“Who said the business is not feasible? An existing same business is already doing well somewhere”.
“Why perform another feasibility study when one was just finished a few years ago?”
The dynamic nature of today’s business environment has led to an increase in the risks and uncertainties that are faced by organizations. A feasibility study can be performed for a solution to a specific problem, new idea, business decision or a project.
The feasibility study answers the following questions
whether it has potential to fulfill the required outcomes;
whether the concept is technically possible;
whether this solution is most effective one for those needs;
whether it will have constructive impacts;
whether it’s socially and ecologically sustainable;
whether the organization / person has the required resources;
whether it will can fetch future profits.
Components of Feasibility Report
- Description of the Industry
- Current Market Analysis
- Competition Analysis
- Anticipated Future Market Potential
- Potential customers and Sources of Revenues
- Business Founders / Promoters Background
- Employees and / or Labor Analysis
- Materials and Supplies, and Location
- Site and Environment
- Useful for identifying operational problems to be solved, and their urgency
- Define acceptability of any solution
- Asses any aspect of the prject conflicts with legal requirements
- Estimate the total Capital requirements
- Estimate equity and credit needs
- Budgeted expected costs and returns
- Detailed Cost Benefit Analysis
The feasibility study answers the following questions
The feasibility report acts as an investigative tool to assess the potential, viability or practicability of a new business or venture. The importance of a feasibility study is based on organizational desire to “get it right” before committing resources, time, or budget. It would be good exercise to make these determinations in advance, instead of facing problems in conducting operations. It can be used for the following purposes:
- It act as a “go / no-go gauge” for any business or venture.
- It can be adopted in the case of introduction of the latest products or ideas into the business mix.
- To understand the stepwise process that helps weigh the pros and cons of each step prior to getting into the actual process.
- It provides results for key decisions that may help moving forward with the idea, refining it or leaving it altogether.
- It helps in linking project efficiency to budget cost.
- It helps in risk mitigation because with contingency planning and risk treatment strategy. A thoroughly executed feasibility report helps the firm in attaining a broad picture as well as a detailed analysis of the profitability of its future business.
- It also acts as an outstanding source of provision of information to the future investors of the business. They can receive a complete snapshot of the various factors related to the venture.