Feasibility Study (Business) - Explained
How to Test a Business Idea for Feasibility
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What is a Feasibility Study?
A feasibility study refers to an analysis that takes every relevant factor of a project into account (legal, economic, technical, and scheduling considerations) to determine the possibility of completing the project successfully.
Project managers utilize feasibility studies to determine whether a project's return is worth the time and effort.
Tips for Conducting a Feasibility Study
Suggested best practices Feasibility studies show the unique goals and needs of a project, so each is different. Nevertheless, the tips below can apply widely to carrying out a feasibility study. You might, for instance, want to:
- Get feedback concerning the new concept from the right stakeholders.
- Examine and also asking questions about your data to ensure that it is solid.
- Carry out a market research or market survey to improve data collection.
- Write an operational, organizational, or business plan.
- Prepare a projected income statement.
- Prepare an opening day balance sheet.
- Make the first "go" or "no-go" decision about forging ahead with the plan.
- Suggested components
Once you've completed your basic due diligence, you may consider the elements below as a template of items to add in your study:
- Executive summary - Narrative explaining information of the product, plan, project, service, or business.
- Technological considerations - What would it take? Do we have it? If we don't, can we get it? What would it cost?
- Existing marketplace - Analyze the local, as well as, broader markets for the plan, service, product, or business.
- Marketing strategy - Give a detailed description.
- Required staffing, including organizational chart - For this project, what are the human capital needs?
- Schedule and Timeline, and major interim markers, for the completion date of the project.
- Project financials.
- Findings and Recommendations - Break down into sections of technology, organization, financials, and marketing.
(Important: When carrying out a feasibility study, it is good to have a contingency plan, that you also test to ensure it's a possible alternative supposing the first plan fails.)