So you have identified a business to startup but that is not enough to say that the business will be successful? How then can you determine the viability of the business? This is where feasibility study comes to play. So what exactly is feasibility study?
Everybody wants to be successful in their business. The goal is to render service and make profit but the achievement of these goals depend on the model adopted for the business to be successful. Therefore, a feasibility study is an analysis of a proposed business plan or project to determine its Technical viability, Economic viability and Operational viability.
There are several components of a feasibility study. Having identified the business you want to start, here are the factors to consider when carrying out a feasibility study.
This refers to available resources. Manpower, skills, equipment etc. that is necessary for the business to thrive. It is not about having all the resources but how they will be used to achieve the goals of the business in terms of services to be rendered and the profit to be made. If resources are utilized efficiently, there is a high chance that success to be recorded.
This refers to the cost-benefit analysis of the business. What are the cost of running the business? Will the capital invested reflect in the profit made? What will be the expected duration of returns? It is not enough to invest huge sums of money into a business but to ensure that the investment is not a waste.
This is key to the success of the business, talking about crossing the T’s and dotting the I’s. When a system for the business is developed, it must conform with the requirements identified for the smooth running of the business. The business plan must align with every resources needed. Here, the corporate and legal structure of the business must be considered as they are needed for the smooth running of the business.
This depends on the business. Generally a business being set up in an environment will have to make sure that it is in no way breaking any law of the environment where it is established. The idea here is to make sure that the entity to be established is compliant with the laws of the land.
Results and conclusions:
The feasibility study should show an in depth report of all the negatives and positives that could possibly affect the business. The report describes whether the business will be viable or not.
Feasibility study is necessary for a start up. The knowledge gotten from the study can help decision making easy. The study will act as a guide, preventing mistakes and bad decisions that can have a negative effect on the business.