insights and relevant information. To conduct a feasibility study, you need to hire a consultant, or if you have a project management officer (PMO), ask them if they take this type of work.
Here are the steps involved in a feasibility study for any business:
1. Run a basic analysis
Conducting a feasibility study is a time-consuming process. Before getting into the feasibility study, you must analyze the project for any obstacles. For instance, if a project needs considerably more budget than what is available, you probably cannot complete the project. Likewise, if the products need to be available in the market by a specific date or time, but not available for a long time, then your project is not feasible. Such large-scale obstacles result in an irrelevant feasibility study, as it is clearly understood that the project is not viable.
2. Assess the financial feasibility
Consider the financial feasibility study as the estimated income statement for the project. The specific part of the study reveals the expected project income and summarizes how much you need to invest- both money and time, to accomplish the project objectives.
In this phase, analyze if the project would affect the cash flow of your business. Based on the difficulty, your in-house project management officer or the external consultant would join your financial team to execute the project's cost-benefit analysis.
3. Evaluate the market
The market evaluation or the market feasibility study helps to identify the demand in the market. This study provides an idea about the expected revenue and the possible market risks you would be involved in.
The market evaluation, above any aspect of the feasibility study, helps to assess the opportunity in the market. It is crucial to assess the position of the competitor and analyze the statistics to understand how the project would work.
4. Assess the technical and operational feasibility study
Although the financials may look attractive and the market is available, this resource might not support your organization the way you want! To assess the operational feasibility, you need to consider staffing, and equipment required for the project- the organizational resources such as time and money necessary for the success of the project.
Based on the project, it is also necessary to assess the legal impact of the resource.
5. Review the sensitive aspects of the project
In this phase, the internal PMO team or an external consultant has considered all the elements of the feasibility study- financial, market, technical and operational feasibility. Before you execute the recommendations, the PMO or the consultant reviews and analyzes the data for any obstacles. This includes ensuring that the income statement is compatible with the market analysis.
The feasibility analysis does not provide a definite decision for a hard problem. Instead, it helps you create the right questions and corresponding answers, so you make the most effective decision for the project and the team.
6. Submit a Decision
The final phase of the feasibility study is the executive summary covering the important points and submitting the solution.
Based on the difficulty of the project, the internal PMO or external consultant shares the feasibility study with the stakeholders or submits it to the group to address the questions, Live.
Role of Feasibility Consultants
Feasibility consultants are professionals who help businesses, organizations, and government entities determine whether a proposed project or venture is likely to be successful. They conduct research and analysis to evaluate the potential market demand, technical feasibility, and financial viability of the project and then present their findings and recommendations to the stakeholders. Their services can be used to support decision-making for a wide range of projects, including new product launches, expansion plans, and mergers and acquisitions
BMS has the most recommended consultants for feasibility studies. We assist businesses across the globe in conducting the most effective feasibility study. Our team of feasibility consultants is highly experienced in assisting client businesses to conduct effective feasibility studies.
Feasibility Study Services
Business Feasibility Study services include market research to assess the size and growth potential of the target market, technical feasibility to review the design and engineering plans, financial analysis to forecast revenues, expenses and cash flow, operational analysis to identify potential challenges in logistics, supply chain and other aspects of the Business.
BMS Auditing has been offering in-class feasibility study services in UAE, Qatar, Oman, KSA, India, Uk and USA with dedicated offices around the world. We help you with writing an ideal feasibility study to identify any potential compliance issues and recommend actions to address them. We also assist you with the step-by-step process of conducting the feasibility study as per the business requirements.
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