A business feasibility study is just what it sounds like: a systematic study to understand whether or not a specific project, venture, or approach is feasible. The ultimate outcome of any feasibility report is a go / no go decision. You either move forward or you don’t.
Feasibility Studies: Keys to Success
The keys to a successful feasibility analysis include:
- The study must be based in reality — not pure speculation or abstract theory. This usually requires primary and secondary market research, to understand whether or not customers will buy, or if investors will invest.
- The project, venture or approach must be sufficiently well defined that specific hypotheses can be tested. Without detailed product or service characteristics, nothing can really be determined to any degree of confidence.
Typical Questions Asked in a Feasibility Study
Here are a few examples of the types of questions we address in a typical feasibility study:
Has anyone attempted anything like this before?
If so, what problems did they encounter? Did they ultimately succeed? If so, what kind of positive return on
investment did they realize?
What are the decision factors?
What are the factors that will enter into the final decision as to whether the project, venture or approach is feasible and should move forward? Typical factors involve financing, staff resources, material resources, market demand, the competitive landscape, time and space constraints, etc.
Are there benchmarks or hurdles that need to be surpassed?
What business requirements are absolutely necessary for a successful solution? Are there unavoidable market risks or environmental risks? How can they be best mitigated?
What data is available internally and externally?
What is the quality and reliability of this data?
Why Conduct a Feasibility Study?
The most common reason would be to limit one’s losses. For example, suppose a company is considering developing and launching an expensive new product. The research and development expenditures could easily cost millions of dollars, and the launch would cost even more. Two or three years of R&D costs would be sunk into the project before there was any possibility of recouping any expenses through sales. Worse, a business owner or entrepreneur could burn through a sizable amount of funds/ life savings in this new venture. In this case, a feasibility study would be a high priority before substantial resources become invested in R&D. If the feasibility study indicates a very low probability of success, it would be far less expensive to invest in the feasibility study and kill the project, than it would be to go forward without the study and see the project fail.
Whether a study’s findings are positive or negative, the feasibility study can help entrepreneurs and managers better understand what aspects of the project are of greatest strategic importance to the success of the venture. If the feasibility study is negative, the findings still may uncover previously unknown market opportunities and can thus help set the stage for some other successful product or service commercialization. If the feasibility study is positive, the findings should provide useful insights and benchmarks for the project as it moves forward in the commercialization process.
Market Feasibility Study Types
Different feasibility study companies have different strengths. At Ground Floor Partners our expertise is market feasibility, not engineering feasibility. We research and analyze market factors such as demographics, demand, market capacity, competition, regulation, cultural issues, etc. Here are just a few examples of the types of feasibility studies we do:
- new products, services or programs
- new business ventures
- new technologies
- coffee shops and cafes
- spas and salons
- apartment complexes
- schools and other education projects
- family entertainment centers
- sports facilities and complexes
- banquet facilities
- adventure parks
- industrial parks
We have alliance partners in construction, architecture, strategic planning, marketing, technology and other areas whom we can bring on to complete any size project.
Wouldn’t it be nice to learn from other people’s mistakes, so you can avoid repeating them? Here is a brief list of the most common mistakes when performing feasibility studies.
Unbridled enthusiasm is a wonderful thing. But when it comes to starting or growing a business, it can also be very expensive. Here are a few tips on how to get a better handle on reality, and shift from making wild gambles to taking calculated risks.
Contact Us now to see if Ground Floor Partners is a good fit for your business.