Benefits of Feasibility Study for a New Business
Conducting a feasibility study for a new business or when launching a new idea is crucial to its success. Likewise, when executing a new project whose success or failure has a material effect on your organization. You are driving change, and solving problems, yet failure is intimidating. Creating a feasibility study for a new business is crucial. It is like conducting a SWOT analysis to help you make informed decisions. In this article, we shall walk you through everything you need to know about a feasibility study and how to use it to your advantage. This article also shows insight into the advantages of using a feasibility study template, and how a feasibility analysis in entrepreneurship can help you build a successful business venture. What Is a Feasibility Study for a New Business? From 21,000 in 2022 to over 30,000 in 2023 and almost double that in the first quarter of 2024, the number of businesses in the UAE continues to grow. As a new business owner, it is essential to have a roadmap or guide to help you make informed decisions before settling in this overcrowded market. A feasibility study is like this roadmap or guide. Considering a couple of variables, it helps you to assess the success or otherwise of your new business. The UAE market is wide enough to enter, invest time, money, and energy without having a feasibility study as a navigator to check all important factors that could hinder its growth and sustainability. Market demand, costs, competitors, risks, threats, potential challenges, and opportunities are some of the factors that a feasibility study will help you check. It will answer key questions like; – Will there be enough customers to offer my service to? – Is the operating cost worth the investment when compared to the final take home? – What are the major risks I will face? By projecting answers to these questions and more, you and your team will know if your project is likely to succeed or not. When a more comprehensive feasibility study template is used, it will also reveal key areas that need adjustments before moving forward. Why Every Entrepreneur Needs a Feasibility Study? There are lots of benefits attached to conducting a Feasibility analysis in entrepreneurship. Aside from helping to confirm the viability of a business, it also helps to uncover potential challenges, and find ways to mitigate them. Here are a couple of other reasons you might need a comprehensive feasibility study. – to provide a detailed analysis of your business concept. – help secure funding by providing how realistic the growth and sustainability of a business can be – Highlighting strengths, weaknesses, opportunities, and threats of your idea – Help prevent future losses Components of a Feasibility Study Report Having understood why a feasibility analysis is important, it is also important to learn what afeasibility study report should include. Here is what a typical feasibility analysis includes; Ø Market Analysis Also, market feasibility study. This is an evaluation of how you expect the project deliverables to perform in the market. How many units do you want to sell? Who do you want to sell them to? What period will they buy it the most? Who sells the same product? It also contains a market competition breakdown and a sales projection. Ø Financial Projections This section contains a set of financial statements that estimate cost, forecast revenue, and project how profitable the business is. It shows investors how you want to spend their money. And in the case of loans, how do you plan to pay it back? Ø Legal Requirements Legal requirements examine whether a project is not against the business rules and regulations of the UAE. It also checks that other legal and ethical standards are in place. It also helps to avoid legal issues before, during, and throughout the project lifecycle. Ø Technical Feasibility This ascertains if the new business has the available resources to function effectively. These resources majorly include material and technological. It also shows if the project can meet the technical standard for a digital project. Ø Organizational Feasibility Organizational feasibility evaluates the management prowess needed to function optimally. Generally, it revolves around staffing, human management, human resources, etc. An executive summary, risk assessment, and operational plan are other components needed in a feasibility study report. Steps for Conducting a Feasibility Analysis Below are the steps involved in carrying out afeasibility analysis. 1. Conduct market research 2. Create your financial projections 3. Evaluate your operational need; personnel, technology, material, etc 4. Carry out a legal and compliance check 5. Combine all into a feasibility study report Benefits of Using a Feasibility Study Template Using a feasibility study template makes the process of writing a feasibility study report easier. It saves time and ensures all aspects are covered, leaving no chance for mistakes that could have been avoided. Other benefits include; – Consistent formatting makes it easy to be reviewed by stakeholders – It reduces the chances of omitting critical details – It serves as the perfect itinerary Frequently Asked Questions How long does it take to complete a feasibility study? This varies depending on the technicality of the project. Do I need professional help to conduct a feasibility study? Yes. It is advisable to hire a consultant who can provide you will provide a detailed analysis and make everything clear whilst breaking down terminologies. Conclusion Not having a proper Feasibility Study for a new business can render your effort, money, time, and resources useless. There are a couple of companies that have failed due to not having a feasibility study in place. Underestimating costs, ignoring market competition, and skipping market research are common mistakes to avoid when conducting a feasibility study report.
How to Conduct a Feasibility Study: A Step-By-Step Guide
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. Types of Feasibility Studies 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 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: Market size This assesses the size of your target market and its growth potential. Competition analysis This helps you understand existing competitors—their strengths, weaknesses, and market share. Target audience Helps you identify the demographics, preferences, and purchasing behavior of potential customers. Economic trends It also evaluates economic factors that may impact market demand. This includes income levels, employment rates, and consumer spending habits. Regulatory environment Helps you consider your regulatory requirements and constraints. Especially if you intend to market your product/service in a new geographical location. Business Feasibility Studies 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: Business concept Assesses the uniqueness and value proposition of the business idea. Market analysis Similar to market feasibility studies. Analyzes the target market, competition, and demand for your proposed product or service. Financial feasibility Evaluates the financial viability of the business. This includes startup costs, revenue projections, and potential return on investment. Operational feasibility Examines the practical aspects of running the business—location, staffing requirements, and operational processes. Legal and regulatory consideration Identifying legal and regulatory requirements that may impact the establishment and operation of the business, such as permits, licenses, and zoning regulations. The Role of Feasibility Study Consultants 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: Expertise 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. Market Mastery 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. Analytical Prowess 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. Key Components of a Feasibility Study Report A standard feasibility study report contains: An Analysis of the Projected Market This is a deep dive into your proposed market trends, customer preferences, and competition. It helps you to understand the lay of the land. Your Financial Projections These documents peer into your finances with detailed projections. Your costs, revenues, and return on investment are all evaluated to yield the best result. A Risk Assessment File 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: Step-by-Step Guide on How to Conduct a Feasibility Study Step 1 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. Step 2 Gather information from various sources—surveys, interviews, and existing research. Conduct thorough market research to understand your customer needs, market trends, and competitor landscapes. Step 3 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. Step 4 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. Step 5 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
Strategic Decision-Making: Feasibility Studies in Business Planning
Image credit: Unsplash Success in the modern competitive and fast-paced business world depends on strategic decision-making. Every choice you make has a direct impact on your business’s growth. To ensure informed and effective decision-making, businesses rely on feasibility studies. Feasibility studies are comprehensive assessments that evaluate the viability of your project or idea. This post discusses feasibility studies’ function in strategic decision-making and company planning. Overview of Feasibility Study Feasibility studies are systematic analyses that determine your business venture’s viability and potential success. Before investing considerable resources, feasibility studies help you make professional judgments. Feasibility studies assist you in analyzing the risks and rewards of your proposed enterprises. You can assess your ideas’ practicality and sustainability, uncover any impediments, and change your methods by doing a thorough study. For instance, a retail company considering growth into a new market can do a market feasibility study in UAE and others to examine demand, competition, and profitability. To assess the viability of a new software product, a tech startup can undertake a technical feasibility study. These studies help companies avoid costly mistakes and make professional decisions. Types of Feasibility Studies Image credit: Unsplash Feasibility studies cover various facets of a company proposal. Popular forms are market feasibility studies, technical feasibility studies, and financial feasibility studies. A market feasibility study investigates the demand and market circumstances for a product or service, assisting businesses in understanding the needs and preferences of their customers. A technical feasibility study determines the technological requirements and resources required to implement a project successfully. A financial feasibility study examines the financial ramifications of a project, such as cost predictions, income potential, and return on investment, to establish the project’s economic sustainability. Benefits of Feasibility Studies Feasibility offers several benefits. These include: Risk Identification Feasibility studies help you identify project risks and obstacles. Early identification of these hazards allows you to mitigate them and reduce failure. Opportunity Evaluation Feasibility studies assist you in uncovering prospects from your proposed projects. You can find unique selling propositions and acquire a competitive edge by analyzing the market, competitors, and client needs. Decision-making Support Feasibility studies provide crucial data and insights for informed decision-making. You may make strategic decisions that support your long-term goals by conducting a project feasibility study and analyzing the outcomes. Conducting a Feasibility Study Image credit: Unsplash Follow these procedures to perform a business feasibility study: 1. Define Your Objectives: Clearly state your aims and objectives for a focused and systematic feasibility study. 2. Collect Relevant Data: Market research, surveys, interviews, and other data collection methods. This data will reveal market conditions, customer preferences, and industry trends. 3. Analyse the Data: Thoroughly assess the acquired data using appropriate analytical tools and procedures. This helps in revealing Patterns, trends, and hazards or opportunities. 4. Assess Technical Feasibility: Assess your project’s technical needs and resources. Keenly consider the required technology, skilled labor, and regulatory compliance. 5. Assess Financial Feasibility: Assess your project’s cost predictions, income potential, and return on investment. Then, compare the result with your budget. 6. Consider Stakeholder Involvement: Involve essential stakeholders throughout the feasibility study. Ensure you consult the team members, industry experts, firms offering feasibility study services, and customers. Their opinions and experience will bring vital insights and ensure a full investigation. 7. Write a Feasibility Study Report: Compile the feasibility study’s findings, conclusions, and suggestions. This research will help decision-makers, investors, and other stakeholders. To Sum Up Feasibility Studies are vital to strategic decision-making and business planning by helping to assess your project’s viability and potential. Feasibility studies analyze risks, evaluate opportunities, and give data-driven insights for informed decision-making. Remember that a feasibility study helps you make informed decisions matching your short-term and long-term goals. It lets you evaluate your ideas, uncover potential issues, and adapt your approach. So, if you’re considering a new entire project, incorporating feasibility in research studies is a leeway to achieving unparalleled success.