When it comes to entering an industry with an original business concept, all that matters is how the execution of the research will be conducted. One of the factors that enormously influences the success of the new business is the way the feasibility studies are done. If you haven’t studied economics or industry-related courses, it will be hard to do it by yourself. Fortunately, there are a lot of ways to equip yourself with knowledge and try to finish it on your own. One of those ways is reading and self-educating about the feasibility studies and then creating one. You can always consult an expert but, doing the deed yourself is by far more convenient for you in terms of costs and being on top of it.
What is a Feasibility Study?
The feasibility study ensures the economic viability of the project in a specific market. It is a document that ascertains a quality mandate accepted by financial institutions or investors and operators and private equity firms as well. Inside the document should be included a decision basis for the development, financing, or operation of the business within the selected industry. The segments are executive summary, market analysis, positioning, supply and demand analysis, POS revenue stream, forecasting, expenses, the return of investment, cash flows, financial ratios, and investment appraisal.
How to Create a Feasibility Study Template?
There are several steps you need to follow in order to create a feasibility study template by yourself. However, it is always a good idea to have the feasibility study template checked by a consultant who has experience in the industry. Now, let’s see the steps.
1. Conduct a Preliminary Analysis
In this step, you need to outline the plan. Look where on the market the demand is greater than the supply and make sure that the service or product you intend to sell has a distinctive value. Then, observe if the challenges are too hard to overcome by yourself, or you would need investors or partners in your business endeavor.
2. Compile a Projected Income Statement
To do this step think backward – what is your expectation of the income from the project and what investment do you need to get there. This is the basics of the income statement – how much money you will need in order to make a profit as expected.
3. Do a Market Research
You need to dive deep into the market and thoroughly inspect the demographics, the location, the competitors, the value of the market, and how expansive the market is. This step is crucial for your attempt in positioning your business on the market.
4. Plan How the Business Will Function
The next step is figuring out the business operations. What will be your start-up costs, operation costs, and fixed investments? What kind of equipment you will need as well as the advertising methods that will bring your brand in front of the target audience.
5. Prepare a Balance Sheet
Evaluate your assets and liabilities and do this as accurately as possible. Create a list and categorize items, sources, costs, and available financing. Think about how you will lease or purchase land, facilities, and equipment and how you will finance the assets.
6. Review All Data
In the end, make sure you carefully review everything you have compiled. Don’t skip steps and go over every information you have collected. This will prompt you with the reassurance that everything is achievable and nothing requires changes. Ask yourself – Is the plan realistic? Can you carry it out without spending more money than you have planned?
Thus, the feasibility study template is a crucial step towards success in the launching of your new business. Once again, it is recommended that an expert in the field takes a look at the document just to make sure you haven’t done anything wrong. Plus, it will cost much less than hiring them to do one for you. However, keep in mind that the studies and analyses you do before the launch of the business are what will set you apart from the crowd and make you beat the competition.
What are the advantages of a Feasibility Study?
A feasibility study should be more than just a tool for decision-making. Managers can use the information to shape the actual project planning process by involving in a feasibility study.
1. Understanding Demand with the help of Feasibility Study
A feasibility study determines whether or not an idea will work for a particular product or service. It’s important to remember that internal projects and consumer products have a different purpose, and therefore a different target audience. The project manager can focus on high-demanding projects by avoiding low-demand projects.
2. A Feasibility Study Helps in Calculating Resources
Another advantage of feasibility studies is that they give you a chance to figure out how many people or dollars you have to get a project going. If a feasibility study recommends against a project, it might tell you you don’t have enough people or money.
3. Feasibility Study helps More in Marketing Timeline
Validating a prospective time is a huge task. This is the great advantage of a feasibility study. When sponsors develop a project plan, they often forget about possible disasters. A quality feasibility study can help avoid these delays and breakdowns.
4. Feasibility Study helps in Ascertaining Marketing
Even if it’s already clear you have a product people want, you should look to see whether there are similar products that are stronger and better known. With the help of a feasibility study, you’ll also learn if you need to worry about intellectual property issues.
Demand and Supply Analysis in Feasibility Study
What is Demand Analysis in a Feasibility Study?
Demand analysis in a feasibility study is the process of analyzing the target marketer’s demand for a client for a product or service. Most companies use demand analysis to calculate how successfully to enter the market and owes the profit they expected to expand business operations.
It helps the business understand which products or services it should focus on as well as which ones should be eliminated. This way, businesses can allocate their resources effectively.
What is Supply Analysis in a Feasibility Study?
The supply analysis in a feasibility study is an analysis of existing supply conditions is an evaluation of the existing supply of a good or service, which will help determine if the amount supplied meets the demand for that good or service.