As well said, “ you don’t want to invest your money, your time and your effort on a project or business idea, which seems possible to fail or not to success”.
Let’s look at Wikipedia definition: “A feasibility study evaluates the project’s potential for success; therefore, perceived objectivity is an important factor in the credibility of the study for potential investors and lending institutions.”
What is a Feasibility Report?
-The feasibility report is an analysis or study or new business or product idea and covers the discussions, analysis, and study of the different aspects ( almost every aspect ) of the feasibility of START-UP businesses.
A visibility report focus on the various aspects of the survivability of the start-up business such as product feasibility, financial feasibility, Market feasibility, Plant/Machinery feasibility, Manpower feasibility, location feasibility etc.
Know the feasibility of your new Business or Product Idea, Talk with the Expert
The three amazing benefits of having feasibility study or analysis:
Being focused and specific a feasibility study or analysis starts with a single question — asking whether the idea, event or action is a viable solution — and force you to focus solely on that question to the exclusion of everything else, drilling down to explore possible outcomes.
A feasibility analysis is different than the business plan. A feasibility study is an investigative tool that might cause you to discount an idea, whereas a business plan is a call to action. Generally, feasibility analysis is used as a predecessor to creating a business plan.
2.The Big Picture
Feasibility study or analysis force you consider the big picture first and then think of a top-down approach. In this way, one or two general starter questions lead to a host of additional, more detailed questions that become increasingly narrower in focus as you get closer to reaching an ultimate answer. For example, asking whether anyone will buy your new-and-improved product and whether it will generate a profit creates additional questions that force you to consider customer need and possible competition, and to identify risks that you may face.
You must also describe the followings:-
–Your product and its benefits,
– Your target market, and
– Cost along with break-even and profit points.
Feasibility study or analysis offer you the chance to “get it right” before committing time, money and business resources to an idea that may not work in the way you originally planned, causing you to invest even more in correcting flaws, removing limitations, and then simply try again. Feasibility studies may also open your eyes to new possibilities, opportunities, and solutions you might never have otherwise considered. There are no right or wrong answers to the questions you ask, but an answer you don’t necessarily want or expect can create new profit potential.
The Usability and inclusion of a feasibility report:
Feasibility studies do not dive into, in-depth long-term financial projections. In basic terms, investor or start-up owner should have a foresight if he will make or lose money during this project. The investor decides to proceed or not, considering the outcomes of the feasibility study.
Accordingly, a successful feasibility study should do a basic break-even analysis to see how much money would be necessary to meet the operating expenses of the business idea.
So, there are two main elements to take into consideration:
1.Cost = Money + Time + Effort
2.Value expected to be delivered by business idea
That being said, a feasibility study dives into four major areas:
As the first step of a feasibility study, the market analysis should be done in order to have an idea about supply & demand balance of your product or service.
- Units to be Sold: How many units do you project to sell each month?
- Supply Projection: What is the projected supply in your area of the products or services needed for your project?
- Identification of Target Market and Target Customer: What are your target market and target customer? How many are they, your potential customers?
- Competition Analysis: What competition exists in this market? Can you establish a market niche which will enable you to compete effectively with others providing this product or service?
- Location: Is the location of your proposed business or project likely to affect its success? If so, is the identified site the most appropriate one available?
As the next step to market analysis, right organizational structure and organizational qualifications to manage the business should be determined. People to be on board, in management and other positions should be carefully thought and assigned. In this step, in order to illustrate your organizational structure on an org chart, as a quick and simple solution, use an.
Depending on the nature of your business idea, technology and equipment may become one of the biggest cost element. So you need to decide on technology and equipment needed. On the other hand, you should consider the date when you will obtain those since they will directly affect your start-up timeline.
As a final step, you should analyze key financial parameters as following:
- Variable Costs: These are the costs incurred in starting up a new business, including COGS
- Fixed Costs: Here you will define Opex and Capex
- Logistics & Inventory
- Sales Projections and Target Realization Reporting: This is your monthly sales amount projection.
- Sales Channels: You should define how much of sales will be distributed on which channel and sell out prices for each channel
- Pricing: Considering competition, the most appropriate price positioning for your product or service should be determined.
- Profit and Loss Statement Report: This is for finding the break-even point for the proposed business, considering the costs and revenue generated.
As a conclusion, your feasibility study should give a clear idea whether your business idea deserves investment or not. If you want to ease your feasibility study process, using ready-to-use Feasibility Study Kit for Start-ups which include all above will be a smart solution for you.
If you have any query, please comment in the comment box below