What is it?
We develop a business idea. We want it to give it a hardcore shape of business. We want to survive. We want to grow. We want to acquire market share and so we want to acquire other businesses. The feasibility report is the document which helps in the above all. The feasibility report, overall, says that whether the business shall be feasible at various dimensions.
Let us see what all a standard feasibility report contains.
- Executive summary – An outlook for feasibility study
- Skill set of management needed to carry the business
- Product feasibility – It should include USP of the product also.
- Price feasibility- What should be the feasible price of the product along with the associated services
- Market sustainability- overall sustainability of the product in the market
- Legal and environmental feasibility- Rules and regulations of central, state or local bodies & others
- Financial Feasibility- Finance needed and whether the product is financially viable, Start of revenue generation
- Limitations- During study
Why it is prepared?
Feasibility report has manifold purposes:
- Internal purpose: –Feasibility report acts as a guide to the business owner a complete picture that whether his business idea will materialize. After looking at the different dimensions, business owners will have fair idea that where are the speed breakers. It is not a one-time study report but time to time it will be modified as the business dynamics change.
- External purpose:-It is used, along with the business plan, to present to venture capitalists for the purpose of fundraising. The fund providers invest in people and business and expect more than average return on an investment.
How it should be prepared?
- The skill set of management:-Firstly, the skill set required to carry out the business should be identified. These may be Experience, pro-activeness, networking, contacts etc. After that, it needed to find out that whether the business owner or his team has those skill set.
- Product feasibility:-What are the parameters on which the proposed product should be tested? It could be whether there is similar product available in the market, USP of the proposed product, associated services with the proposed product, Value addition to the customers etc.
- Price feasibility:-What is the pocket strength of the customers? Whether price will factor product cost and other costs. Whether Differential pricing is more feasible.
- Market viability:-Feasibility report should include that what is the present status of the related industry, dependency upon other industries, Key success factors, possible trigger point, Competitors’ reaction and strategy etc.
- Technological feasibility:-This is more important where the business requires hi-tech or the product requires continuous modification.
- Legal & environmental feasibility:-Whether there is a need for severe compliance if the business is run. There may be licenses required from central, state, local bodies or concerned approving authority.
- Financial feasibility:-Finance is the backbone of any business. It must be looked that what will be expected profitability, ROI, Break-even, payback period etc.
- Executive summary:-An Executive summary is the very important section of feasibility report. Before going into the details of the report venture capitalists will go through this section. An executive summary should be critically written and should be to the point.
Feasibility report should be such that it should clearly serve the purposes. While raising fund it should be presented with a business plan and pitch-deck. While preparing a feasibility report, it is advisable to list down all the parameters on which business is dependent and in-depth study should be carried out.