how to make a feasibility study?

The development of the plan is one of the most important pillars that any business depend on as a previous stage to start any business or project, including small and large enterprises, entrepreneurial and investment projects, in addition to projects with financial return and non-profit projects, although the development of the plan is what usually starts before starting any work, there is a previous step in what is known as a feasibility study.

 Concept of feasibility study 

There are many definitions that illustrate the concept of feasibility study, the most important of which are:

• It is “an analysis or evaluation through which it is possible to determine whether the planned project is possible in all respects and within its estimated costs, in addition to determining whether the project is profitable in the future, its impact on society, and its ability to achieve its objectives, and assess the costs and expected returns from it”
• “It is the process by which information about the proposed project is collected and analyzed in order to know how to implement and minimize the risks to ensure the profits of the project, and therefore to know whether this project is a feasible project or not feasible project”.

 Conducting a feasibility study 

To ensure a successful feasibility study, we must divide the study into several sections to cover all aspects of the study, and get all the data and information that will tell us if the in case the project is a feasible project or not a feasible project in a single feasibility study, here are the steps to conduct a feasibility study to assess whether a certain project is a feasible project or not a feasible project:

• Technical study:

The first part of the feasibility study is the technical study. The technical study determines the technical feasibility of the project and is based on assessing the technical resources available to the project.

The technical study assess whether the resources fit the production capacity, determining the size of production, machinery and equipment (the most suitable machinery and equipment for the project). The technical study also determine the labor required for management.

The technical study determine whether the technical team is able to turn ideas into a feasible project. The technical study also involves assessing the logistical or geographical requirements of the project, and your method of operations management. Technical study is also based on the analysis of an important element, the product.

• Financial study

Once the technical study of the feasibility study is completed and the project idea is technically feasible project, it will now start the financial study. Financial study is sometimes referred to as economic feasibility. Financial study is the evaluation of all what will be spent on the project, and economic feasibility is the assessment of the material return from the project. However, many believe that financial study and economic study are the same.

Financial study helps the project owner to estimate the costs and benefits associated with the project before allocating the financial resources of the project, and this financial study enhances the credibility of the project for you, since financial study is related to providing figures on the founding costs, assets management sales, operating costs, and matters related to access to investment or financing. Some of the questions related to the financial study part should be asked:

1. How much money do I need to start?
2. Will the project require external funding?
3. What pricing structure will I use?
4. What are the potential sales volumes of the product or service?
5. How long can the project stand if the sale does not occur?
6. How long will you need to break even between selling and profit?
7. How much is the return on investment?

Financial study usually involves conducting financial analysis using financial ratios, financial ratios analysis provides an initial perception of the financial situation of the project. Financial ratios can help judge whether the project can be considered a feasible project or not a feasible project. There are many types of financial ratios that can be used in a feasibility study. You should be aware of the different types of financial ratios, and what financial ratios stand for. And what indications financial ratios provide. Financial ratios also help you assess different aspects within the project including profitability, liquidity, etc. You should pay close attention to financial ratios while conducting a feasibility study.

• Marketing study:

Another important part of the feasibility study is the marketing study. In a marketing study, you will need to find an answer to these two key questions: Does anyone in the market need this product or service? Is there a similar product / service on the market now that would prevent the success of the project? Marketing study is based on testing and analyzing the target market.

• When conducting a marketing study as part of the feasibility study, you should ask what market segments do you target through your product or service?
• When conducting a marketing study, you should ask why would people buy this product / service?
• When conducting a marketing study as part of the feasibility study, you should ask who are your target customers and how many approximate in the market and their purchasing power?
• When conducting a marketing study as part of the feasibility study, you should ask what are the buying patterns for these customers? (The way customers buy product or service, quantity, duration, timing, etc.)
• When conducting a marketing study as part of the feasibility study, you should ask how will you sell your product or service and where?
• When conducting a marketing study as part of the feasibility study, you should ask who are your competitors, what are their strengths and weaknesses?

 Watch: A Feasibility Study - Step by Step 

With greetings: Al - Manara Consulting to help researchers and graduate students