BUSINESS FEASIBILITY STUDY

WHAT IS A FEASIBILITY STUDY ?

A Business Feasibility Study can be defined as a controlled process for identifying problems and opportunities, determining objectives, describing situations, defining  successful outcomes and assessing the range of costs and benefits associated with several alternatives for solving a problem. The Business Feasibility Study is used to support the decision-making process based on a cost benefit analysis of the actual business or project viability. The feasibility study is conducted during the deliberation phase of the business development cycle  prior to commencement of a  formal  Business  Plan.  It  is  an  analytical  tool  that  includes recommendations and limitations, which are utilised to assist the decision-makers  when  determining  if the Business Concept is viable.

Source: (Drucker 1985; Hoagland & Williamson 2000; Thompson2003c; Thompson 2003a).

WHAY IS IT IMPORTANT?
It is estimated that only one in fifty business ideas are actually commercially viable. Therefore a Business Feasibility Study is an effective way to safeguard against wastage of further investmentor resources . If a project is seen to be feasible from the results of the study, the next logical step is to proceed with the full Business Plan. The research and information  uncovered  in the feasibility  study  will  support  the business planning stage and reduce the research time, the cost of the Business  Plan will also  be reduced. A thorough viability  analysis  provides  an  abundance  of  information  that is  also  necessary  for  the  Business Plan.  For  example,  a good market analysis is necessary in order to determine the business concept’s feasibility.  This information provides the basis for the market section of the Business Plan.

Finally, a feasibility study should contain clear supporting evidence for its recommendations. The strength of the recommendations can  be  weighed  against  the  study  ability  to  demonstrate  the continuity  that  exists  between  the  research  analysis  and  the proposed  business  model.  Recommendations  will  be  reliant on a mix of numerical data with qualitative, experience-based documentation. A Business Feasibility Study is heavily dependent on the market research and analysis. A feasibility study provides the stake holders with varying degrees of evidence that a Business Concept will in fact be viable.
Source: (Hoagland & Williamson  2000;Thompson 2003c; Thompson 2003a; Wickham 2004).

CONCLUSION

The feasibility study must provide answers for crucial question before a business plan is launched:

 

•  Market Viability

•  Technical Viability

•  Business Model Viability

•  Management Model Viability

•  Economic and Financial Model Viability

•  Exit Strategy Viability

 Business and market analysis will contribute considerably to the Business Feasibility Study. Consideration should be given to using traditional business analysis techniques such as SWOT, Porters Five Forces and PEST. Although they may not provide information which is a perfect fit to the proposed business model, they will provide a strong starting point for future analysis.

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