Feasibility Studies

A feasibility study is an evaluation and analysis of the potential of the proposed project which is based on extensive investigation and research to support the process of decision making.Feasibility studies aim to objectively and rationally uncover the strengths and weaknesses of an existing business or proposed venture, opportunities and threats present in the environment, the resources required to carry through, and ultimately the prospects for success. In its simplest terms, the two criteria to judge feasibility are cost required and value to be attained. As such, a well-designed feasibility study should provide a historical background of the business or project, description of the product or service, accounting statements, details of the operations and management, marketing research and policies, financial data, legal requirements and tax obligations. Generally, feasibility studies precede technical development and project implementation.A feasibility study evaluates the project's potential for success; therefore, the perceived objectivity is an important factor in the credibility to be placed on the study by potential investors and lending institutions.  It must therefore be conducted with an objective, unbiased approach to provide information upon which decisions can be based.

Benefit Analysis - Just because you can undertake and finish a project doesn’t mean you should pursue it.A profitable project might drain your resources in other areas or limit your ability to pursue another project that would provide a larger return on your investment. Project feasibility studies show you the risk/reward benefit, opportunity costs and overall return.Optimal Timing Identification - A project that is easy to do in the spring might cause significant stress on your company if you try to do it in the winter. This all depends on your lab our, production capacity, supply chain, cash flow and financing options. If a feasibility study doesn’t take into account the time of the year the project will occur, re-evaluate the study to determine if its projected results will change depending on when you undertake the project.Cash Flow Projections - You might need to hold off on undertaking a project until you have enough cash on hand to fund the effort. You might have good sales in January, but if you offer creditors 90-day terms, you won’t be able to use the cash from those sales to start your project until April. Include cash flow considerations in any feasibility study to ensure you can adequately fund a project that, by all other indications, is a go.Supply Chain Management - A project that seems like a no-brainer might put too much stress on one or more areas of your company, causing more damage than good to your overall business. For example, launching a new product could prove profitable on paper but might need significant marketing planning and execution. If your marketing staff is already working at full capacity, you will need to divert their time from other profitable efforts or accept a less-than-optimal effort on your new launch. Making and selling a product and service can also stress your production, billing, sales, warehousing and shipping functions.Lab our Analysis - A good feasibility study looks at the quality of your staff rather than just the quantity. For example, an Internet company’s graphic artists might have plenty of time to help the business launch a print magazine, but these artists might not be trained to create a magazine grid, understand print typography or know how to create sections of a magazine such as departments, columns and feature wells. A sales force that relies on high-volume cold calling using a sales-oriented approach might not be qualified to sell a new service that requires a consultative selling approach.