A feasibility study is the evaluation of a business plan to determine its viability.A feasibility study is an objective examine based on actual and credible statistics. The feasibility study is the first stage in starting a successful business since it helps to ascertain whether the proposed business model can generate the required cash flow and maintain the stability of the enterprise.
In this stage, the internal and external market conditions are researched. To close the gap, the current and future market conditions are examined, the leading companies are found, and their strengths and weaknesses are recognised. The new product or service is compared to others already on the market, its unique qualities that give it an advantage over those items are understood, and its ability to address any market needs is evaluated. At this phase, it is decided what value propositions to make to the target customers and how receptive the target customers are.
This process involves analysing the startup costs, ongoing operational costs, funding options, and profitability. At this point, the fixed and variable costs as well as the legal and capital acquisition costs are calculated. Understanding the ramifications and costs associated with various financing alternatives helps identify the best method of raising money, whether it be through loans, investments, or other means. Furthermore determined are the anticipated return on investment and estimated income. To ensure a healthy cash flow, the conditions of payment for the supplier and the client are also decided. Any financial feasibility report will generally include the following:
Technical Aspect
This step involves analysing the resources required for the company. Aspects of facilities and equipment that need to be determined include the hardware and software needs, the source and availability of capital assets, and if an expansion or change in line can be accommodated with the capital being invested. The factors to be taken into account when it comes to labour and management are the number of workers needed, their level of technical expertise, the training they need receive, and the competence and experience of the managers.
At this stage, the timeline for business setup is chosen. Even though market research takes time, a workable business plan needs to be implemented quickly because the industry is so dynamic. The company’s aims and objectives should be achieved by implementing the business plan within the allotted time frame.
We employ the PIECES framework, which aids in determining the issues that need to be resolved and their criticality:
A. Performance: Does the mode of operation offer a sufficient throughput and reaction time?
B. Information: Is the information provided to managers and end users timely, relevant, accurate, and prepared for their use?
C. Economy – Does the method of operation offer the company cost-effective information services? Might there be an increase in benefits and/or a decrease in costs?
D. Control – Does the method of operation provide adequate safeguards against fraud, as well as for the security and accuracy of data and information?
E. Effectiveness – Does the method of operation make the best use of the resources at hand, such as people, time, and the flow of forms?
F. Services: Does the method of operation offer dependable service?