I know some persons might be thinking why can’t one just start a business immediately since he/she have the capital to venture into the business? Why the stress and spending resources in trying to know how feasible a business is likely to be. In this study of the purpose of Feasibility Study In Business, I will want us to look at it in two ways; 

1.  The Use Of Feasibility Study 
2.  Why We Do Feasibility Study 

The Use of Feasibility Study

                                               

Let us assume that the products we want to study already have similar ones in the market, and then feasibility study should provide answers to the following questions: 

• What is the rate of demand for the product or services intended for the market?

By this the prospective entrepreneur is trying to find out the requirements for the product, the size and value for the market.  

• How many people or establishments are producing similar products? 

By this question, the prospective entrepreneur is trying to determine the nature and the numbers of competitors in the market. 

• What are the materials needed for the production of the product? 

This includes the equipment needed, the services, raw materials, packaging and finding the personnel (staff) and the cost. 

• What will it cost to produce a product? 

This is important because it helps to calculate the start-up capital as well as other operating production costs. 

• What is the profit Margin? 

It helps to forecast profit margin. To do this, you have to calculate the difference between the expected income from the projected sales to an estimated share of the market and cost of production. 

Why We Do Feasibility Study 

                                                                 

• Documentation

Carrying out a feasibility study will help the prospective entrepreneur to properly document that the business was properly investigation as raw data and information were collected and compiled. 

• Success Possibility

It enhances the possibility of success by simply addressing the challenging factors that would have affected the business. 

• New Opportunities

In the process of carrying out the study, new opportunities would be identified. The investigative process makes it possible for the prospective entrepreneur to alight other opportunities thereby creating room for alternatives. 

• Reasons

The study simply help to determine if the business is profitable or not thereby giving reasons either to proceed in the investment or not. 

• Decision Making

Statistics and data collected during the process provide quality information for decision making. 

• Loan

In Nigeria for example, prospective entrepreneur are able to seek for start up loans by presenting a standard business plan. With the help of a feasibility study, one would be able to secure funding from lending institutions and other monetary sources.