The success or failure of a business is dependent on the foundation on which it is built. An idea may sound fabulous or look incredible on paper and yet fail woefully in the business world. Feasibility studies assess the economic viability of a proposed business. It is a rational and objective tool used for uncovering the strengths and weaknesses of a proposed venture or an existing one. It provides an overview of the primary issues associated to a business concept or idea. A good feasibility study should contain a minimum of the following information:
– Historical background of the business concept
– Detailed description of the product or service offering
– Detailed Market Research
– Legal policies surrounding the business
– Tax Obligations
– Technological Inputs
– Industry Analysis
– Business Model
– Market and Sales Strategy
– Production Operations Requirements
– Management and Personnel Requirements
– Regulations and Environmental Issues
– Critical Risk Factors
– Financial Projections
Many businesses fail because their owners do not properly define the diverse dimensions of a business feasibility including: market feasibility, technical feasibility, business model feasibility, management model feasibility, economic and financial model feasibility, and exit strategy feasibility. A detailed feasibility study is important for the following reasons:
– RESOURCES: It catalogues and ascertains available resources and estimates additional resources required. This knowledge helps business owners make informed decisions on the next steps to take.
– SCRUTINIZES DEMAND: It reveals the true nature of demand and analyzes, i.e. whether or not there is real demand for a product or service. This information helps the business owner make realistic projections on the business.
– REALITY: It determines whether the business idea makes practical sense and is realistic in its proposed approach.
– MARKETING FEASIBILITY: It reveals the true state of a potential or existing market. It also provides information on whether the market is already over saturated with the products or services of stronger competitors, and if the business stands any chance of competing favorably.
– BREAK EVEN ANALYSIS: It performs financial projections that estimate break-even points beyond which a business begins to make profits and below which losses will be recorded.
– TIMELINE: It helps to validate or invalidate the prospective timelines set for achievement of certain goals and objectives.
Adereti Best Emmanuel is content developer, motivational speaker, biographer, poet, author and an on-air personality. He was a speaker at the recently concluded Lagos State conference for Head of Budget/Planning Depts of all Lagos State LG’s/LCDA’s. He is the Head of Operations, YT&T Global Vision Ltd and also a freelance business consultant.
Twitter Handle: @bestonradio
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