FEASIBILITY STUDYBy Obiakoeze, Onyeka Joshua, May 2014
- “How is a feasibility study so necessary?
- “Feasibility studies are just a waste of time, we need to buy the building immediately and bid on the equipments.”
- “…who said the business is not feasible? An existing same business is already doing well somewhere”.
- “Why conduct another feasibility study when one was just finished a few years ago?”
- “Feasibility studies are just a trick for consultants to make money
Let us take a glance at this important term Feasibility Study. A Feasibility study is a study that analyses the viability of any business idea you can think of or plan to go into. This study concentrates on answering the necessary questions such as “would I proceed with the anticipated project idea?” every step of the study is geared towards helping answer such questions, and trust me, when you finally execute that business, you will only keep smiling as it lasts.
A Feasibility study can also be used in many other ways, but it majorly focuses on the anticipated business venture(s) which may include farming (poultry, crop, etc), NGO, Finance company and other different business ideas. These ought to have a proper feasibility study conducted to ascertain the viability of the idea before proceeding with developing the business. Note: discovering that a business idea will not work can save quality time, money and hiccups much later.
A business venture can be accepted feasible when the business can grow to generate conventional cash-flow and profits, can survive the risks it will encounter, maintain viability in the long-term and meet the goals of the business owner.
The business venture can be a start-up business, purchase of a pre-existing business, an extension of a current business operations or a new enterprise for an existing business. A feasibility study can be considered as only one step in assessing the business idea and development process.
A feasibility study is generally conducted after a producer has deliberated series of business ideas or circumstances. The feasibility study helps to structure specific business circumstances for tranquil study. In the course of this process, the number of business alternatives under consideration is always affected.
During the feasibility study process, one may investigate diversity of ways of organizing the business and positioning one’s product in the marketplace. It is like a journey of exploration that may take several paths before one reaches one’s purpose. But it is necessary to note that just because the initial analysis turns negative does not mean that the proposal does not have a credit. Sometimes limitations or flaws in the proposal can be corrected.
ASSESSING THE MARKET
A market assessment can be conducted to help find out the viability of the product in the proposed marketplace. Assessing the market will help discover some more market opportunities. If no opportunities are found, then there may be no need to continue with a feasibility study, but if there are opportunities, then the market assessment can concentrate directly to the construction of business set-ups investigating into the feasibility study. A market assessment provides most of the all the information you may need for the marketing feasibility section of that feasibility study.
Please note; It is not the the work of your consultant to decide whether or not to proceed with that business idea neither is it part of the part of the function of the feasibility study. It is solely the role of the project leaders to make such decision, using the information derived from the study and inputs gotten from the consultants.
THE ‘POINT OF NO RETURN’
This does not mean you cannot decide to back out finally, but by this, I mean it is a point or stage at which there is no other option than to just go ahead and execute the business plan. This decision is one of the critical ones in business development. It is the ‘point of no return’ in the sense that once you have definitely decided to pursue a particular business setting, there is usually no more turning back. At this stage, the feasibility study can be a major source of information in making this decision. This, points out the significance of a properly developed feasibility study.
A BUSINESS PLAN / A FEASIBILITY STUDY
It is important to point out the fact that a feasibility study is not a business plan, their distinct roles are frequently misunderstood. The feasibility study helps with an investigating function and addresses the major question of “Is this a viable business venture?” The feasibility study points and accesses several alternatives and methods of achieving business success narrowing the range of the project down to identify the very best business scenario(s). It helps to narrow the scope of the project down to identifying and defining two or three scenarios or alternatives. While the business plan, helps a planning function. It points out the necessary actions to move the proposal from an “idea” to a “reality.”
Please note that the feasibility study has to be conducted before the business plan. Business plans are prepared only after the business has been approved to be feasible. If the proposed business is considered to be feasible, then a business plan can be constructed with a “roadmap” of how the business can be started and developed and it provides the “blueprint” for project execution.
REASONS WHY YOU MUST CONDUCT A FEASIBILITY STUDY
If you take time to examine successful businesses, you will discover that they did not just go into that business without first SCRUPULOUSLY examining all of the problems and assessing the probability of the business success before executing the business. These reasons below should help encourage you to conduct a proper feasibility study;
- A feasibility study gives focus to the project and points out alternatives.
- A feasibility study narrows business alternatives to the better business decision.
- A feasibility study also identifies new opportunities through the analytical process.
- A feasibility study identifies reasons not to proceed in the business and avoid economical wastes.
- A feasibility study boosts the success probability by early addressing and moderation of some factors that could affect the project latter on.
- A feasibility study provides excellent pieces of information for decision making.
- A feasibility study supplies documentation to prove that the business venture was thoroughly investigated.
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So dear investor, I wish you to make a check now and take the proper process on your steps to achieving a great business success. Consult a consultant today and never stop smiling at your decisions.