Survival in the marketplace has become difficult, however, entering it is an entirely different story. Absence of proper planning and forethought leads to the failure of entrants. Thus, to ensure profitability, it becomes essential to conduct some sort of analysis before plunging into the market. A proper example of this analysis is the feasibility study.
The feasibility study acts as an investigative tool to assess the potential, viability or practicability of a new business. It is an excellent instrument for the prediction of the likelihood of success or failure of a new business venture. It may also be adopted in the case of incorporation of new products or ideas into the business mix.
It provides results for key decisions that may be:
- Moving forward with the idea
- Refining it
- Leaving it altogether
A feasibility study also determines alternatives and solutions which may otherwise not have been known. Thus, it becomes critical to conduct this research before the commitment of business resources, time and money to a business idea that may not work as planned as this only leads to further investment for the correction of previous mistakes. The collection of this data helps make informed decisions regarding the selection of the most profitable path.
Our Feasibility Study’s components include (but are not limited to):
The market analysis is conducted to critically analyze and understand the environment in which your business will compete. Some basic components of market analysis include:
- Estimate of market size, volume
- Projected market share
- Analysis of the competition
- Key Future Trends
In addition to the market analysis, financial analysis is a critical component of the feasibility study. Without the “financials,” it will be impossible to determine how feasible the business idea is. Key components of financial analysis include:
- Capital Requirements
- Start-up Costs
- Revenue Projections
- Gross Profit Margins (GPM)
- Net Income
Technical Analysis is used only for a certain type of businesses that are technology driven. The analysis will vary from case to case and may include statistical measures and other technical evaluations.
An Economic Analysis ascertains the economic benefits to be reaped by the business. It is essential to discover the economic advantages and costs to be incurred. This not only determines the viability of the project but also directs the business towards saving itself from an inadequate allocation of resources. The credibility of the idea is assessed, and the management achieves a distinct breakdown of all the various costs it will have to incur from the initiation to the execution of the entire project.
Organizational and Operational Analysis
All the future requirements of the human resource are analyzed under this category. The required background of the professionals and current shortcomings are generated. In the case of the absence of an effective team, hiring decisions may be made on the basis of the feasibility study.
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