Feasibility Study in Business – A feasibility study is an analysis used in measuring the ability and likelihood to complete a project successfully including all relevant factors. It accounts for factors that affect it such as economic, technological, legal and scheduling factors. Project managers use feasibility studies to determine potential positive and negative outcomes of a project before investing a considerable amount of time and money into it.
Feasibility study in business is to express the model of the business and its marketability; check its prospect for financial profitability and success; and convey the managing group’s capability to implement and accomplish the business.
Business can be operated successfully if everything revolving around it is well planned. A viable business idea is a business which can be operated successfully and smoothly. Maximum chances of Surviving in the competitive era should be the utmost priority. The business idea should be able to start easily and germinate easily, it should have maximum chances to survive for long. This is why you need to know before going into a business, you need to do your business feasibility study. This will give you idea of what you are likely to meet in the market. Walk through the general concept of feasibility study in business below;
Concept of Feasibility Study in Business
Feasibility study in business is a comprehensive research study required by the entrepreneur or his agent to determine the practicability, profitability and viability of the business idea. Before jumping into a start up business, expanding an existing one or even acquiring an existing one, it is very necessary to analyze the feasibility of that business. For whatever purpose, the main task of feasibility analysis is to express the model of the business and its marketability; check its prospect for financial profitability and success; and convey the managing group’s capability to implement and accomplish the business objectives.
Feasibility analysis is therefore an overview of the business and a preliminary appraisal of the business idea to consider if it merits pursuing. It reasonably reveals without prejudice the strengths and weaknesses of the business, its opportunities and threats through the background and the assets required to carry through as well as the eventual diagnosis for achievement.
Feasibility Study in business provides the entrepreneur the opportunity to flesh up the initial business plan, consider the missing and available features needed to be put in position for the business to succeed. It is an opportunity to consider if it is visibly feasible and viable; despite the challenges one is likely to experience and how to solve those challenges.
The main concern and tool of feasibility study in business are the necessary expenditure and the profit to be accomplished. This means it is all about finance. A new startup business requires some financial funding which comes in several unique categories of financing options. Some universal and reliable funding sources easily available to most entrepreneurs are through the entrepreneur’s savings and personal bank soft loans, financial supports from friends and family which may or may not involve interests.
These are typically the first stage of financing whereby the entrepreneur invests his own funds and raise funds from friends and family. For more ambitious businesses, the next stage source is usually the funding from angel investors. These are private investors who use their own capital to finance businesses. After this is the next stage of financing from institutional investors like venture capitalists companies who are specialists in funding new businesses for profitable gains. Such venture capitalists also sometimes provide any observable potential weakness in the business. These include legal, business networks, marketing or operational deficiencies that may be threatening the survival of the business. Sometimes angel investors and Venture capital companies’ bargain cash exchanges for an equity stake in startup businesses struggling to start operating.
Reasons for Feasibility Study in Business
Feasibility study in business is all about questioning your concept, ascertaining which components are in place to make it realistic to easily execute and recognizing the biggest obstacles you’re likely to face. feasibility study in business mainly assists to:
- Appraise the business marketplace for the new business idea;
- Assess if the Managing team have the personality generally known with successful business persons. It is advisable to have self-assessment first. One must have that personality suited, skilled and knowledgeable to run a business and lead a group to success.
- Identify the challenges of startups and how one can overcome those challenges,
- Consider the financial feasibility of the business viz-a-viz its expected sales incomes, fixed and variable costs as well as break- even calculations; decide to continue with the business plan due to its viability and other attractions or not. Sometime it takes asking oneself some bitter but pertinent questions whether to scrap the idea if it is no longer as originally envisaged or needs to be amended, redirected or altered immensely.
Therefore, a suitable feasibility study will supply the historical setting of the business, describe the products and services, the account/financial profile/data, information on its operations as well as management, marketing research and strategy, including legal necessities. In actual fact, for such a serious research, all starter of a business are subjected to feasibility study, depending on the type of business.
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