A 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 most important decision factors?
What factors enter into the final decision as to whether the project, venture or approach is feasible and should move forward? Typical factors involve financing, labor supply, market size and market trends, supply and demand, the competitive landscape, lot size or other space constraints, land use restrictions, water supply issues, environmental regulations, zoning laws, 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?
What is the quality and reliability of this data? In some cases, there is a huge volume of high quality data compiled by reputable, trusted sources; in other cases, available data can be sparse. Generally speaking, the larger and more regulated the industry, the better the data.
Why Conduct a Feasibility Study?
The most common reason is to reduce risk. 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 are 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 other 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, approaches or programs
- New business ventures
- Value-added agricultural products
- Restaurants
- Coffee shops and cafes
- Spas and salons
- Apartment complexes
- Schools and other education-related projects
- Gyms, sports facilities and complexes
- Family entertainment centers
- Real estate (highest and best use studies)
- Banquet facilities
- Adventure parks
- Industrial parks
Why Ground Floor Partners?
Unbridled enthusiasm is a wonderful thing. But when it comes to starting or growing a business, it can also be very expensive. It isn’t possible to eliminate risk, but a well-designed, thoughtful feasibility study can help you get a better handle on reality, shift from making wild gambles to taking calculated risks, and save you time and money.
When you hire Ground Floor Partners you learn and benefit from other people’s mistakes, so you can avoid repeating them.
Our team has decades of management experience with hundreds of organizations — from small startups to Fortune 500 corporations, nonprofits, and government agencies.
We also have alliance partners in construction, architecture, strategic planning, finance, healthcare, marketing, technology and other areas that we can bring on to complete virtually any size project.