Conducting Feasibility Study In Business - How Important Is It?

Most prospective entrepreneurs have an idea of the type of business/project or services that they would like to undertake. This interest may come from friends, family members or other entrepreneurs that have succeeded in their line of business. Having a business idea is not a sufficient condition to start a business straight away, without having thought clearly about the different aspects involved in actually running the business. 

                                                      

I once had a friend who thinks more of the monetary aspect of doing a business than the process it will take in successful implementation of strategies in achieving the main goals and objectives of the business. Every business must satisfy a need either in goods or services. More often, intended business men or women may invest money in a business only to find out later that there is little demand for the product.

What Can Be Done

In order to reduce the risk of failure and losing money, potential entrepreneurs should go through the different aspects of running their business in discussions with friends and advisers before they commit funds or try to obtain a loan. This process is known as doing feasibility study and when the outcome of the feasibility study is written down , the document is known as a business plan.

Feasibility Study And Business Plan

Many people mix up the concept of feasibility study and that of business plan hence some people use them interchangeably. They do not exactly mean the same concept, even though the processes of developing the two are similar. While a feasibility study is carried out to know if the intended business venture is worth the effort and resources, a business plan is developed only after one is convinced that a business opportunity exists. This implies that a business plan is prepared after a feasibility study has been conducted. Another difference is that a feasibility study is all about business idea viability while a business plan deals with business growth and sustainability.

                                                

A feasibility study helps to narrow the scope of the project to identify the best business model. The business plan deals with only one alternative or model. The feasibility study must narrow the scope of the project to identify and define two or three scenarios or alternatives. The feasibility study is conducted before the business plan. A business plan is conducted only after the business venture has been deemed to be feasible.

Common Reasons For Conducting Feasibility Study

A feasibility study is performed by an individual or a company when they want to know whether a project is viable given certain circumstances. Feasibility studies are undertaken under many circumstances - to find out whether an individual or a company has enough money for a project or to find out whether the product being created will sell. The aims of a feasibility study are to objectively and rationally uncover the strengths and weaknesses of the existing business or proposed venture, identify opportunities and threats as presented by the environment, assess the resources required and ultimately, the prospects of success. In its simplest term, 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 operations and management, marketing research and policies, financial data, legal requirements and tax obligations.

Conclusion

Before proceeding with a full-blown feasibility study, you may want to do some pre-feasibility analysis of your own. If you find out early-on that the proposed business idea is not feasible, it will save you time and money. If the findings lead you to proceed with the feasibility study, your work may have resolved some basic issues. You can also decide to use a consultant for the pre-feasibility study, but you should be involved too. This is an opportunity for you to understand the issues of business development.

WISH YOU THE BEST IN YOUR ENTREPRENEURIAL JOURNEY!!!!