WHAT IS A FEASIBILITY STUDY
A Business Feasibility Study can be defined as a controlled process for identifying problems and opportunities, determining objectives, describing situations, defining successful outcomes and assessing the range of costs and benefits associated with several alternatives for solving a problem. The Business Feasibility Study is used to support the decision making process based on a cost benefit analysis of the actual business or project viability.
The feasibility study is conducted during the deliberation phase of the business development cycle prior to commencement of a formal Business Plan. It is an analytical tool that includes recommendations and limitations, which are utilized to assist the decision-makers when determining if the Business Concept is viable.
THE IMPORTANCE OF A BUSINESS FEASIBILITY STUDY
It is estimated that only one in fifty business ideas are actual y commercially viable. Therefore a Business Feasibility Study is an effective way to safeguard against wastage of further investment or resources (Gofton 1997; Bickerdyke et al. 2000). If a project is seen to be feasible from the results of the study, the next logical step is to proceed with the full Business Plan. The research and information uncovered in the feasibility study will support the business planning stage and reduce the research time. Hence, the cost of the Business Plan will also be reduced. A thorough viability analysis provides an abundance of information that is also necessary for the Business Plan. For example, a good market analysis is necessary in order to determine the business concept’s feasibility. This information provides the basis for the market section of the Business Plan. Final y, a feasibility study should contain clear supporting evidence for its recommendations. The strength of the recommendations can be weighed against the study ability to demonstrate the continuity that exists between the research analysis and the proposed business model. Recommendations will be reliant on a mix of numerical data with qualitative, experience-based documentation. A Business Feasibility Study is heavily dependent on the market research and analysis. A feasibility study provides the stake holders with varying degrees of evidence that a Business Concept will in fact be viable.
BUSINESS FEASIBILITY STUDY AND DIMENSIONS OF BUSINESS VIABILITY
The Business Feasibility Study findings will be assessed by potential investors and stakeholders regarding their credibility and depth of argument. The Business Feasibility Study places the findings of the Dimensions of Business Viability Model assessment into a formal business report. It also aligns the findings with functional processes of an enterprise which an audience can easily understand. For the purposes of understanding the structure of a Business feasibility Study the following represents the framework of the Dimensions of Business Viability
- Market Viability
- Technical Viability
- Business Model Viability
- Management Model Viability
- Economic and Financial Model Viability
- Exit Strategy Viability
Business and market analysis will contribute considerably to the Business Feasibility Study . Consideration should be given to using traditional business analysis techniques such as SWOT, Porters Five Forces and PEST. Although they may not provide information which is a perfect fit to the proposed business model, they will provide a strong starting point for future analysis.
BUSINESS FEASIBILITY STUDY OUTLINE
Because putting together a Business Plan is a significant investment of time and money, the entrepreneur should make sure that there are no major roadblocks on their road to business success. The Business Feasibility Study will assist in identifying such obstacles and determine the true viability of the Business Concept.