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What Is a Feasibility Study?

Understanding a feasibility study, how to conduct a feasibility study, the bottom line.

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Feasibility Study

Yarilet Perez is an experienced multimedia journalist and fact-checker with a Master of Science in Journalism. She has worked in multiple cities covering breaking news, politics, education, and more. Her expertise is in personal finance and investing, and real estate.

A feasibility study is a detailed analysis that considers all of the critical aspects of a proposed project in order to determine the likelihood of it succeeding.

Success in business may be defined primarily by return on investment , meaning that the project will generate enough profit to justify the investment. However, many other important factors may be identified on the plus or minus side, such as community reaction and environmental impact.

Although feasibility studies can help project managers determine the risk and return of pursuing a plan of action, several steps should be considered before moving forward.

Key Takeaways

• A company may conduct a feasibility study when it’s considering launching a new business, adding a new product line, or acquiring a rival.
• A feasibility study assesses the potential for success of the proposed plan or project by defining its expected costs and projected benefits in detail.
• It’s a good idea to have a contingency plan on hand in case the original project is found to be infeasible.

Lara Antal / Investopedia

A feasibility study is an assessment of the practicality of a proposed plan or project. A feasibility study analyzes the viability of a project to determine whether the project or venture is likely to succeed. The study is also designed to identify potential issues and problems that could arise while pursuing the project.

As part of the feasibility study, project managers must determine whether they have enough of the right people, financial resources, and technology. The study must also determine the return on investment, whether this is measured as a financial gain or a benefit to society, the latter in the case of a nonprofit project.

The feasibility study might include a cash flow analysis, measuring the level of cash generated from revenue vs. the project’s operating costs . A risk assessment must also be completed to determine whether the return is enough to offset the risk of undergoing the venture.

When doing a feasibility study, it’s always good to have a contingency plan that is ready to test as a viable alternative if the first plan fails.

Benefits of a Feasibility Study

There are several benefits to feasibility studies, including helping project managers discern the pros and cons of undertaking a project before investing a significant amount of time and capital into it.

Feasibility studies can also provide a company’s management team with crucial information that could prevent them from entering into a risky business venture.

Such studies help companies determine how they will grow. They will know more about how they will operate, what the potential obstacles are, who the competition is, and what the market is.

Feasibility studies also help convince investors and bankers that investing in a particular project or business is a wise choice.

The exact format of a feasibility study will depend on the type of organization that requires it. However, the same factors will be involved even if their weighting varies.

Preliminary Analysis

Although each project can have unique goals and needs, there are some best practices for conducting any feasibility study:

• Conduct a preliminary analysis, which involves getting feedback about the new concept from the appropriate stakeholders.
• Analyze and ask questions about the data obtained in the early phase of the study to make sure that it’s solid.
• Conduct a market survey or market research to identify the market demand and opportunity for pursuing the project or business.
• Write an organizational, operational, or business plan, including identifying the amount of labor needed, at what cost, and for how long.
• Prepare a projected income statement, which includes revenue, operating costs, and profit .
• Prepare an opening day balance sheet .
• Identify obstacles and any potential vulnerabilities, as well as how to deal with them.
• Make an initial “go” or “no-go” decision about moving ahead with the plan.

Suggested Components

Once the initial due diligence has been completed, the real work begins. Components that are typically found in a feasibility study include the following:

• Executive summary : Formulate a narrative describing details of the project, product, service, plan, or business.
• Technological considerations : Ask what will it take. Do you have it? If not, can you get it? What will it cost?
• Existing marketplace : Examine the local and broader markets for the product, service, plan, or business.
• Marketing strategy : Describe it in detail.
• Required staffing : What are the human capital needs for this project? Draw up an organizational chart.
• Schedule and timeline : Include significant interim markers for the project’s completion date.
• Project financials
• Findings and recommendations : Break down into subsets of technology, marketing, organization, and financials.

Examples of a Feasibility Study

Below are two examples of a feasibility study. The first involves expansion plans for a university. The second is a real-world example conducted by the Washington State Department of Transportation with private contributions from Microsoft Inc.

A University Science Building

Officials at a university were concerned that the science building—built in the 1970s—was outdated. Considering the technological and scientific advances of the last 20 years, they wanted to explore the cost and benefits of upgrading and expanding the building. A feasibility study was conducted.

In the preliminary analysis, school officials explored several options, weighing the benefits and costs of expanding and updating the science building. Some school officials had concerns about the project, including the cost and possible community opposition. The new science building would be much larger, and the community board had earlier rejected similar proposals. The feasibility study would need to address these concerns and any potential legal or zoning issues.

The feasibility study also explored the technological needs of the new science facility, the benefits to the students, and the long-term viability of the college. A modernized science facility would expand the school’s scientific research capabilities, improve its curriculum, and attract new students.

Financial projections showed the cost and scope of the project and how the school planned to raise the needed funds, which included issuing a bond to investors and tapping into the school’s endowment . The projections also showed how the expanded facility would allow more students to be enrolled in the science programs, increasing revenue from tuition and fees.

The feasibility study demonstrated that the project was viable, paving the way to enacting the modernization and expansion plans of the science building.

Without conducting a feasibility study, the school administrators would never have known whether its expansion plans were viable.

A High-Speed Rail Project

The Washington State Department of Transportation decided to conduct a feasibility study on a proposal to construct a high-speed rail that would connect Vancouver, British Columbia, Seattle, Washington, and Portland, Oregon. The goal was to create an environmentally responsible transportation system to enhance the competitiveness and future prosperity of the Pacific Northwest.

The preliminary analysis outlined a governance framework for future decision making. The study involved researching the most effective governance framework by interviewing experts and stakeholders, reviewing governance structures, and learning from existing high-speed rail projects in North America. As a result, governing and coordinating entities were developed to oversee and follow the project if it was approved by the state legislature.

A strategic engagement plan involved an equitable approach with the public, elected officials, federal agencies, business leaders, advocacy groups, and Indigenous communities. The engagement plan was designed to be flexible, considering the size and scope of the project and how many cities and towns would be involved. A team of the executive committee members was formed and met to discuss strategies, as well as lessons learned from previous projects, and met with experts to create an outreach framework.

The financial component of the feasibility study outlined the strategy for securing the project’s funding, which explored obtaining funds from federal, state, and private investments. The project’s cost was estimated to be $24 billion to $42 billion. The revenue generated from the high-speed rail system was estimated to be $160 million to $250 million.

The report bifurcated the money sources between funding and financing. Funding referred to grants, appropriations from the local or state government, and revenue. Financing referred to bonds issued by the government, loans from financial institutions, and equity investments, which are essentially loans against future revenue that need to be paid back with interest.

The sources for the capital needed were to vary as the project moved forward. In the early stages, most of the funding would come from the government, and as the project developed, funding would come from private contributions and financing measures. Private contributors included Microsoft Inc.

The benefits outlined in the feasibility report show that the region would experience enhanced interconnectivity, allowing for better management of the population and increasing regional economic growth by $355 billion. The new transportation system would provide people with access to better jobs and more affordable housing. The high-speed rail system would also relieve congested areas from automobile traffic.

The timeline for the study began in 2016, when an agreement was reached with British Columbia to work together on a new technology corridor that included high-speed rail transportation. The feasibility report was submitted to the Washington State Legislature in December 2020.

What Is the Main Objective of a Feasibility Study?

A feasibility study is designed to help decision makers determine whether or not a proposed project or investment is likely to be successful. It identifies both the known costs and the expected benefits.

In business, “successful” means that the financial return exceeds the cost. In a nonprofit, success may be measured in other ways. A project’s benefit to the community it serves may be worth the cost.

What Are the Steps in a Feasibility Study?

A feasibility study starts with a preliminary analysis. Stakeholders are interviewed, market research is conducted, and a business plan is prepared. All of this information is analyzed to make an initial “go” or “no-go” decision.

If it’s a go, the real study can begin. This includes listing the technological considerations, studying the marketplace, describing the marketing strategy, and outlining the necessary human capital, project schedule, and financing requirements.

Who Conducts a Feasibility Study?

A feasibility study may be conducted by a team of the organization’s senior managers. If they lack the expertise or time to do the work internally, it may be outsourced to a consultant.

What Are the 4 Types of Feasibility?

The study considers the feasibility of four aspects of a project:

Technical : A list of the hardware and software needed, and the skilled labor required to make them work

Financial : An estimate of the cost of the overall project and its expected return

Market : An analysis of the market for the product or service, the industry, competition, consumer demand, sales forecasts, and growth projections

Organizational : An outline of the business structure and the management team that will be needed

Feasibility studies help project managers determine the viability of a project or business venture by identifying the factors that can lead to its success. The study also shows the potential return on investment and any risks to the success of the venture.

A feasibility study contains a detailed analysis of what’s needed to complete the proposed project. The report may include a description of the new product or venture, a market analysis, the technology and labor needed, and the sources of financing and capital. The report will also include financial projections, the likelihood of success, and ultimately, a “go” or “no-go” decision.

Washington State Department of Transportation. “ Ultra-High-Speed Rail Study .”

Washington State Department of Transportation. “ Cascadia Ultra High Speed Ground Transportation: Framework for the Future .”

Washington State Department of Transportation. “ Ultra-High-Speed Rail Study: Outcomes .”

Washington State Department of Transportation. “ Ultra-High-Speed Ground Transportation Business Case Analysis ,” Page ii (Page 3 of PDF).

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10 Feasibility study and business plan differences you should know

by Naiyer Jawaid | Nov 8, 2021 | Development , Real Estate | 5 comments

Feasibility study and business plan differences are subtle. In this post we will discuss 10 differences will help you to evaluate and differentiate between a feasibility study and a business plan.

Do you know what is a feasibility report? Do you know what is a business plan? Can you easily differentiate between a feasibility report and a business plan?

It’s easy! Just read out through the article and it will all be easy.

Let’s start by learning about a feasibility report:

A feasibility study is a formal document that assist in the identification and investigation of a proposed project. We can identify the project's weaknesses and strengths with the support of a feasibility study report, which saves us time and energy. We can determine whether the suggested idea will be lucrative and practicable in the future.

Before investing in a project, it is critical to determine if the project will be beneficial in the long run. The organization also needs to know how much the project will cost. Overall, a feasibility analysis indicates whether the firm should invest or continue with the project.

You should also like to read When to do feasibility study?

Now let us learn about business plan:

A business plan is a formal document that contains the goals/ objective of the business, the time in which the goal will be completed and the strategies that can be adopted to reach the specific goal.

A business plan is a necessary document for every new firm to have in place before it can begin operations. Writing a credible business plan is typically a requirement for banks and venture capital companies before contemplating granting funding to new enterprises.

It is not a smart idea to operate without a business strategy. In fact, very few businesses can survive for long without one. There are many more advantages to developing and keeping to a strong business plan, such as the ability to think through ideas without investing too much money and, eventually, losing money. Business plans are used by start-ups to get off the ground and attract outside investors.

A feasibility study is used to assess if a business or a concept is viable. After the business opportunity has been identified, the business strategy is produced. “A feasibility study is carried out with the goal of determining the workability and profitability of a company venture. A feasibility study is conducted before any money is committed in a new business endeavour to see whether it is worth the time, effort, and resources.

Similarities between a Feasibility study and a business plan

It's essential to analyse the similarities between a feasibility study and a business plan because they're both implemented altogether in same ways to help you build a lucrative company. The following are some of the similarities between the two documents:

Time: Both the reports are completed before the business begins and can be repeated afterwards to decide the next stages for new concepts.

Input: Both Feasibility report and the Business plan include input from a variety of people or departments with a variety of talents.

Format: Both report formats incorporate other documents that are gathered in order to create the report.

Components: Examining the target market, market circumstances, and financial expenses are some of the topics examined.

Use: Both may be displayed to potential investors and can assist the organization's management in making choices.

Organizations uses a business plan and a feasibility study as analytical and decision-making tools.

Although the three tools can be used in conjunction with one another in decision-making processes, they each have their own strengths and weaknesses, and they appear to target and address separate processes.

You might also like to read How to write a feasibility study report?

Now let us evaluate the difference between feasibility report and a business report-

• A feasibility study is conducted to determine the viability and profitability of a business endeavour. A feasibility study is conducted before any money is committed in a new business endeavour to see whether it is worth the time, effort, and resources.

A business plan, on the other hand, is created only when it has been determined that a business opportunity exists and that the endeavour is about to begin.

• A feasibility report is the first step and after that a business plan is made to be implemented, without feasibility report a business plan cannot be made.
• A feasibility study contains computations, research, and projected financial forecasts for a company possibility. A business plan, on the other hand, is mostly comprised of tactics and strategies to be applied to establish and expand the company.
• A feasibility study is concerned with the viability of a business concept, but a business plan is concerned with the development and sustainability of a company.
• A feasibility report informs the entrepreneur about the profit potential of a company concept or opportunity, whereas a business plan assists the entrepreneur in raising the necessary start-up cash from investors.
• Key components of a feasibility study and a business plan

• A business plan does not include the description of the sales methods used, such as distribution agreements, strategic alliances, and the amount of involvement with partners, as well as the payment terms, warranties, and other customer support.

But a feasibility report includes all the sales methods, strategies, alliances to payment and customer support.

•  Feasibility report contains:
• Assists in cost estimation, describe the production site, required inputs, and sourcing region.
• Physical description of the factory, including machine, capacity, warehouse, and supply chain, is necessary.
• Indicate if the area used for production is rented or owned. This will have an impact on the financial forecast.
• Information regarding the manufacturer's capacity, order details, price, and so on, if manufacturing is outsourced. To aid in cost estimation, describe the production site, needed inputs, and sourcing location.
• A physical description of the factory, including machine, capacity, warehouse, and supply chain, is necessary.

But a business plan does not contain anything related to production and operations, but a business plan contains all the information related to management.

• A poorly written business plan – poor projections, strategies, analysis, business model, and environmental factors, among other things – can be easily adjusted during business operations, but this cannot be said of a feasibility study because an incorrect conclusion in a feasibility study can be costly — it could mean launching a venture with little chance of survival or approving a proposal that wastes the company's human and financial resources.
•  A business plan presume that a company will prosper and lays out the procedures needed to get there. Those in charge of conducting a feasibility study should not have any predetermined notions regarding the likelihood of success. They must maintain as much objectivity as possible. They do research and allow the facts to lead to the study's conclusion. If the study concludes that the idea is viable, some of the findings, such as market size predictions, may be incorporated in the company's business plan.

You should also read What is land development feasibility study?

These 10 differences will help you to evaluate and differentiate between a feasibility study and a business plan.

Feasibility study may appear to be like the business plan in many respects. "A feasibility study may easily be transformed to a business plan” but it is crucial to remember that the feasibility study is completed prior to the endeavor. The business plan should be thought of in terms of growth and sustainability, whereas the feasibility study should be thought of in terms of concept viability.

This is all you need to know and understand about feasibility study and business plan.

Get ready to apply your knowledge in the real words with lots of success.

You might also like to explore below external contents on  feasibility study :

• What Is a Feasibility Study? – Types & Benefits
• Best 8 Property Management Software
• FEASIBILITY STUDIES & BUSINESS PLANS

Hope you enjoyed this post on  feasibility study , let me know what you think in the comment section below.

Are you someone involved with real estate feasibility?

We are excited to launch the next generation of real estate feasibility software to help you manage your development projects with ease.

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This is a very good piece of writing. When you have a concept for a company but want to be sure it’s a good idea, you do a feasibility study.

It was very helpful. Thank you so much!

Appropriately timed! A company’s future operations are laid out in great detail in the company’s business plan. Once you’ve done your feasibility study, you’ll know whether or not the proposal has merit. The next step is to lay out your goals, whether financial and otherwise, as well as the strategies you want to use to attain them and the organisational structure you envision.

Prior to the company opening, both are undertaken, and may be repeated again in the future to identify the next steps on new ideas that may arise.

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• Project planning |
• How to conduct a feasibility study: Tem ...

How to conduct a feasibility study: Templates and examples

Conducting a feasibility study is an important step in successful project management. By evaluating the viability of a proposed project, a feasibility study helps you identify potential challenges and opportunities, ensuring you make informed decisions. In this guide, we’ll walk you through how to conduct a feasibility study with practical templates and real-world examples, designed for project managers seeking to optimize their project planning process.

It can be exciting to run a large, complex project that has a huge potential impact on your organization. On the one hand, you’re driving real change. On the other hand, failure is intimidating. 

What is a feasibility study? 

A feasibility study—sometimes called a feasibility analysis or feasibility report—is a way to evaluate whether or not a project plan could be successful. A feasibility study evaluates the practicality of your project plan in order to judge whether or not you’re able to move forward with the project. 

It does so by answering two questions: 

Does our team have the required tools or resources to complete this project? 

Will there be a high enough return on investment to make the project worth pursuing? 

Benefits of conducting a feasibility study

There are several key benefits to conducting a feasibility study before launching a new project:

Confirms market opportunities and the target market before investing significant resources

Identifies potential issues and risks early on

Provides in-depth data for better decision making on the proposed project's viability

Creates documentation on expected costs and benefits, including financial analysis

Obtains stakeholder buy-in by demonstrating due diligence

Feasibility studies are important for projects that represent significant investments for your business. Projects that also have a large potential impact on your presence in the market may also require a feasibility assessment. 

As the project manager , you may not be directly responsible for driving the feasibility study, but it’s important to know what these studies are. By understanding the different elements that go into a feasibility study, you can better support the team driving the feasibility study and ensure the best outcome for your project.

When should you conduct a feasibility analysis?

A feasibility study should be conducted after the project has been pitched but before any work has actually started. The study is part of the project planning process. In fact, it’s often done in conjunction with a SWOT analysis or project risk assessment , depending on the specific project. 

Feasibility studies help: 

Confirm market opportunities before committing to a project

Narrow your business alternatives

Create documentation about the benefits and disadvantages of your proposed initiative

Provide more information before making a go-or-no-go decision

You likely don’t need a feasibility study if:

You already know the project is feasible

You’ve run a similar project in the past

Your competitors are succeeding with a similar initiative in market

The project is small, straightforward, and has minimal long-term business impact

Your team ran a similar feasibility analysis within the past three years

One thing to keep in mind is that a feasibility study is not a project pitch. During a project pitch, you’re evaluating whether or not the project is a good idea for your company and whether the goals of the project are in line with your overall strategic plan. Typically, once you’ve established that the project is a good idea, you'll run a feasibility study to confirm that the project is possible with the tools and resources you have at your disposal. 

Types of feasibility studies

There are five main types of feasibility studies: technical feasibility, financial feasibility, market feasibility (or market fit), operational feasibility, and legal feasibility. Most comprehensive feasibility studies will include an assessment of all five of these areas.

Technical feasibility

A technical feasibility study reviews the technical resources available for your project. This study determines if you have the right equipment, enough equipment, and the right technical knowledge to complete your project objectives . For example, if your project plan proposes creating 50,000 products per month, but you can only produce 30,000 products per month in your factories, this project isn’t technically feasible. 

Financial feasibility

Financial feasibility describes whether or not your project is fiscally viable. A financial feasibility report includes a cost-benefit analysis of the project. It also forecasts an expected return on investment (ROI) and outlines any financial risks. The goal at the end of the financial feasibility study is to understand the economic benefits the project will drive. 

Market feasibility

The market feasibility study is an evaluation of how your team expects the project’s deliverables to perform in the market. This part of the report includes a market analysis, a market competition breakdown, and sales projections.

Operational feasibility

An operational feasibility study evaluates whether or not your organization is able to complete this project. This includes staffing requirements, organizational structure, and any applicable legal requirements. At the end of the operational feasibility study, your team will have a sense of whether or not you have the resources, skills, and competencies to complete this work. 

Legal feasibility

A legal feasibility analysis assesses whether the proposed project complies with all relevant legal requirements and regulations. This includes examining legal and regulatory barriers, necessary permits, licenses, or certifications, potential legal liabilities or risks, and intellectual property considerations. The legal feasibility study ensures that the project can be completed without running afoul of any laws or incurring undue legal exposure for the organization.

Feasibility assessment checklist

Most feasibility studies are structured in a similar way. These documents serve as an assessment of the practicality of a proposed business idea. Creating a clear feasibility study helps project stakeholders during the decision making process. 

The essential elements of a feasibility study are: 

An executive summary describing the project’s overall viability

A description of the product or service being developed during this project

Any technical considerations , including technology, equipment, or staffing

The market survey , including a study of the current market and the marketing strategy 

The operational feasibility study evaluates whether or not your team’s current organizational structure can support this initiative

The project timeline

Financial projections based on your financial feasibility report

6 steps to conduct a feasibility study

You likely won’t be conducting the feasibility study yourself, but you will probably be called on to provide insight and information. To conduct a feasibility study, hire a trained consultant or, if you have an in-house project management office (PMO) , ask if they take on this type of work. In general, here are the steps they’ll take to complete this work: 

1. Run a preliminary analysis

Creating a feasibility study is a time-intensive process. Before diving into the feasibility study, it’s important to evaluate the project for any obvious and insurmountable roadblocks. For example, if the project requires significantly more budget than your organization has available, you likely won’t be able to complete it. Similarly, if the project deliverables need to be live and in the market by a certain date but won’t be available for several months after that, the project likely isn’t feasible either. These types of large-scale obstacles make a feasibility study unnecessary because it’s clear the project is not viable.

2. Evaluate financial feasibility

Think of the financial feasibility study as the projected income statement for the project. This part of the feasibility study clarifies the expected project income and outlines what your organization needs to invest—in terms of time and money—in order to hit the project objectives. 

During the financial feasibility study, take into account whether or not the project will impact your business's cash flow. Depending on the complexity of the initiative, your internal PMO or external consultant may want to work with your financial team to run a cost-benefit analysis of the project. 

3. Run a market assessment

The market assessment, or market feasibility study, is a chance to identify the demand in the market. This study offers a sense of expected revenue for the project and any potential market risks you could run into. 

The market assessment, more than any other part of the feasibility study, is a chance to evaluate whether or not there’s an opportunity in the market. During this study, it’s critical to evaluate your competitor’s positions and analyze demographics to get a sense of how the project will go. 

4. Consider technical and operational feasibility

Even if the financials are looking good and the market is ready, this initiative may not be something your organization can support. To evaluate operational feasibility, consider any staffing or equipment requirements this project needs. What organizational resources—including time, money, and skills—are necessary in order for this project to succeed? 

Depending on the project, it may also be necessary to consider the legal impact of the initiative. For example, if the project involves developing a new patent for your product, you will need to involve your legal team and incorporate that requirement into the project plan.

5. Review project points of vulnerability

At this stage, your internal PMO team or external consultant have looked at all four elements of your feasibility study—financials, market analysis, technical feasibility, and operational feasibility. Before running their recommendations by you and your stakeholders, they will review and analyze the data for any inconsistencies. This includes ensuring the income statement is in line with your market analysis. Similarly, now that they’ve run a technical feasibility study, are any liabilities too big of a red flag? (If so, create a contingency plan !) 

Depending on the complexity of your project, there won’t always be a clear answer. A feasibility analysis doesn’t provide a black-and-white decision for a complex problem. Rather, it helps you come to the table with the right questions—and answers—so you can make the best decision for your project and for your team.

6. Propose a decision

The final step of the feasibility study is an executive summary touching on the main points and proposing a solution. 

Depending on the complexity and scope of the project, your internal PMO or external consultant may share the feasibility study with stakeholders or present it to the group in order to field any questions live. Either way, with the study in hand, your team now has the information you need to make an informed decision.

Feasibility study examples

To better understand the concepts behind feasibility assessments, here are two hypothetical examples demonstrating how these studies can be applied in real-world scenarios.

Example 1: New product development

A consumer goods company is considering launching a new product line. Before investing in new product development, they conduct a feasibility study to assess the proposed project.

The feasibility study includes:

Market research to gauge consumer interest, assess competitor offerings, and estimate potential market share for the target market.

Technological considerations, including R&D requirements, production processes, and any necessary patents or certifications.

In-depth financial analysis projects sales volumes, revenue, costs, and profitability over a multi-year period.

Evaluation of organizational readiness, including the skills of the current management team and staff to bring the new product to market.

Assessment of legal feasibility to ensure compliance with regulations and identify any potential liability issues.

The comprehensive feasibility study identifies a promising market opportunity for the new business venture. The company decides to proceed with the new project, using the feasibility report as a template for their business development process. The study helps secure funding from key decision-makers, setting this start-up product initiative up for success.

Example 2: Real estate development deal

A property developer is evaluating the feasibility of purchasing land for a new residential community. They commission a feasibility study to determine the viability of this real estate development project.

The feasibility assessment covers:

Detailed analysis of the local housing market, including demand drivers, comparable properties, pricing, and absorption rates.

Site planning to assess the property's capacity, constraints, and technological considerations.

In-depth review of legal feasibility, including zoning, permitting, environmental regulations, and other potential legal hurdles.

Financial analysis modeling various development scenarios and estimating returns on investment.

Creation of an opening day balance sheet projecting the assets, liabilities, and equity for the proposed project.

Sensitivity analysis to evaluate the impact of changes in key assumptions on the project's scope and profitability.

The feasibility study concludes that while the real estate start-up is viable, it carries significant risk. Based on these findings, the developer makes an informed decision to move forward, but with a revised project's scope and a phased approach to mitigate risk. The comprehensive feasibility analysis proves critical in guiding this major investment decision.

Which phase of the project management process involves feasibility studies?

Feasibility studies are a key part of the project initiation and planning phases. They are typically conducted after a project has been conceptualized but before significant resources are invested in detailed planning and execution.

The purpose of a feasibility assessment is to objectively evaluate the viability of a proposed project, considering factors such as technical feasibility, market demand, financial costs and benefits, legal requirements, and organizational readiness. By thoroughly assessing these aspects, a feasibility study helps project stakeholders make an informed go-or-no-go decision.

While feasibility studies are a critical tool in the early stages of project management, they differ from other planning documents like project charters, business cases, and business plans. Here's a closer look at these key differences:

Feasibility study vs. project charter

A project charter is a relatively informal document to pitch your project to stakeholders. Think of the charter as an elevator pitch for your project objectives, scope, and responsibilities. Typically, your project sponsor or executive stakeholders review the charter before ratifying the project. 

A feasibility study should be implemented after the project charter has been ratified. This isn’t a document to pitch whether or not the project is in line with your team’s goals—rather, it’s a way to ensure the project is something you and your team can accomplish.

Feasibility study vs. business case

A business case is a more formalized version of the project charter. While you’d typically create a project charter for small or straightforward initiatives, you should create a business case if you are pitching a large, complex initiative that will make a major impact on the business. This longer, more formal document will also include financial information and typically involve more senior stakeholders. 

After your business case is approved by relevant stakeholders, you'll run a feasibility study to make sure the work is doable. If you find it isn’t, you might return to your executive stakeholders and request more resources, tools, or time in order to ensure your business case is feasible.

Feasibility study vs. business plan

A business plan is a formal document outlining your organization’s goals. You typically write a business plan when founding your company or when your business is going through a significant shift. Your business plan informs a lot of other business decisions, including your three- to five-year strategic plan . 

As you implement your business and strategic plan, you’ll invest in individual projects. A feasibility study is a way to evaluate the practicality of any given individual project or initiative.

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Business Plan Vs. Feasibility Study

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If you're considering starting a business, you'll need both a feasibility study and a business plan. Both documents should be written after conducting thorough research and critical thinking, and conveyed in formats that others can understand. That way, you can show both to people whose opinions you value as well as to those you hope will invest in your idea. Before you begin, it's important to define and distinguish between a feasibility study and a business plan.

Defining Both Terms

A feasibility study is done before starting a business, when you have the idea for the business but you want to make sure it's feasible, or advisable. Put another way, is it worth your time, effort and money to create this business? Several different professionals may contribute to the study, such as an accountant, entrepreneurs who have opened successful businesses, and Realtors who advise on the worth of the location and pricing, comparing similar businesses in the area.

A business plan details how the business will operate. It assumes your feasibility study has been completed and it was determined the idea is viable. Now you're going to spell out your financial and other objectives, the methods you plan to use to achieve them, and your proposed organizational structure.

Consider the Similarities

Comparing the similarities between feasibility study and business plan is important because both are used in different ways to help you create a profitable business. Similarities between the two documents include:

• Timing : Both are initially done before the business opens, and can be conducted again later to determine the next steps on future ideas.
• Input : Both include input from several individuals or departments that have different skills. 
• Format : Both include other documents that are pulled together in order to compose the report.
• Components : Some of the issues analyzed are similar, including examining the target market, market conditions and financial costs.
• Usage : Both help the organization's management make decisions, and can also be shown to potential investors.

Understand the Differences

It's equally important to understand the difference between feasibility study and business plan . They are not the same, and one cannot substitute for the other. Differences include:

• Purpose : Feasibility studies determine whether to go ahead with the business or with another idea, whereas business plans are designed after the decision to go ahead has already been made.
• Methodology : Essentially, feasibility studies are research projects, whereas business plans are projections for the future.
• Risks : Feasibility studies determine the risks associated with the idea, whereas business plans explain how management will deal with the risks so that it will make a profit.
• Cost : Feasibility studies can require hiring outside professionals with expertise who will conduct thorough studies, whereas business plans are written by employees of the business, as part of their jobs.

Conducting a Feasibility Study

If you're doing the feasibility study yourself, conduct a complete competitive analysis considering the following:

• Product demand:  Is there a need or want for your product or service? Is the need already being met, or is there room for another product?
• Market conditions :  Who would buy your product and where are they?  Can you serve their location? Is the market saturated, or is there room/need for more products?
• Pricing:  What do current users pay for similar products? What do you need to charge so that you will be profitable, and will consumers pay your price?
• Risks : What are the risks associated with your idea?
• Probability of Success : Can you reasonably overcome the risks to become profitable?

Writing a Business Plan

Writing a business plan may seem daunting, but if you take it step-by-step, it will come to fruition. The Small Business Administration advises that business plans should include the following:

• Executive Summary : Include your mission statement, products and or services, some brief information about your leadership team and key employees, as well as the location of your business. To attract investors, add current financial information and projections for growth.
• Company description : Detail the problems your business solves; its target market; its competitive advantages, compared with the competition, and anything else that makes your company superior to others: i.e.,  product awards or recognition, big increases in sales, and so on.
• Market analysis : Perform competitive research of what other businesses are doing; their strengths and weaknesses, and how and why your business will be competitive and successful in the market.
• Organization or management: State the  legal status of your business, such as a corporation or partnership, and include an organizational chart showing management levels, departments, and so on.
• Service or product line : State what you will sell or provide and describe the benefits of each. Explain any research done, and any patents filed, and so on. 
• Marketing and sales : Explain in detail your marketing strategy and how sales will be made.
• Funding request : If necessary, detail the amount of funding you’ll need for the next five years - specifically,  what you’ll do with the funds, and the terms you’re asking for.
• Financial projections : This is the business’s financial outlook for the next five years. Include current financial statements, if the business is in operation.
• Appendix : This includes supporting documents or requested materials, such as resumes, product photos, letters of reference, patents, licenses and so on.
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Barbara Bean-Mellinger is a freelance writer who lives in the Washington, D.C. area. She has written on business topics for bizfluent.com, afkinsider.com, Harbor Style Magazine, the Charlotte Sun and more. Barbara holds a B.S. from the University of Pittsburgh and has won numerous awards in B2B and B2C marketing.

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• What is the difference between a feasibility study and a business plan?

Navigating the dynamic business world requires a high degree of strategic acumen and meticulous preparation, especially for senior management roles. In this article, we'll delve into two paramount tools that can significantly assist in this journey: business plans and feasibility studies.

Both tools are used extensively by seasoned professionals such as senior finance managers, real estate development managers, asset managers, and procurement managers. Yet, the relationship and differentiation between business plans and feasibility studies often confuse. Through this article, we'll demystify these concepts and reveal how business plan and feasibility study consultants can be crucial in bolstering your strategic decision-making.

Unravelling the relationship

Business plans and feasibility studies are interconnected yet serve different purposes. A business plan outlines your organisation's direction, detailing the approach to achieving set goals, while a feasibility study analyses the viability of a specific business venture before it's initiated.

Consider a corporation contemplating a shift to solar power. They begin with a feasibility study, engaging a consultant to evaluate factors like sunlight availability, installation costs, regulatory environment, and potential impact on their market position. If this study finds that the location isn't sunny enough, costs are too high, or infrastructure is unsuitable, the idea is scrapped, saving the corporation from a costly mistake.

However, if the feasibility study deems the transition viable, the corporation proceeds to the business plan stage. They hire a business plan consultant to outline a detailed strategy, covering aspects such as budgeting, sourcing, installation timelines, risk mitigation, and communication plans.

Dissecting the differences

While both a business plan and a feasibility study are crucial, they're not interchangeable. A feasibility study asks, "Should we do this?" while a business plan asks, "How will we do this?"

To explain better, let's consider a scenario involving a restaurant. If a restaurateur is considering opening a new branch in a different city, they would first conduct a feasibility study. They'd assess the local market demand, competition, demographics, potential locations, costs, and projected revenue. If the study finds that the new branch wouldn't be profitable or sustainable, they would shelve the idea. However, if the feasibility study reveals that the new branch is likely to be successful, they'd proceed to create a business plan. This would detail how they intend to launch and run the new branch, such as the restaurant's concept, target customers, marketing strategies, menu, pricing, staffing, and financial projections.

In essence, the feasibility study is about whether they should open the restaurant, and the business plan is about how they will open and operate it, illustrating the key difference between the two tools.

The rationale behind business plans and feasibility studies

Why should your organisation invest time and resources in these tools? Essentially, they provide clarity and confidence in decision-making. A feasibility study examines the practicability of your idea. It determines if the proposed project is worth the risk and investment. It's akin to a 'litmus test', helping you avoid costly missteps.

On the other hand, a business plan provides a detailed roadmap for your business. It lays out your business's objectives and strategies, management and operational structure, and financial projections. It facilitates internal understanding and commitment and helps attract external investors when well-executed.

The role of consultants

Given the complexity and the high stakes involved, many organisations engage business plan consultants and feasibility study consultants. These experts bring an external perspective, help avoid internal biases, and contribute specialist knowledge and methodologies.

Feasibility study consultants conduct comprehensive market research, cost analyses, and risk assessments. They help determine if your proposed project is both profitable and achievable. On the other hand, business plan consultants assist in crafting compelling business plans that communicate your vision effectively. They analyse your business's strengths, weaknesses, opportunities, and threats (SWOT) and devise strategies that align with your objectives and capabilities.

Final thoughts

For senior management, these tools offer invaluable assistance. A robust feasibility study allows managers to make informed go/no-go decisions. It facilitates risk management and helps align the team around a shared understanding of the project's potential. Business plans, meanwhile, provide a clear vision and direction for the organisation. They assist managers in tracking progress, managing changes, and communicating with stakeholders. They're essential for steering the corporate ship in an often turbulent business sea.

In conclusion, business plans and feasibility studies, assisted by professional consultants, play an instrumental role in shaping and executing your business strategy. They underpin decision-making, mitigate risks, and maximise potential returns. Whether you're evaluating a new project or charting your organisation's path, consider investing in a well-crafted feasibility study and a comprehensive business plan - the rewards can be immense.

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Business Feasibility Study: Turning Business Ideas into Reality

Over 30 years in business as an owner, restaurateur, and consultant, offering a unique understanding of business and marketing expertise.

“ Chase the vision, not the money, the money will end up following you. “ ~ Tony Hsieh

Key Takeaways

• Business Feasibility Study : An evaluation process to determine the viability of a business idea, covering market viability, financial feasibility, and operational capacity.
• Market Research : Investigates the target market, customer demand, competitive landscape, and market opportunities to validate the product or service demand.
• Financial Viability Assessment : Involves detailed financial projections, including start-up costs, operating expenses, revenue forecasts, and profitability analysis, to ensure financial sustainability.
• Technical Feasibility : Examines the technical resources, technology, and infrastructure required to deliver the product or service effectively.
• Legal and Regulatory Compliance : Identifies legal obligations, industry-specific regulations, and ethical considerations impacting the business.
• Operational Feasibility : Assesses the operational processes, resource allocation, and scalability of business operations.
• Risk Analysis : Identifies potential business risks and develops contingency plans to mitigate these risks.

Introduction to a Business Feasibility Study

Got an idea for a new business venture? Whether it's a small startup or an expansion of an existing business, one of the first steps you should consider is conducting a Business Feasibility Study. Think of it as your business's reality check. This article provides you with the information you need to determine if your business idea is viable and has the potential for success.

At its core, a Business Feasibility Study is a comprehensive process that evaluates the practicality of your business idea. It's not just about finding out if your idea can work, but it's also about identifying potential obstacles and opportunities that lie ahead. This study looks into various aspects of the business, such as market viability, financial feasibility, legal compliance, and more.

The purpose of this study is not to discourage you but to give you a clear picture of what you're stepping into. It helps you answer crucial questions like: Is there a demand for your product or service? Can you realistically compete in the market? What are the financial requirements and risks involved? By addressing these questions early on, you can make informed decisions and avoid costly mistakes.

As you investigate deeper into the feasibility study, you'll come across several components, from analyzing your target market to understanding the financial implications of your venture. Each component plays a vital role in shaping your business strategy and ensuring that your venture is grounded in reality.

Remember, the goal here is not just to validate your business idea but also to lay down a solid foundation for your business plan. A well-conducted Business Feasibility Study can be a powerful tool in attracting investors, securing loans, and guiding your strategic decisions as you move forward.

In the following sections, we'll explore each aspect of the Business Feasibility Study in detail, guiding you through the steps to conduct one effectively. Especially if you're a budding entrepreneur, understanding how to navigate through these studies can be a game-changer for your business success.

Steps in Conducting a Business Feasibility Study

Now that we've broached the topic of a Business Feasibility Study let's walk through the steps to conduct one effectively. This type of hike can seem daunting at first, but breaking it down into manageable steps makes it much more approachable. Each of the following steps will give you valuable insights into the feasibility of your business idea. The key is to approach this study with an open mind and a willingness to evaluate every aspect of your business idea critically.

• Define Your Business Idea and Goals : The first step is crystal clear: know what your business idea is and what you want to achieve with it. This might seem obvious, but having a well-defined goal will guide the entire feasibility study.
• Conduct Preliminary Analysis : Before diving deep, do a quick initial check to see if your idea has any obvious flaws or if there are immediate red flags. This analysis could include a basic market scan, a quick review of similar existing products or services, and a brief assessment of your potential customer base.
• Market Research : This is where you roll up your sleeves and dive into the nitty-gritty of your target market. Who are your potential customers? What do they need? What are the current trends affecting your industry? Market research can range from online surveys and focus groups to in-depth competitor analysis.
• Organizational and Technical Assessment : Here, you need to evaluate whether you have or can obtain the necessary resources, including technology, staff, and expertise, to turn your idea into reality. This step is crucial in understanding the operational aspect of your business.
• Financial Viability Assessment : One of the most critical aspects of the feasibility study is financial assessment. This involves creating detailed financial projections, including start-up costs, operating costs, revenue forecasts, and profitability analysis. It's about figuring out if your idea can be profitable and sustainable in the long term.
• Legal and Regulatory Compliance : Every business operates within a legal framework. In this step, you should identify the legal and regulatory requirements related to your business. This could include licenses, permits, or any industry-specific regulations.
• Risk Assessment and Contingency Planning : No business venture is without risk. Identifying potential risks and developing contingency plans to mitigate these risks is a vital part of the feasibility study.
• Conclusion and Recommendations : Based on your findings, draw conclusions about the viability of your business idea. Is it feasible? If so, what are the next steps? If not, what alternative strategies could you consider?

Market Feasibility Study

In this section, let's talk about how you gather a wealth of information that will be critical in making informed decisions about your business idea. The goal is to ensure that there is a market for your product or service and to understand the dynamics of that market to position your business for success strategically.

• Market Analysis for Feasibility : Understanding your market is a cornerstone of business success. A thorough market analysis for feasibility involves examining the industry you're entering, the demand for the product or service you plan to offer, and the dynamics of the market itself. This step is not just about seeing if there's a market for your idea but understanding the nuances of that market – its size, growth trends, and customer behaviors. This knowledge is crucial in shaping your business strategies and offerings to ensure they resonate with your target audience .
• Customer Demand Analysis Feasibility : Diving deeper, customer demand analysis focuses on the needs and preferences of your target demographic. It's about asking questions like, Who are your potential customers? What are their buying habits? What problems do they need to solve? This analysis helps you tailor your product or service to the specific needs and desires of your customers, increasing the likelihood of your business's success.
• Market Opportunity Assessment : Identifying market opportunities is about spotting gaps in the market that your business can fill. This might include underserved areas, emerging trends, or unique angles your competitors havent explored. By identifying these opportunities, you can position your business to take advantage of them, giving you a competitive edge.
• Competitive Analysis Feasibility Study : Finally, understanding your competition is vital. A competitive analysis involves looking at who your competitors are, what they offer, their strengths and weaknesses, and how they meet the market's needs. This analysis not only helps you find your unique selling proposition but also teaches you about the successes and failures of others in your industry.

Financial Feasibility Study

It is here you'll gain a comprehensive understanding of the financial aspects of your business. It's about ensuring that your business idea is not just viable in the market but is also financially sound and capable of generating profits.

• Financial Viability Assessment : This step is all about the numbers. A financial viability assessment examines whether your business idea makes financial sense. It's where you crunch the numbers to understand the financial health of your proposed venture. This includes forecasting revenues, estimating start-up and operating costs, and projecting profits and cash flow . The goal here is to determine if your business can be financially sustainable and profitable in the long term.
• Cost Analysis in Feasibility Study : Every business incurs costs, and understanding these is crucial. In this part of the study, you'll break down all the costs associated with starting and running your business. This includes direct costs like inventory and labor, as well as indirect costs like marketing and administrative expenses. A thorough cost analysis helps you plan your finances more effectively and avoid unexpected financial challenges.
• Investment Feasibility Analysis : This analysis focuses on the investment aspect of your business. How much capital will you need to get started, and where will it come from? This section explores potential funding sources such as loans, investors, or personal savings and assesses the feasibility of securing the required funds. It also involves evaluating the risk associated with these investments and their potential returns.
• Return on Investment in Feasibility : Lastly, calculating the Return on Investment (ROI) is a key component. This involves estimating how much profit your investment will generate relative to its cost. It's a crucial metric that helps you understand the value you can expect from your business venture. A favorable ROI indicates that your business idea could be a wise investment.

Technical Feasibility Study

The goal of the following section is to provide you with a comprehensive understanding of the legal landscape in which your business will operate. It's about ensuring that your business idea is robust, not just in terms of market and financial viability but also in its ability to meet legal and ethical standards.

• Legal Requirements Feasibility : When starting a business , you must navigate a maze of legal requirements. This part of the feasibility study focuses on understanding all the legal aspects related to your business. This includes local, state, and federal laws that apply to your business , industry-specific regulations, and requirements for permits and licenses. The aim is to ensure that your business idea is not only feasible from a market and financial perspective but also legally viable. Legal compliance is more than just ticking boxes; it's about understanding how legal aspects can impact your business operations. For instance, if you're in a highly regulated industry like healthcare or finance, legal compliance becomes even more critical. The study should also consider the implications of not meeting these legal requirements, which could range from fines to the shutdown of your business operations.
• Evaluating Ethical Considerations : In addition to legal compliance, it's also important to consider the ethical implications of your business. This involves evaluating how your business practices align with ethical standards and societal expectations. Its about doing the right thing, not just the legally required thing. For example, if your business deals with sensitive customer data, you need to ensure that data is handled ethically and responsibly.
• Impact on Business Strategy : Legal and ethical considerations can significantly impact your business strategy. For example, if there are stringent environmental regulations in your industry, your business strategy may need to include sustainable practices and eco-friendly solutions. The feasibility study should assess how legal and ethical considerations can be integrated into your business strategy, ensuring that your business is not only compliant but also socially responsible.

Risk Analysis and Scheduling

This section of your feasibility study will arm you with the knowledge and strategies to anticipate and manage the risks associated with your business venture. It's about being prepared and proactive, rather than reactive, to the challenges that your business might face.

• Risk Assessment in Feasibility Studies : Starting a business is inherently risky, but understanding and planning for these risks can greatly improve your chances of success. In this part of your feasibility study, you'll identify potential risks that could impact your business. This includes financial risks, such as unexpected costs or revenue shortfalls. Operational risks like supply chain disruptions, market risks, such as changing consumer preferences, and other external risks, including regulatory changes or economic downturns. After identifying these risks, the next step is to assess their likelihood and potential impact on your business. This involves not only recognizing the risks but also understanding how they could affect your operations and financial health. Risk assessment helps you develop strategies to mitigate these risks, such as diversifying your product line, securing insurance , or establishing strong supplier relationships.
• Project Management in Feasibility : Effective project management is crucial in executing your business plan and in conducting your feasibility study. This includes planning, organizing, directing, and controlling resources to achieve specific goals. Good project management in feasibility studies ensures that your research is thorough, timely, and aligned with your business objectives. It also involves setting realistic timelines for your project, allocating resources efficiently, and managing stakeholders' expectations. Incorporating project management principles into your feasibility study can help in scheduling and organizing the various components of the study. It ensures that the study is completed in a systematic and efficient manner, providing you with reliable and actionable insights.

Business Model and Strategy

In this section, you're not just evaluating the feasibility of your business idea but also ensuring that it aligns with a larger strategic vision. It's about crafting a business model and strategy that are not only feasible but also poised for growth and success in the long run.

• Business Model Evaluation : The heart of your business feasibility study lies in evaluating your proposed business model. This is where you align your business idea, market research, financial assessments, and technical capabilities to see if they all fit together into a viable business model. A business model evaluation involves scrutinizing how you plan to create, deliver, and capture value. It answers questions like: How will you generate revenue? What value are you providing to your customers? How will you reach your target market? What are the costs involved, and how will they be covered? This evaluation is crucial in understanding whether your business model is practical, sustainable, and profitable.
• Business Strategy Feasibility : Once you have a clear picture of your business model, the next step is to align it with your overall business strategy. This involves assessing whether your business model supports your long-term business goals and objectives. Business strategy feasibility is about ensuring that your approach to the market, your growth plans, and your operational strategy are all in sync with the findings of your feasibility study. It's about making strategic decisions that are informed by data and insights from your study rather than just intuition or assumptions.

Operational Feasibility Study

Operational Feasibility Analysis: This part of the feasibility study is about getting down to the brass tacks of how your business will operate on a day-to-day basis. It's about examining if your business plan can be effectively translated into operations. This includes assessing your operational processes, from production or service delivery to supply chain management, customer support, and sales operations.

You need to evaluate whether you have the necessary resources, such as manpower, materials, and technology, to carry out your business operations. It's also important to consider the scalability of your operations – can they grow as your business grows?

Another key aspect of operational feasibility is determining if your business operations align with your organizational structure and culture. For instance, if your business requires rapid innovation and flexibility, do your operational plan and organizational culture support that?

Operational feasibility is not just about whether you can do something but whether you can do it efficiently, effectively, and sustainably.

Specialized Feasibility Studies

This section is about tailoring your feasibility study to address the specific considerations of your industry, the environmental impact of your business, and your growth potential. It's about making sure that your business is not only viable at launch but also set up for future success.

• Industry-specific Feasibility Studies : Different industries have unique challenges and opportunities, making it crucial to conduct industry-specific feasibility studies. For instance, a feasibility study in the tech industry would focus heavily on technological innovations and market adoption rates, while one in the manufacturing sector might concentrate more on production capabilities and supply chain logistics. Understanding the nuances of your specific industry is vital to ensure that your feasibility study is relevant and accurate. It helps in identifying industry-specific risks, regulatory requirements, and market dynamics that are crucial for your businesss success.
• Environmental Impact Business Study : In an era where sustainability is increasingly important, considering the environmental impact of your business is essential. This part of the feasibility study assesses how your business operations will affect the environment and what measures you can take to minimize negative impacts. This includes looking at factors like energy consumption, waste management, and the sourcing of materials. Being environmentally responsible can not only help reduce potential liabilities but can also enhance your brand's reputation and appeal to environmentally conscious consumers.
• Business Growth Feasibility Study : This section looks beyond the initial launch of your business to its potential for growth. It involves evaluating how scalable your business model is, identifying potential areas for expansion, and assessing the feasibility of these growth plans. It's about understanding what it will take for your business to grow, both in the short-term and long-term, and whether your current plan supports this growth.

Feasibility Study Tools and Techniques

Let's now explore a variety of tools and techniques essential for conducting a well-rounded feasibility study. Understanding how to use these tools and techniques effectively is crucial in gaining a holistic view of your business ideas feasibility.

Overview of Feasibility Study Tools: To conduct an effective feasibility study, various tools can be utilized. These tools help in collecting data, analyzing information, and making informed decisions. For example, SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) is a common tool used to evaluate the strategic position of a business idea. Financial tools like cash flow forecasting , break-even analysis, and ROI calculations are essential for the financial aspect of the study. For market analysis, tools such as market surveys, customer interviews, and competitor analysis can provide valuable insights.

Techniques Used in Feasibility Studies : Besides tools, certain techniques are pivotal in conducting a thorough feasibility study. These include qualitative methods like focus groups and interviews that provide an in-depth understanding of customer attitudes and preferences. Quantitative methods like statistical analysis and market trend analysis offer concrete data on market size, growth rates, and customer demographics. Additionally, scenario planning can be used to envision various business scenarios and plan accordingly.

Utilizing Technology in Feasibility Studies : In the digital age, leveraging technology can significantly enhance the efficiency and accuracy of your feasibility study. Software tools for data analysis, project management software for organizing and tracking the study, and digital survey tools for gathering market insights are examples of how technology can aid in conducting a comprehensive feasibility study.

Integrating Findings to Formulate Conclusions : The final technique in a feasibility study is the integration of findings from various tools and methods to formulate comprehensive conclusions. This involves collating data from market, financial, technical, and legal analyses to see the overall picture. It's about synthesizing information from different sources to determine the overall feasibility and viability of your business idea.

Comparative Analysis

Now, we need to compare and contrast the roles of a business plan and a feasibility study, emphasizing how they work together in the planning and execution of a successful business venture.

Business Plan Versus Feasibility Study : It's essential to understand the difference between a business plan and a feasibility study as they serve different, yet complementary, purposes. A business plan is a detailed roadmap for the operation and growth of your business. It outlines your business goals, strategies to achieve them, operational structure, marketing plan , and financial projections. Essentially, a business plan is a guide for how to run your business and achieve success.

On the other hand, a feasibility study is more of a preliminary step. Itis conducted before the business plan to assess the viability of a business idea. The feasibility study helps determine whether your idea is worth pursuing before you invest significant time and resources into developing a business plan. It includes market analysis, financial feasibility, legal compliance, and technical assessment.

Comparatively, a feasibility study asks the question, Should this business be started? While a business plan addresses How will this business succeed? A feasibility study is what you need when deciding if your business idea is worth pursuing, and a business plan is what you'll use to guide your business's establishment and growth after deciding it's feasible.

Integrating Feasibility Study Findings into Business Planning : Often, the findings of your feasibility study will directly inform your business plan. For example, insights from market analysis in the feasibility study can shape your marketing strategies in the business plan. Financial assessments from the study can help in creating more accurate financial projections in your business plan. In this way, the feasibility study can be seen as the foundation upon which your business plan is built.

Final Thoughts on Business Feasibility Study

Summarizing Key Findings : After thoroughly examining each aspect of your business idea through the feasibility study, it's time to bring all these findings together. This summary should encapsulate the insights from market analysis, financial viability, technical assessment, legal compliance, and operational feasibility. Highlight the key strengths and opportunities your study has revealed, as well as any significant challenges or risks.

Providing Actionable Recommendations : Based on the key findings, the next step is to provide actionable recommendations. If your feasibility study shows that your business idea is viable, outline the next steps to take your idea from concept to reality. This could include developing a detailed business plan, securing funding, or initiating market entry strategies.

If the feasibility study suggests that your business idea may not be viable, or if there are significant challenges, recommend alternative approaches. This might involve pivoting your business idea, exploring different markets, or addressing the identified weaknesses before proceeding.

Emphasizing the Importance of Continuous Evaluation : It's important to remember that a feasibility study is not a one-time task but an ongoing process. As your business grows and the market evolves, continuously re-evaluating the feasibility of your business model and strategies is crucial. This ongoing evaluation ensures that your business remains relevant and competitive in a changing business environment.

Encouragement and Motivation : Lastly, whether your feasibility study results are positive or less encouraging, it's important to stay motivated. Every business journey comes with its challenges and learning opportunities. Use the insights gained from this study to refine your business idea and strategy. Remember, the ultimate goal of a feasibility study is to set the stage for a successful and sustainable business.

FAQs on Business Feasibility Study

While all components of a business feasibility study are important, the market analysis is often considered critical. It helps determine if there's a demand for your product or service and sets the foundation for the rest of your study.

The duration of a business feasibility study can vary widely depending on the complexity of the business idea and the depth of analysis required. Generally, it could take anywhere from a few weeks to several months.

It's possible to conduct a basic feasibility study on your own, especially for small-scale projects. However, for more complex or larger-scale business ideas, it might be beneficial to engage a professional consultant who can provide expertise and an objective perspective.

If your feasibility study suggests that your business idea might not be viable, consider exploring alternative ideas, adjusting your business model, or addressing the identified challenges. Sometimes, a pivot in strategy or a different approach can make a significant difference.

It's a good practice to revisit your feasibility study periodically, especially when there are significant market shifts, technological advancements, or changes in consumer behavior. This helps ensure that your business stays relevant and adapts to changing conditions.

A business feasibility study is a preliminary assessment to determine the viability of a business idea, while a pilot project is a small-scale implementation of the business plan to test its practicality in a real-world setting.

There are various software tools available for different aspects of a feasibility study, such as financial modeling (e.g., Excel), market analysis (e.g., MarketResearch.com), and project management (e.g., Trello or Asana). The choice of tools depends on your specific needs and the complexity of the study.

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What is a Feasibility Study?

Steps in a feasibility study, contents of a feasibility report, types of feasibility study, more resources, feasibility study.

An assessment of the practicality of a proposed project/plan

A feasibility study, as the name suggests, is designed to reveal whether a project/plan is feasible. It is an assessment of the practicality of a proposed project/plan.

A feasibility study is part of the initial design stage of any project/plan. It is conducted in order to objectively uncover the strengths and weaknesses of a proposed project or an existing business. It can help to identify and assess the opportunities and threats present in the natural environment, the resources required for the project, and the prospects for success. It is conducted in order to find answers to the following questions:

• Does the company possess the required resources and technology?
• Will the company receive a sufficiently high return on its investment?

Conducting a feasibility study involves the following steps:

• Conduct preliminary analyses.
• Prepare a projected income statement . What are the possible revenues that the project can generate?
• Conduct a market survey. Does the project create a good or service that is in demand in the market? What price are consumers willing to pay for the good or service?
• Plan the organizational structure of the new project. What are the staffing requirements? How many workers are needed? What other resources are needed?
• Prepare an opening day balance of projected expenses and revenue
• Review and analyze the points of vulnerability that are internal to the project and that can be controlled or eliminated.
• Decide whether to go on with the plan/project.

A feasibility report should include the following sections:

• Executive Summary
• Description of the Product/Service
• Technology Considerations
• Product/ Service Marketplace
• Identification of the Specific Market
• Marketing Strategy
• Organizational Structure
• Financial Projections

1. Technical feasibility

• Technical: Hardware and software
• Existing or new technology
• Site analysis
• Transportation

2. Financial feasibility

• Initial investment
• Resources to procure capital: Banks, investors, venture capitalists
• Return on investment

3. Market feasibility

• Type of industry
• Prevailing market
• Future market growth
• Competitors and potential customers
• Projection of sales

4. Organizational feasibility

• The organizational structure of the business
• Legal structure of the business or the specific project
• Management team’s competency, professional skills, and experience

The practice of companies blindly following available templates comes with enormous risks. Whether companies design or copy certain business models, it is necessary to conduct a feasibility study using models to reduce the risk of failure. A feasibility study of the business model should be centered on the organization’s value-creation processes.

Thank you for reading CFI’s guide on Feasibility Study. To keep learning and advancing your career, the additional CFI resources below will be useful:

• Cross-Sectional Data Analysis
• Financial Statements Examples – Amazon Case Study
• Market Planning
• See all management & strategy resources

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What is a Feasibility Study and How to Conduct It? (+ Examples)

Appinio Research · 26.09.2023 · 28min read

Are you ready to turn your project or business idea into a concrete reality but unsure about its feasibility? Whether you're a seasoned entrepreneur or a first-time project manager, understanding the intricate process of conducting a feasibility study is vital for making informed decisions and maximizing your chances of success.

This guide will equip you with the knowledge and tools to navigate the complexities of market, technical, financial, and operational feasibility studies. By the end, you'll have a clear roadmap to confidently assess, plan, and execute your project.

What is a Feasibility Study?

A feasibility study is a systematic and comprehensive analysis of a proposed project or business idea to assess its viability and potential for success. It involves evaluating various aspects such as market demand, technical feasibility, financial viability, and operational capabilities. The primary goal of a feasibility study is to provide you with valuable insights and data to make informed decisions about whether to proceed with the project.

Why is a Feasibility Study Important?

Conducting a feasibility study is a critical step in the planning process for any project or business. It helps you:

• Minimize Risks: By identifying potential challenges and obstacles early on, you can develop strategies to mitigate risks.
• Optimize Resource Allocation: A feasibility study helps you allocate your resources more efficiently, including time and money.
• Enhance Decision-Making: Armed with data and insights, you can make well-informed decisions about pursuing the project or exploring alternative options.
• Attract Stakeholders: Potential investors, lenders, and partners often require a feasibility study to assess the project's credibility and potential return on investment.

Now that you understand the importance of feasibility studies, let's explore the various types and dive deeper into each aspect.

Types of Feasibility Studies

Feasibility studies come in various forms, each designed to assess different aspects of a project's viability. Let's delve into the four primary types of feasibility studies in more detail:

1. Market Feasibility Study

Market feasibility studies are conducted to determine whether there is a demand for a product or service in a specific market or industry. This type of study focuses on understanding customer needs, market trends, and the competitive landscape. Here are the key elements of a market feasibility study:

• Market Research and Analysis: Comprehensive research is conducted to gather market size, growth potential , and customer behavior data. This includes both primary research (surveys, interviews) and secondary research (existing reports, data).
• Target Audience Identification: Identifying the ideal customer base by segmenting the market based on demographics, psychographics, and behavior. Understanding your target audience is crucial for tailoring your product or service.
• Competitive Analysis : Assessing the competition within the market, including identifying direct and indirect competitors, their strengths, weaknesses, and market share .
• Demand and Supply Assessment: Analyzing the balance between the demand for the product or service and its supply. This helps determine whether there is room for a new entrant in the market.

2. Technical Feasibility Study

Technical feasibility studies evaluate whether the project can be developed and implemented from a technical standpoint. This assessment focuses on the project's design, technical requirements, and resource availability. Here's what it entails:

• Project Design and Technical Requirements: Defining the technical specifications of the project, including hardware, software, and any specialized equipment. This phase outlines the technical aspects required for project execution.
• Technology Assessment: Evaluating the chosen technology's suitability for the project and assessing its scalability and compatibility with existing systems.
• Resource Evaluation: Assessing the availability of essential resources such as personnel, materials, and suppliers to ensure the project's technical requirements can be met.
• Risk Analysis: Identifying potential technical risks, challenges, and obstacles that may arise during project development. Developing risk mitigation strategies is a critical part of technical feasibility.

3. Financial Feasibility Study

Financial feasibility studies aim to determine whether the project is financially viable and sustainable in the long run. This type of study involves estimating costs, projecting revenue, and conducting financial analyses. Key components include:

• Cost Estimation: Calculating both initial and ongoing costs associated with the project, including capital expenditures, operational expenses, and contingency funds.
• Revenue Projections: Forecasting the income the project is expected to generate, considering sales, pricing strategies, market demand, and potential revenue streams.
• Investment Analysis: Evaluating the return on investment (ROI), payback period, and potential risks associated with financing the project.
• Financial Viability Assessment: Analyzing the project's profitability, cash flow, and financial stability to ensure it can meet its financial obligations and sustain operations.

4. Operational Feasibility Study

Operational feasibility studies assess whether the project can be effectively implemented within the organization's existing operational framework. This study considers processes, resource planning, scalability, and operational risks. Key elements include:

• Process and Workflow Assessment: Analyzing how the project integrates with current processes and workflows, identifying potential bottlenecks, and optimizing operations.
• Resource Planning: Determining the human, physical, and technological resources required for successful project execution and identifying resource gaps.
• Scalability Evaluation: Assessing the project's ability to adapt and expand to meet changing demands and growth opportunities, including capacity planning and growth strategies.
• Operational Risks Analysis: Identifying potential operational challenges and developing strategies to mitigate them, ensuring smooth project implementation.

Each type of feasibility study serves a specific purpose in evaluating different facets of your project, collectively providing a comprehensive assessment of its viability and potential for success.

How to Prepare for a Feasibility Study?

Before you dive into the nitty-gritty details of conducting a feasibility study, it's essential to prepare thoroughly. Proper preparation will set the stage for a successful and insightful study. In this section, we'll explore the main steps involved in preparing for a feasibility study.

1. Identify the Project or Idea

Identifying and defining your project or business idea is the foundational step in the feasibility study process. This initial phase is critical because it helps you clarify your objectives and set the direction for the study.

• Problem Identification: Start by pinpointing the problem or need your project addresses. What pain point does it solve for your target audience?
• Project Definition: Clearly define your project or business idea. What are its core components, features, or offerings?
• Goals and Objectives: Establish specific goals and objectives for your project. What do you aim to achieve in the short and long term?
• Alignment with Vision: Ensure your project aligns with your overall vision and mission. How does it fit into your larger strategic plan?

Remember, the more precisely you can articulate your project or idea at this stage, the easier it will be to conduct a focused and effective feasibility study.

2. Assemble a Feasibility Study Team

Once you've defined your project, the next step is to assemble a competent and diverse feasibility study team. Your team's expertise will play a crucial role in conducting a thorough assessment of your project's viability.

• Identify Key Roles: Determine the essential roles required for your feasibility study. These typically include experts in areas such as market research, finance, technology, and operations.
• Select Team Members: Choose team members with the relevant skills and experience to fulfill these roles effectively. Look for individuals who have successfully conducted feasibility studies in the past.
• Collaboration and Communication: Foster a collaborative environment within your team. Effective communication is essential to ensure everyone is aligned on objectives and timelines.
• Project Manager: Designate a project manager responsible for coordinating the study, tracking progress, and meeting deadlines.
• External Consultants: In some cases, you may need to engage external consultants or specialists with niche expertise to provide valuable insights.

Having the right people on your team will help you collect accurate data, analyze findings comprehensively, and make well-informed decisions based on the study's outcomes.

3. Set Clear Objectives and Scope

Before you begin the feasibility study, it's crucial to establish clear and well-defined objectives. These objectives will guide your research and analysis efforts throughout the study.

Steps to Set Clear Objectives and Scope:

• Objective Clarity: Define the specific goals you aim to achieve through the feasibility study. What questions do you want to answer, and what decisions will the study inform?
• Scope Definition: Determine the boundaries of your study. What aspects of the project will be included, and what will be excluded? Clarify any limitations.
• Resource Allocation: Assess the resources needed for the study, including time, budget, and personnel. Ensure that you allocate resources appropriately based on the scope and objectives.
• Timeline: Establish a realistic timeline for the feasibility study. Identify key milestones and deadlines for completing different phases of the study.

Clear objectives and a well-defined scope will help you stay focused and avoid scope creep during the study. They also provide a basis for measuring the study's success against its intended outcomes.

4. Gather Initial Information

Before you delve into extensive research and data collection , start by gathering any existing information and documents related to your project or industry. This initial step will help you understand the current landscape and identify gaps in your knowledge.

• Document Review: Review any existing project documentation, market research reports, business plans, or relevant industry studies.
• Competitor Analysis : Gather information about your competitors, including their products, pricing, market share, and strategies.
• Regulatory and Compliance Documents: If applicable, collect information on industry regulations, permits, licenses, and compliance requirements.
• Market Trends: Stay informed about current market trends, consumer preferences, and emerging technologies that may impact your project.
• Stakeholder Interviews: Consider conducting initial interviews with key stakeholders, including potential customers, suppliers, and industry experts, to gather insights and feedback.

By starting with a strong foundation of existing knowledge, you'll be better prepared to identify gaps that require further investigation during the feasibility study. This proactive approach ensures that your study is comprehensive and well-informed from the outset.

How to Conduct a Market Feasibility Study?

The market feasibility study is a crucial component of your overall feasibility analysis. It focuses on assessing the potential demand for your product or service, understanding your target audience, analyzing your competition, and evaluating supply and demand dynamics within your chosen market.

Market Research and Analysis

Market research is the foundation of your market feasibility study. It involves gathering and analyzing data to gain insights into market trends, customer preferences, and the overall business landscape.

• Data Collection: Utilize various methods such as surveys, interviews, questionnaires, and secondary research to collect data about the market. This data may include market size, growth rates, and historical trends.
• Market Segmentation: Divide the market into segments based on factors such as demographics, psychographics , geography, and behavior. This segmentation helps you identify specific target markets .
• Customer Needs Analysis: Understand the needs, preferences, and pain points of potential customers . Determine how your product or service can address these needs effectively.
• Market Trends: Stay updated on current market trends, emerging technologies, and industry innovations that could impact your project.
• SWOT Analysis: Conduct a SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis to identify internal and external factors that may affect your market entry strategy.

In today's dynamic market landscape, gathering precise data for your market feasibility study is paramount. Appinio offers a versatile platform that enables you to swiftly collect valuable market insights from a diverse audience.

With Appinio, you can employ surveys, questionnaires, and in-depth analyses to refine your understanding of market trends, customer preferences, and competition.

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Target Audience Identification

Knowing your target audience is essential for tailoring your product or service to meet their specific needs and preferences.

• Demographic Analysis: Define the age, gender, income level, education, and other demographic characteristics of your ideal customers.
• Psychographic Profiling: Understand the psychographics of your target audience, including their lifestyle, values, interests, and buying behavior.
• Market Segmentation: Refine your target audience by segmenting it further based on shared characteristics and behaviors.
• Needs and Pain Points: Identify your target audience's unique needs, challenges, and pain points that your product or service can address.
• Competitor's Customers: Analyze the customer base of your competitors to identify potential opportunities for capturing market share.

Competitive Analysis

Competitive analysis helps you understand the strengths and weaknesses of your competitors, positioning your project strategically within the market.

• Competitor Identification: Identify direct and indirect competitors within your industry or market niche.
• Competitive Advantage: Determine the unique selling points (USPs) that set your project apart from competitors. What value can you offer that others cannot?
• SWOT Analysis for Competitors: Conduct a SWOT analysis for each competitor to assess their strengths, weaknesses, opportunities, and threats.
• Market Share Assessment: Analyze each competitor's market share and market penetration strategies.
• Pricing Strategies: Investigate the pricing strategies employed by competitors and consider how your pricing strategy will compare.

Leveraging the power of data collection and analysis is essential in gaining a competitive edge. With Appinio , you can efficiently gather critical insights about your competitors, their strengths, and weaknesses. Seamlessly integrate these findings into your market feasibility study, empowering your project with a strategic advantage.

Demand and Supply Assessment

Understanding supply and demand dynamics is crucial for gauging market sustainability and potential challenges.

• Market Demand Analysis: Estimate the current and future demand for your product or service. Consider factors like seasonality and trends.
• Supply Evaluation: Assess the availability of resources, suppliers, and distribution channels required to meet the expected demand.
• Market Saturation: Determine whether the market is saturated with similar offerings and how this might affect your project.
• Demand Forecasting: Use historical data and market trends to make informed projections about future demand.
• Scalability: Consider the scalability of your project to meet increased demand or potential fluctuations.

A comprehensive market feasibility study will give you valuable insights into your potential customer base, market dynamics, and competitive landscape. This information will be pivotal in shaping your project's direction and strategy.

How to Conduct a Technical Feasibility Study?

The technical feasibility study assesses the practicality of implementing your project from a technical standpoint. It involves evaluating the project's design, technical requirements, technological feasibility, resource availability, and risk analysis. Let's delve into each aspect in more detail.

1. Project Design and Technical Requirements

The project design and technical requirements are the foundation of your technical feasibility study. This phase involves defining the technical specifications and infrastructure needed to execute your project successfully.

• Technical Specifications: Clearly define the technical specifications of your project, including hardware, software, and any specialized equipment.
• Infrastructure Planning: Determine the physical infrastructure requirements, such as facilities, utilities, and transportation logistics.
• Development Workflow: Outline the workflow and processes required to design, develop, and implement the project.
• Prototyping: Consider creating prototypes or proof-of-concept models to test and validate the technical aspects of your project.

2. Technology Assessment

A critical aspect of the technical feasibility study is assessing the technology required for your project and ensuring it aligns with your goals.

• Technology Suitability: Evaluate the suitability of the chosen technology for your project. Is it the right fit, or are there better alternatives?
• Scalability and Compatibility: Assess whether the chosen technology can scale as your project grows and whether it is compatible with existing systems or software.
• Security Measures: Consider cybersecurity and data protection measures to safeguard sensitive information.
• Technical Expertise: Ensure your team or external partners possess the technical expertise to implement and maintain the technology.

3. Resource Evaluation

Resource evaluation involves assessing the availability of the essential resources required to execute your project successfully. These resources include personnel, materials, and suppliers.

• Human Resources: Evaluate whether you have access to skilled personnel or if additional hiring or training is necessary.
• Material Resources: Identify the materials and supplies needed for your project and assess their availability and costs.
• Supplier Relationships: Establish relationships with reliable suppliers and consistently assess their ability to meet your resource requirements.

4. Risk Analysis

Risk analysis is a critical component of the technical feasibility study, as it helps you anticipate and mitigate potential technical challenges and setbacks.

• Identify Risks: Identify potential technical risks, such as hardware or software failures, technical skill gaps, or unforeseen technical obstacles.
• Risk Mitigation Strategies: Develop strategies to mitigate identified risks, including contingency plans and resource allocation for risk management.
• Cost Estimation for Risk Mitigation: Assess the potential costs associated with managing technical risks and incorporate them into your project budget.

By conducting a thorough technical feasibility study, you can ensure that your project is technically viable and well-prepared to overcome technical challenges. This assessment will also guide decision-making regarding technology choices, resource allocation, and risk management strategies.

How to Conduct a Financial Feasibility Study?

The financial feasibility study is a critical aspect of your overall feasibility analysis. It focuses on assessing the financial viability of your project by estimating costs, projecting revenue, conducting investment analysis, and evaluating the overall financial health of your project. Let's delve into each aspect in more detail.

1. Cost Estimation

Cost estimation is the process of calculating the expenses associated with planning, developing, and implementing your project. This involves identifying both initial and ongoing costs.

• Initial Costs: Calculate the upfront expenses required to initiate the project, including capital expenditures, equipment purchases, and any development costs.
• Operational Costs: Estimate the ongoing operating expenses, such as salaries, utilities, rent, marketing, and maintenance.
• Contingency Funds: Allocate funds for unexpected expenses or contingencies to account for unforeseen challenges.
• Depreciation: Consider the depreciation of assets over time, as it impacts your financial statements.

2. Revenue Projections

Revenue projections involve forecasting the income your project is expected to generate over a specific period. Accurate revenue projections are crucial for assessing the project's financial viability.

• Sales Forecasts: Estimate your product or service sales based on market demand, pricing strategies, and potential growth.
• Pricing Strategy: Determine your pricing strategy, considering factors like competition, market conditions, and customer willingness to pay.
• Market Penetration: Analyze how quickly you can capture market share and increase sales over time.
• Seasonal Variations: Account for any seasonal fluctuations in revenue that may impact your cash flow.

3. Investment Analysis

Investment analysis involves evaluating the potential return on investment (ROI) and assessing the attractiveness of your project to potential investors or stakeholders.

• Return on Investment (ROI): Calculate the expected ROI by comparing the project's net gains against the initial investment.
• Payback Period: Determine how long it will take for the project to generate sufficient revenue to cover its initial costs.
• Risk Assessment: Consider the level of risk associated with the project and whether it aligns with investors' risk tolerance.
• Sensitivity Analysis: Perform sensitivity analysis to understand how changes in key variables, such as sales or costs, affect the investment's profitability.

4. Financial Viability Assessment

A financial viability assessment evaluates the project's ability to sustain itself financially in the long term. It considers factors such as profitability, cash flow, and financial stability.

• Profitability Analysis: Assess whether the project is expected to generate profits over its lifespan.
• Cash Flow Management: Analyze the project's cash flow to ensure it can cover operating expenses, debt payments, and other financial obligations.
• Break-Even Analysis: Determine the point at which the project's revenue covers all costs, resulting in neither profit nor loss.
• Financial Ratios: Calculate key financial ratios, such as debt-to-equity ratio and return on equity, to evaluate the project's financial health.

By conducting a comprehensive financial feasibility study, you can gain a clear understanding of the project's financial prospects and make informed decisions regarding its viability and potential for success.

How to Conduct an Operational Feasibility Study?

The operational feasibility study assesses whether your project can be implemented effectively within your organization's operational framework. It involves evaluating processes, resource planning, scalability, and analyzing potential operational risks.

1. Process and Workflow Assessment

The process and workflow assessment examines how the project integrates with existing processes and workflows within your organization.

• Process Mapping: Map out current processes and workflows to identify areas of integration and potential bottlenecks.
• Workflow Efficiency: Assess the efficiency and effectiveness of existing workflows and identify opportunities for improvement.
• Change Management: Consider the project's impact on employees and plan for change management strategies to ensure a smooth transition.

2. Resource Planning

Resource planning involves determining the human, physical, and technological resources needed to execute the project successfully.

• Human Resources: Assess the availability of skilled personnel and consider whether additional hiring or training is necessary.
• Physical Resources: Identify the physical infrastructure, equipment, and materials required for the project.
• Technology and Tools: Ensure that the necessary technology and tools are available and up to date to support project implementation.

3. Scalability Evaluation

Scalability evaluation assesses whether the project can adapt and expand to meet changing demands and growth opportunities.

• Scalability Factors: Identify factors impacting scalability, such as market growth, customer demand, and technological advancements.
• Capacity Planning: Plan for the scalability of resources, including personnel, infrastructure, and technology.
• Growth Strategies: Develop strategies for scaling the project, such as geographic expansion, product diversification, or increasing production capacity.

4. Operational Risk Analysis

Operational risk analysis involves identifying potential operational challenges and developing mitigation strategies.

• Risk Identification: Identify operational risks that could disrupt project implementation or ongoing operations.
• Risk Mitigation: Develop risk mitigation plans and contingency strategies to address potential challenges.
• Testing and Simulation: Consider conducting simulations or testing to evaluate how the project performs under various operational scenarios.
• Monitoring and Adaptation: Implement monitoring and feedback mechanisms to detect and address operational issues as they arise.

Conducting a thorough operational feasibility study ensures that your project aligns with your organization's capabilities, processes, and resources. This assessment will help you plan for a successful implementation and minimize operational disruptions.

How to Write a Feasibility Study?

The feasibility study report is the culmination of your feasibility analysis. It provides a structured and comprehensive document outlining your study's findings, conclusions, and recommendations. Let's explore the key components of the feasibility study report.

1. Structure and Components

The structure of your feasibility study report should be well-organized and easy to navigate. It typically includes the following components:

• Executive Summary: A concise summary of the study's key findings, conclusions, and recommendations.
• Introduction: An overview of the project, the objectives of the study, and a brief outline of what the report covers.
• Methodology: A description of the research methods , data sources, and analytical techniques used in the study.
• Market Feasibility Study: Detailed information on market research, target audience, competitive analysis, and demand-supply assessment.
• Technical Feasibility Study: Insights into project design, technical requirements, technology assessment, resource evaluation, and risk analysis.
• Financial Feasibility Study: Comprehensive information on cost estimation, revenue projections, investment analysis, and financial viability assessment.
• Operational Feasibility Study: Details on process and workflow assessment, resource planning, scalability evaluation, and operational risks analysis.
• Conclusion: A summary of key findings and conclusions drawn from the study.

Recommendations: Clear and actionable recommendations based on the study's findings.

2. Write the Feasibility Study Report

When writing the feasibility study report, it's essential to maintain clarity, conciseness, and objectivity. Use clear language and provide sufficient detail to support your conclusions and recommendations.

• Be Objective: Present findings and conclusions impartially, based on data and analysis.
• Use Visuals: Incorporate charts, graphs, and tables to illustrate key points and make the report more accessible.
• Cite Sources: Properly cite all data sources and references used in the study.
• Include Appendices: Attach any supplementary information, data, or documents in appendices for reference.

3. Present Findings and Recommendations

When presenting your findings and recommendations, consider your target audience. Tailor your presentation to the needs and interests of stakeholders, whether they are investors, executives, or decision-makers.

• Highlight Key Takeaways: Summarize the most critical findings and recommendations upfront.
• Use Visual Aids: Create a visually engaging presentation with slides, charts, and infographics.
• Address Questions: Be prepared to answer questions and provide additional context during the presentation.
• Provide Supporting Data: Back up your findings and recommendations with data from the feasibility study.

4. Review and Validation

Before finalizing the feasibility study report, conducting a thorough review and validation process is crucial. This ensures the accuracy and credibility of the report.

• Peer Review: Have colleagues or subject matter experts review the report for accuracy and completeness.
• Data Validation: Double-check data sources and calculations to ensure they are accurate.
• Cross-Functional Review: Involve team members from different disciplines to provide diverse perspectives.
• Stakeholder Input: Seek input from key stakeholders to validate findings and recommendations.

By following a structured approach to creating your feasibility study report, you can effectively communicate the results of your analysis, support informed decision-making, and increase the likelihood of project success.

Feasibility Study Examples

Let's dive into some real-world examples to truly grasp the concept and application of feasibility studies. These examples will illustrate how various types of projects and businesses undergo the feasibility assessment process to ensure their viability and success.

Example 1: Local Restaurant

Imagine you're passionate about opening a new restaurant in a bustling urban area. Before investing significant capital, you'd want to conduct a thorough feasibility study. Here's how it might unfold:

• Market Feasibility: You research the local dining scene, identify target demographics, and assess the demand for your cuisine. Market surveys reveal potential competitors, dining preferences, and pricing expectations.
• Technical Feasibility: You design the restaurant layout, plan the kitchen setup, and assess the technical requirements for equipment and facilities. You consider factors like kitchen efficiency, safety regulations, and adherence to health codes.
• Financial Feasibility: You estimate the initial costs for leasing or purchasing a space, kitchen equipment, staff hiring, and marketing. Revenue projections are based on expected foot traffic, menu pricing, and seasonal variations.
• Operational Feasibility: You create kitchen and service operations workflow diagrams, considering staff roles and responsibilities. Resource planning includes hiring chefs, waitstaff, and kitchen personnel. Scalability is evaluated for potential expansion or franchising.
• Risk Analysis: Potential operational risks are identified, such as food safety concerns, labor shortages, or location-specific challenges. Risk mitigation strategies involve staff training, quality control measures, and contingency plans for unexpected events.

Example 2: Software Development Project

Now, let's explore the feasibility study process for a software development project, such as building a mobile app:

• Market Feasibility: You analyze the mobile app market, identify your target audience, and assess the demand for a solution in a specific niche. You gather user feedback and conduct competitor analysis to understand the competitive landscape.
• Technical Feasibility: You define the technical requirements for the app, considering platforms (iOS, Android), development tools, and potential integrations with third-party services. You evaluate the feasibility of implementing specific features.
• Financial Feasibility: You estimate the development costs, including hiring developers, designers, and ongoing maintenance expenses. Revenue projections are based on app pricing, potential in-app purchases, and advertising revenue.
• Operational Feasibility: You map out the development workflow, detailing the phases from concept to deployment. Resource planning includes hiring developers with the necessary skills, setting up development environments, and establishing a testing framework.
• Risk Analysis: Potential risks like scope creep, technical challenges, or market saturation are assessed. Mitigation strategies involve setting clear project milestones, conducting thorough testing, and having contingency plans for technical glitches.

These examples demonstrate the versatility of feasibility studies across diverse projects. Whatever type of venture or endeavor you want to embark on, a well-structured feasibility study guides you toward informed decisions and increased project success.

In conclusion, conducting a feasibility study is a crucial step in your project's journey. It helps you assess the viability and potential risks, providing a solid foundation for informed decision-making. Remember, a well-executed feasibility study not only enables you to identify challenges but also uncovers opportunities that can lead to your project's success.

By thoroughly examining market trends, technical requirements, financial aspects, and operational considerations, you are better prepared to embark on your project confidently. With this guide, you've gained the knowledge and tools needed to navigate the intricate terrain of feasibility studies.

How to Conduct a Feasibility Study in Minutes?

Speed and precision are paramount for feasibility studies, and Appinio delivers just that. As a real-time market research platform, Appinio empowers you to seamlessly conduct your market research in a matter of minutes, putting actionable insights at your fingertips.

Here's why Appinio stands out as the go-to tool for feasibility studies:

• Rapid Insights: Appinio's intuitive platform ensures that anyone, regardless of their research background, can effortlessly navigate and conduct research, saving valuable time and resources.
• Lightning-Fast Responses: With an average field time of under 23 minutes for 1,000 respondents, Appinio ensures that you get the answers you need when you need them, making it ideal for time-sensitive feasibility studies.
• Global Reach: Appinio's extensive reach spans over 90 countries, allowing you to define the perfect target group from a pool of 1,200+ characteristics and gather insights from diverse markets.

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Feasibility study: definition, benefits and differences with a Business Plan

• Last updated on 09 January, 2024

Welcome to our series of articles on feasibility studies.

• What is a Feasibility study?
• What is a bankable feasibility study?
• How to do a feasibility study?
• Feasibility study consultants: expertise needed
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• Car Park Feasibility Study: Key considerations
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• Feasibility study of solar PV projects: Key components
• Feasibility study of real estate developments
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In this post, we will touch on all the basic concepts behind a feasibility study. definition, benefits of doing it, main parts, differences with a business plan, etc. Aninver Development Partners is a consulting firm specializing in Feasibility studies for projects such as hotels, infrastructure, energy, technology, etc. We assist clients globally. 

Definition of Feasibility study

A feasibility study is a comprehensive and systematic analysis and evaluation of a proposed project, business venture, or initiative to determine its practicality, viability, and potential for success. It involves a thorough examination of various factors, such as financial, technical, operational, legal, environmental, and market-related aspects, to assess whether the project is feasible and worth pursuing. 

The primary goal of a feasibility study is to provide stakeholders with essential information and insights to make informed decisions about whether to proceed with the project, abandon it, or make necessary adjustments to enhance its chances of success.

Differences between a feasibility study and a business plan

Feasibility studies and business plans are both important tools in the development and evaluation of a business or project, but they serve different purposes and are created at different stages of the process. Here are the key differences between a feasibility study and a business plan:

Differences in Purpose

• Feasibility Study : Feasibility studies are conducted in the early stages of project development or business planning. Their primary purpose is to determine whether a proposed project or business idea is viable and should be pursued. Feasibility studies focus on assessing the potential risks, challenges, and opportunities associated with the project.
• Business Plan : Business plans are created after the feasibility study, once it has been established that the project is viable. The purpose of a business plan is to outline in detail how the business will be structured, operated, and grown. It serves as a roadmap for the future of the business and is often used to secure financing.

Differences in Content

• Feasibility Study : A feasibility study includes an analysis of the project's overall concept, market research, technical requirements, financial projections, potential risks, and recommendations. It provides a high-level overview of the project's feasibility.
• Business Plan : A business plan is a detailed document that outlines the company's mission, vision, goals, organizational structure, market strategy, marketing and sales plans, financial forecasts, and operational details. It delves into the specifics of how the business will operate.

Differences in Timing

• Feasibility Study : Feasibility studies are conducted at the outset of a project or business idea to assess its potential feasibility. They help stakeholders decide whether to move forward with the project.
• Business Plan : Business plans are typically created after the feasibility study, once it has been determined that the project is feasible and worth pursuing. They provide a roadmap for the actual operation and growth of the business.

Differences in Audience

• Feasibility Study : The primary audience for a feasibility study includes project stakeholders, investors, and decision-makers who need to determine whether the project should proceed.
• Business Plan : Business plans are used to communicate the business's vision and strategy to a wider audience, including potential investors, lenders, partners, and employees.

In summary, a feasibility study is a preliminary assessment of the potential success of a project, while a business plan is a detailed document that outlines how a business will be run. The feasibility study helps determine whether a business plan should be developed, while the business plan provides a comprehensive strategy for the ongoing operation and growth of the business.

Feasibility study vs Pre-feasibility study

Let's explore now the key differences between a prefeasibility study and a feasibility study:

Purpose and Scope : A prefeasibility study and a feasibility study both play critical roles in project evaluation, but they serve distinct purposes. A prefeasibility study is typically the initial phase in the assessment process. Its primary purpose is to provide a preliminary evaluation of a project's potential viability. It helps stakeholders decide whether it's worth investing further resources into a detailed feasibility study. In contrast, a feasibility study goes into much greater depth and detail, assessing the project's practicality from technical, financial, operational, and market perspectives. It aims to provide a comprehensive understanding of whether the project is feasible and worth pursuing.

Level of Detail : One of the key distinctions between the two studies is the level of detail they encompass. A prefeasibility study offers a broad overview of the project, examining high-level factors like market demand, technical requirements, and rough cost estimates. It provides enough information to make an initial go/no-go decision. In contrast, a feasibility study drills down into finer details, providing precise financial projections, risk assessments, engineering specifics, and a comprehensive business plan. It seeks to leave no stone unturned in assessing the project's practicality.

Resource and Cost Implications : A prefeasibility study is generally less resource-intensive and cheaper to conduct compared to a full feasibility study. It acts as a cost-effective filter to eliminate unviable projects early in the evaluation process. Once a project passes the prefeasibility stage and proceeds to a feasibility study, it implies a commitment of more resources, time, and finances due to the comprehensive nature of the study. A prefeasibility study helps in efficient resource allocation by focusing only on the most promising projects, while a feasibility study is a more intensive process suitable for projects that have demonstrated a higher likelihood of success during the prefeasibility assessment.

Benefits of doing a Feasibility study

Conducting a feasibility study offers numerous benefits, making it an essential step in the decision-making process for any project, business venture, or initiative. Here are the key advantages of performing a feasibility study:

• Risk Assessment : Feasibility studies help identify potential risks and challenges associated with a project. By thoroughly examining technical, financial, operational, and market-related aspects, stakeholders can pinpoint areas of concern and develop strategies to mitigate or manage these risks effectively.
• Decision-Making : Feasibility studies provide critical information to decision-makers, helping them make informed choices about whether to proceed with a project. These studies offer a basis for go/no-go decisions, preventing resources from being wasted on unviable endeavors.
• Resource Allocation : By assessing the feasibility of a project, stakeholders can allocate resources more efficiently. They can avoid overinvesting in projects with limited potential and allocate resources to those with a higher likelihood of success.
• Financial Planning : Feasibility studies include detailed financial projections and cost estimates. This financial information is invaluable for securing funding from investors, lenders, or other sources. It helps in creating a solid business case.
• Market Insight : Market feasibility studies provide insights into customer demand, market trends, and competitive dynamics. This information is crucial for designing products or services that meet market needs and for formulating effective marketing strategies.
• Optimized Design : Technical feasibility studies ensure that a project's technical requirements and design are viable. They help in avoiding costly design flaws and ensuring that the project can be implemented as planned.
• Legal and Regulatory Compliance : Feasibility studies can identify potential legal and regulatory challenges. This allows for the development of strategies to navigate and comply with relevant laws and regulations, reducing the risk of legal complications later on.
• Enhanced Project Viability : Feasibility studies may lead to adjustments and improvements in the project plan, making it more viable and likely to succeed. This iterative process ensures that potential issues are addressed proactively.
• Investor and Stakeholder Confidence : When potential investors and stakeholders see that a comprehensive feasibility study has been conducted, they are more likely to have confidence in the project. This can make it easier to secure funding and support.
• Long-Term Planning : Feasibility studies not only assess the viability of a project in the short term but also help in long-term planning. They provide insights into the sustainability and growth potential of a business or initiative.

In summary, conducting a feasibility study is a valuable step in the project development process. It provides a structured approach to assess the viability of a project, manage risks, make informed decisions, secure financing, and set the stage for a successful venture. The benefits of a feasibility study extend beyond initial decision-making and contribute to the overall success and sustainability of a project or business.

Components of a Feasibility study

A feasibility study typically consists of several key components that provide a comprehensive evaluation of a project, business venture, or initiative. These components help stakeholders make informed decisions about the feasibility and viability of the proposed endeavor. The main components of a feasibility study include:

Executive Summary

The executive summary provides a concise overview of the entire feasibility study. It includes a brief description of the project, its objectives, and the key findings and recommendations. It serves as a quick reference for decision-makers.

Project Description

This section outlines the project's goals, objectives, and scope. It defines the problem the project aims to solve or the opportunity it seeks to capture. It also specifies the project's location and the stakeholders involved.

Market Analysis

Market analysis assesses the demand for the product or service within the target market. It includes information on target customers, market size, growth potential, competition, and market trends. This component helps determine whether there is a viable market for the project.

Technical Feasibility

Technical feasibility examines the project's technical requirements. It assesses whether the necessary technology, equipment, and resources are available or can be developed. It also identifies any technical challenges that may need to be addressed.

Operational Feasibility

Operational feasibility evaluates how the project will be implemented and operated. It includes details about project timelines, workflow, personnel requirements, and operational processes. This section helps in understanding how the project will function on a day-to-day basis.

Financial Feasibility

Financial feasibility is a critical component that includes detailed financial projections and analysis. It covers aspects such as startup costs, revenue forecasts, expense estimates, cash flow analysis, and return on investment calculations. It assesses the project's financial viability and potential profitability.

Legal and Regulatory Analysis

This section examines the legal and regulatory requirements that may impact the project. It identifies permits, licenses, or compliance issues that need to be addressed. Understanding and addressing legal and regulatory aspects are essential to avoid potential obstacles.

Risk Assessment

The risk assessment component identifies potential risks and challenges associated with the project. It evaluates the probability and impact of these risks and suggests risk mitigation strategies. Risks can be financial, technical, operational, market-related, or related to external factors.

Recommendations and Conclusion

In this section, the feasibility study summarizes the findings and presents clear recommendations based on the assessment. It often includes a conclusion that states whether the project is feasible and worth pursuing or whether it should be abandoned or modified.

The appendices contain additional supporting documentation and data, such as detailed financial spreadsheets, market research reports, technical specifications, and any other relevant information. These provide a more in-depth reference for stakeholders.

The main components of a feasibility study collectively provide a thorough assessment of a project's viability from multiple angles, ensuring that decision-makers have a comprehensive understanding of the project's potential, risks, and benefits.

Examples of Feasibility studies

Let's look now into some examples of feasibility studies for different types of projects and initiatives:

• Real Estate Development

A real estate developer is considering constructing a residential apartment complex in a growing urban area. A feasibility study would assess factors like market demand, location, zoning regulations, construction costs, potential revenue from rentals, and the financial viability of the project.

• Manufacturing Plant Expansion

A manufacturing company is considering expanding its operations by building a new production facility. The feasibility study would evaluate factors such as available land, infrastructure, equipment requirements, workforce, environmental impact, and the financial feasibility of the expansion.

• Small Business Startup

An entrepreneur is exploring the feasibility of starting a small restaurant in a specific location. The feasibility study would examine the local market, including competitors, target customer demographics, startup costs, regulatory requirements, and financial projections for the first few years of operation.

• Renewable Energy Project

A renewable energy company is considering the construction of a solar power plant. The feasibility study would assess the site's solar exposure, grid connection feasibility, equipment costs, revenue from energy sales, environmental impact, and the return on investment over the project's lifespan.

• Healthcare Facility Expansion

A hospital is contemplating an expansion to meet growing patient demands. The feasibility study would include an assessment of the required medical equipment, staffing needs, regulatory compliance, funding sources, and the anticipated patient load.

• Tourism Development

A tourist destination is considering the construction of a new hotel and recreational facilities. The feasibility study would evaluate the area's appeal to tourists, competition with existing businesses, construction costs, expected occupancy rates, and potential revenue from tourism.

• Nonprofit Program Expansion

A nonprofit organization is looking to expand its community outreach programs. The feasibility study would assess the need for the programs, funding sources, volunteer availability, operational costs, and the impact of the expansion on the organization's mission and goals.

• E-commerce Startup

An entrepreneur plans to launch an e-commerce website. The feasibility study would examine market demand, website development costs, marketing strategies, competitive analysis, and projected sales revenue and profitability.

These examples illustrate how feasibility studies are conducted in various fields and industries to evaluate the potential success and viability of a wide range of projects and initiatives. The specific components and focus areas of a feasibility study will vary depending on the nature of the project and the questions it seeks to address.

7 steps to conduct a Feasibility study

Now, let's think we are going to write a feasibility study. Let's check what steps we need to take to develop the final report.

• Conduct a Preliminary Analysis

Begin by conducting an initial evaluation of the project's objectives and scope. This step involves defining the problem the project intends to address or the opportunity it aims to seize. Ensure that the project's goals are clear and well-defined.

• Analyze Technical Specifications

Examine the technical aspects of the project in detail. Evaluate the availability of required technology, equipment, and resources. Verify that the project's technical requirements can be met effectively.

• Conduct a Commercial Analysis

Perform a comprehensive analysis of the project's commercial aspects. This step involves assessing the market's demand for the product or service, analyzing market size, competition, customer needs, and market trends. Determine if there is a feasible market for the project.

• Prepare a Projected Income Statement

Create a detailed projected income statement for the project. This includes estimating startup costs, revenue forecasts, expense projections, and cash flow analysis. Calculate the return on investment (ROI) to determine the project's financial viability, the Internal Rate of Return (IRR) of the investment and the Net Present Value (NPV) of future cash flows.

• Prepare a Day-Zero Balance Sheet

Develop a balance sheet that represents the project's financial position at the outset (day zero). This financial snapshot should account for all assets, liabilities, and equity to provide a clear overview of the project's financial situation before it begins.

• Analyze Different Alternatives for Feasibility

Explore various alternatives and scenarios for the project's feasibility. Assess different approaches, technologies, or business models to identify the most viable option. Consider the potential impact of these alternatives on the project's success. Make sensibilities to potentila risks.

• Make a Go/No-Go Decision

Based on the findings and analysis conducted throughout the feasibility study, make a well-informed decision on whether to proceed with the project (a "Go" decision) or abandon it (a "No-Go" decision). Ensure that the decision aligns with the project's goals and aligns with the information presented in the study.

These steps provide a structured approach to conducting a feasibility study, ensuring that all relevant aspects of the project are thoroughly assessed and considered before making a decision on its viability.

In conclusion, a feasibility study is an indispensable tool for any project, business venture, or initiative. It serves as the critical bridge between a concept and a well-informed decision. By following a systematic process that includes a preliminary analysis, technical assessment, commercial evaluation, financial projections, and a careful consideration of alternatives, stakeholders can gain a comprehensive understanding of a project's viability.

The feasibility study's ability to assess market demand, technical feasibility, operational requirements, financial viability, and potential risks empowers decision-makers to make informed choices. Whether it's a real estate development, a new product launch, a manufacturing expansion, an IT system upgrade, or any other endeavor, a feasibility study helps in risk management, efficient resource allocation, and, ultimately, the successful realization of the project's goals.

It's important to remember that a well-conducted feasibility study not only serves the purpose of greenlighting a project but also provides a foundation for its long-term success. It gives stakeholders the confidence that the project is based on sound analysis and planning. In a world of complex challenges and opportunities, the feasibility study is a guiding compass for those seeking to turn innovative ideas into reality.

Make sure you hire the right consultants to deliver your feasibility study or business plan. Our firm, Aninver Development Partners, specializes in designing bankable feasibility studies  to make sure projects continue to their following phase. 

Send us a message on our contact page and we can discuss how we can help you. 

Some of our experience conducting feasibility studies can be seen below:

• Feasibility Study for a new marina in the island of San Andrés through PPP
• Pre-feasibility study for construction of silo storages in Northern Ghana through PPP
• Feasibility study of a real estate WAQF project in Cotonou (Benin)
• Feasibility study and analysis of strategic alternatives of a touristic development in Natal
• Feasibility study for creation of an Investment and Export Promotion Agency of Health services in Tunisia
• Feasibility Study for car parks in Bishkek though PPP
• Feasibility study of markets in Benin and Togo under PPP scheme
• Feasibility Study for the establishment of a Large-Scale Cashew Processing Plant in Zambia
• Public Private Partnership (PPPs) study in the Housing Sector
• Review of Business Case for Manila Central Subway
• First Mover PPP Prefeasibility Study
• Review of the feasibility study of the PPP project Complejo El Brillante, in Cordoba (Spain)
• Review of pre-feasibility study of a Health PPP project

Alvaro de la Maza is one the founding partners of Aninver Development Partners. Alvaro is a Civil Engineer, MS on Infrastructure Management and MBA by IESE Business School.Alvaro has extensive experience in Infrastructure and Public Private Partnerships. Alvaro has worked and led multiple consulting projects for clients such as the World Bank, the African Development Bank and other donors.Alvaro enjoys creating digital products and he has led the development of market intelligence platforms in d...

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Feasibility Study vs Business Plan Similarities And Differences

Feasibility Study vs Business Plan

Setting up a business enterprise can present a lot of challenges for the entrepreneur. The preliminary stage which involves a lot of brainstorming often gets down to preparing two important documents: the feasibility study and the business plan, both of which are quite indispensable if you’re considering starting a business, and doing it properly.

The possibility of success in a venture predicates upon the proper delivery of these documents, which should be written after conducting careful research and critical analysis, and conveyed in formats that others can understand, because you might want to seek for funds or investors, or even solicit for a loan, and so won’t be the only person reading them.

It, therefore, becomes needful for any entrepreneur to be able to distinguish between a feasibility study and a business plan, to know how to go about creating them.

What is a feasibility study?

As the name implies, a feasibility study is an analysis of the viability of an idea. Feasibility studies help answer the essential question, “Should we proceed with the proposed idea?” The objective study may be completed in conjunction with a SWOT planning process, which looks at the strengths, weaknesses, opportunities, and threats that may be present externally (the environment) or internally (resources).

Feasibility studies help determine: a) does the company possess the required resources or technologies, and b) does the proposal offer a reasonable return vs. risk from the investment.

So a feasibility study lets you know whether the idea you have for a business is worth the time, effort, and money you are willing to invest in it. It’s just like asking yourself, “Is it advisable that I go into this business?”.

While you might be able to conduct this study yourself, it would be more productive and prudent to get the contributions of different professionals such as accountants, entrepreneurs who have opened successful businesses, and realtors who can advise you on the worth of the location and pricing (values you would need in costing and price estimation), comparing similar businesses in the location where you wish to set up your enterprise.

What is a Business Plan?

A business plan “is a written document describing the nature of the business, the sales and marketing strategy, and the financial background, and containing a projected profit and loss statement”.

A business plan is also a road map that provides directions so a business can plan its future and helps it avoid bumps in the road. The time you spend making your business plan thorough and accurate and keeping it up-to-date is an investment that pays big dividends in the long term.

The business plan comes after you have conducted a proper feasibility study and ascertained that your idea is worth going “all out for”. So creating a business plan is like saying, “Yes I’m convinced about the profitability of this idea. This is how I intend to make it profitable”.

Every business is established for the sole purpose of making a profit. If profiting is not the goal, then it is no business, but rather a non-profit organization. Hence details of how a business will operate and make a profit are contained in the business plan.

This is where you’re going to spell out your financial and other objectives, the methods you plan to use to achieve them, and your proposed organizational structure.

Now, let’s look at what makes a feasibility study and a business plan appear similar.

Similarities between feasibility study and business plan

Comparing the similarities between a feasibility study and a business plan is important because both are used in different ways to help you create a profitable business. Similarities between the two documents include:

Timing : Both are done in the beginning before the work opens, and can be done again later to define the next steps for future ideas.

Inputs : They both involve input from multiple individuals or departments with different skills.

Format : Both contain other documents that are grouped to create the report.

Components : Some of the issues analyzed are similar, including examining the target market, market conditions, and financial costs.

Use : Both help the management of the organization in making decisions, and they can also be shown to potential investors.

By now you should have a considerable understanding of how a feasibility study differs from a business plan. But to expound your knowledge it would do to know what the varying components are.

Purpose : While a feasibility study determines the viability of a business idea, a business plan comes after the decision has been made to go ahead with the business.

Methodology : In essence, a feasibility study is based significantly on research, while a business plan makes projections into the future.

Risks : A feasibility study ascertains the risks associated with the idea, whereas a business plan explains how these risks will be dealt with to ensure that the business makes the desired profit.

Cost : A feasibility study can require hiring professionals with expertise who will conduct thorough studies, whereas a business plan may be written by employees of the business, as part of their jobs.

How do you conduct a Feasibility Study?

If you’re doing the feasibility study yourself, conduct a complete competitive analysis considering the following outlines:

Product demand: Is there a need or want for your product or service? Is the need already being met, or is there room for another product?

Market conditions : Who would buy your product and where are they? Can you serve their location? Is the market saturated, or is there room/need for more products?

Pricing : What do current users pay for similar products? What do you need to charge so that you will be profitable, and will consumers pay your price?

Risks : What are the risks associated with your idea?

Probability of Success : Can you reasonably overcome the risks to become profitable?

• Shea Butter Production In Nigeria 2021 Business Plan

Writing a Business Plan?

Writing a business plan may seem daunting, but if you take it step-by-step, it will come to fruition. The Small Business Administration advises that business plans should include the following:

Executive Summary : Include your mission statement, products and or services, some brief information about your leadership team and key employees, as well as the location of your business. To attract investors, add current financial information and projections for growth.

Company description : Detail the problems your business solves; its target market; its competitive advantages, compared with the competition, and anything else that makes your company superior to others: i.e., product awards or recognition, big increases in sales, and so on.

Market analysis : Perform competitive research of what other businesses are doing; their strengths and weaknesses, and how and why your business will be competitive and successful in the market.

Organization or management : State the legal status of your business, such as a corporation or partnership, and include an organizational chart showing management levels, departments, and so on.

Service or product line : State what you will sell or provide and describe the benefits of each. Explain any research done, and any patents filed, and so on.

Marketing and sales : Explain in detail your marketing strategy and how sales will be made.

Funding request : If you are going to be requesting do fund, detail the amount of funding you’ll need for the next five years – specifically, what you’ll do with the funds, and the terms you’re asking for.

Financial projections : This is the business’s financial outlook for the next five years. Include current financial statements, if the business is in operation.

Appendix : This includes supporting documents or requested materials, such as resumes, product photos, letters of reference, patents, licenses, and so on.

In conclusion, it should be obvious by now that a feasibility study and a business plan cannot substitute for each other, and both exist as essential planning documents for successful businesses. If you have the intention of preparing any or both of these documents, it is advisable to seek the aid of a professional writer wherever you might encounter difficulties.

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The Difference Between A Feasibility Study And A Business Plan

Should you prepare a feasibility study report or a business plan? This is a question that is always asked by thousands of people daily. They want to prepare either of the two but classify both as the same without understanding the clear distinction between a feasibility study report and a business plan.

Feasibility study reports and business plans have different goals, although similar. One is more in-depth than the other, and the reasons for preparing each is partly different from the other.

While a feasibility study report and a business plan are both analysis and decision making tools, it is highly important to know the difference between a feasibility study report and a business plan at all times, as I have detailed below:

See Also:   The Difference Between A Business Plan And A Business Proposal

Reasons For A Feasibility Study Report

A feasibility study report is a document that is prepared after a feasibility study has been carried out. It contains in-depth analysis, projections, cost estimates, production requirements, production processes, and is the ultimate tool to determine whether a business should be started or not.

Since the feasibility study that’s first carried out is a comprehensive market research, its results will show the market size, their demographics, genders, age brackets, number of businesses operating in the industry, and much more.

These results are then put together in the report along with their cost projections, and will ultimately show whether the business is worth following through or not.

Feasibility Study Report Structure

A sample feasibility study report structure could look like the list below:

• Introduction
• Product or Service
• Market Environment
• Competition
• Business Model
• Market and Sales Strategy
• Production Operations Requirements
• Management and Personnel Requirements
• Regulations and Environmental Issues
• Critical Risk Factors
• Financial Projections

See Also:   How To Write A Feasibility Study Report In Nigeria Or Africa: The Complete Guide

Reasons For A Business Plan

A business plan is a strategy and tactical document that is prepared after a successful feasibility study has been carried out. It is written based on the results of a feasibility study, and focuses instead on how the business can achieve a successful market penetration and growth.

A business plan also contains financial projections, cash flow statements, balance sheets, profit and loss statements, break even analysis, and much more. It shows how profitable or not the business will be after acting on the results gotten from the feasibility study, and what it can do to either grow its revenues or change its focus to another industry.

Business Plan Structure

A sample business plan structure could look like the list below:

• Executive Summary
• Business Description
• Service or Product Line
• Market Analysis & Strategies
• Organization & Management
• Funding Request

See Also:   How To Write A Business Plan: The Complete Guide

What Then Do You Need?

If you know nothing about the business you intend to start, the first step is to prepare a feasibility study report after an extensive market research has been carried out. After which, you can go on to prepare a business plan, so you can show the growth, sustainability, and profit potential of the business you’ve set out to run.

See Also:   How to Choose A Business Plan Consultant

What are your thoughts on the difference between a feasibility study report and a business plan? Let me know by leaving a comment below.

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Until now,I always think that business plan and feasibility study report are the same. Thank you a million times for pointing out the difference to me. An eye opener I may say.Thanks once again.

Imeh Enuah.

I’m glad you found the article valuable, Imeh.

Do have a great time!

Thank you brother ❤️👍

Thanks for the effort but still not crystal clear to me…

Thank you for the comment, Victor.

Indeed they’re similar. But the simplest way to understand it is that “a feasibility study is first carried out and documented in a report before a business plan is written to show how you can execute your plans to take the market”.

Stan, even though we don’t go writing you for those your valuable articles, which are changing a lot of lives for good, mullions of people are there silently waiting to read your article everyday. Thanks for impacting knowledge and sharing those priceless write-ups.

Thank you for the kind words and for being a reader, Elvis.

Stan, this has cleared my inquisition on the differentiating factor between the two.

I’m glad you found the article valuable, Daniel.

Thank you for the comment.

Thanks a lot for the article. My position as a Consulting Executive in my previous employment taught me that in industry every feasibility studies is accompanied by a business plan all in one report.

Business plans usually standalone for only existing businesses which usually requires such things as a new marketing or market research, cashflow analysis and asset reappraisal.

Thank you for the contribution, Jeremiah.

Indeed a detailed feasibility report is an in-depth business plan.

What is the difference between a marketing plan and bussines plan

We’d still post an article about that.

Do look out for it on the blog.

Thank you for asking.

Very insightful to say the least. Well done sir!

Thank you for the kind words, Tobechi.

Indeed you are doing a great job.i feel so blessed and fortunate to have such unquontifiable opportunity of learning daily,God bless you, thanks.

Thank you for the kind words, Gideon.

Hello, I wanto prepare a feasibility study report for a potential investor I have a meeting with in another 2 weeks. How do I reach you and where do we start from?

Stan, this is lovely I think I have a better conclusion n knowledge. God bless you.

Thank you for reading, Obi.

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What Is a Feasibility Study: Step-by-Step Guide

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Key takeaways

• A feasibility study is an essential analytical tool that evaluates the viability of a proposed project on multiple fronts, such as financials, technical requirements, and market demand.
• Conducted during the project initiation phase, this type of study serves as an early checkpoint to identify potential roadblocks and assess risks.
• Feasibility studies act as the first line of defense against project failure, saving time, money, and resources.

What is a feasibility study?

A feasibility study is an analytical tool used to evaluate the practicality of a proposed project or business idea. It assesses various factors such as financial viability, technical requirements, legal constraints, and market demand. The study aims to answer the question “Are the goals of this project realistically attainable?” by examining data, studies, and other relevant information.

A feasibility study is a crucial step to take before diving into any project and is generally performed during the project initiation phase of project management . It helps identify potential roadblocks, assess risks, and estimate resource allocation; skipping this step can lead to project failure, wasted resources, and financial losses.

Feasibility studies represent one of the many intricacies of project planning . Understanding the other requirements of this crucial step can give you a well-rounded view of how to set your project up for success.

Steps to conduct a feasibility study

Successfully executing a project hinges on thorough planning and risk assessment. Following this step-by-step guide for conducting a feasibility study will help you meticulously evaluate the viability of your project from the outset.

Step 1: Conduct preliminary analysis

This is where you take a good, hard look at your project to determine whether it’s worth pursuing. At this stage, you should also decide if a more detailed feasibility study is necessary.

A few key criteria usually come into play during this initial assessment. First, consider a general sense of the market demand for your project, the resources you have at your disposal, and some ballpark figures for initial costs. If it’s difficult to get clear estimates, it may be worthwhile to invest additional time and resources in a more comprehensive feasibility study. If no significant roadblocks pop up in this preliminary analysis, then you have the green light to proceed.

Some project management software includes useful features that can help you efficiently collect and organize all this data. These features can be very helpful in decision-making, especially when you’re looking at multiple variables.

Step 2: Create a projected income statement

This vital component of the feasibility study involves forecasting the income, expenses, and profitability associated with the proposed project. The projected income statement is akin to peering into a financial crystal ball to see how the numbers might align.

There are several approaches you can take to assess a project’s financial impact. Historical data and industry benchmarks, for example, can serve as reliable guides. These projections are important for assessing financial feasibility and making informed decisions.

The significance of these forecasts cannot be overstated — they help stakeholders understand the project’s potential ROI and ultimately make the go/no-go decision for the project.

Step 3: Survey the market

The market survey stage involves rolling up your sleeves to gather valuable data and insights about your target market(s) and audience(s). Think of it as your project’s reconnaissance mission: You’re scouting the terrain to understand what you’re getting into.

To start, you’ll want to learn your customers’ preferences to see if your project will fulfill a need or solve a problem they currently face. For example, a software company’s research might reveal customer demand for a new feature that aligns with the project’s goals.

Also consider if your project is timely and whether it will make a significant impact now or in the near future, depending on emerging market trends. It may be useful to conduct competitor research as well; knowing what and who you’re up against can help stakeholders decide whether you should move forward with the project and, if so, how you will approach it.

Surveys and interviews are ideal for firsthand quantitative and qualitative data. However, don’t underestimate the power of existing market reports. This preexisting data can offer a broad market landscape view, helping you make data-driven decisions. You can also leverage other research and data collection methods, such as focus groups and publicly available databases like Statista and the U.S. Census Bureau .

Step 4: Review and analyze the data

With all of the necessary information in hand, use tools like a SWOT analysis to evaluate the project’s strengths, weaknesses, opportunities, and threats. A risk assessment is another go-to method that can help you identify potential pitfalls that could derail your project.

At this point in the feasibility study, weigh key metrics and indicators like projected ROI, milestone dates, market penetration rates, and possible vulnerabilities. These gauges, when reviewed in tandem, paint a broader picture of your project’s viability and value.

Step 5: Determine the next steps

Use your research-backed analysis to decide whether the project you’ve proposed is the best way to address the problems it intends to address. If the metrics are favorable and the risks are manageable, you should feel confident advancing to the planning phase. Too many red flags, however, may mean you need to go back to the drawing board.

Here’s a little tech tip to make this decision easier: Many project management software dashboards can compile your key metrics and findings neatly in one visual package. It’s like having a project feasibility snapshot right at your fingertips, which makes it much easier for stakeholders to understand important data and make informed decisions.

Types of feasibility studies

There are different types of feasibility studies that each focus on a unique aspect of projects and project planning . By understanding the nuances of each, you’ll become better equipped to make well-informed decisions, mitigate risks, and ultimately steer your project toward success.

Technical feasibility

Technical feasibility digs into the nuts and bolts of the project. You’re looking at what kind of technology you’ll need, whether it’s available, and if it can be integrated into your current systems. It’s like checking if you have all the ingredients you need before cooking a specific recipe.

Economic feasibility

This study is all about the money — how much the project will cost and what kinds of economic or profitability benefits it will bring forth. With an economic feasibility study, you’re most often doing a cost-benefit analysis to see if the financials add up in your favor. It’s like weighing the pros and cons but in dollar signs. 

Legal feasibility

This is your legal checkpoint. You’re looking at any laws or regulations that might create risks or restrict your project. This feasibility study could also involve checking compliance with industry-specific or regional regulations.

Operational feasibility

An operational feasibility study will help you see how the project fits into your current operations and operational goals and resources. After completing this type of study, you should know if your project will require new workflows and if your team can handle project tasks alongside their current workloads.

This study also evaluates whether the organization has the expertise to accomplish all project goals.

Scheduling feasibility

This feasibility study is all about time. You’re considering how long the project will take and whether you can afford any delays. Gantt charts , a feature commonly found in project management software, can be convenient in this type of study.

These visual timelines allow you to map out the entire project schedule, set milestones, and identify potential bottlenecks. You can also easily see if your project’s timeline is realistic or if you need to make adjustments to avoid delays.

Feasibility study examples

Feasibility studies add value to the project lifecycle across diverse industries. With each of these examples, the feasibility study is a critical preliminary step to identify potential roadblocks and assess the likelihood of project success.

Construction

A construction project feasibility study might focus on land evaluation, zoning laws, and material costs to determine if a new housing development is viable. In this example, the study helps avoid legal snags and ensure profitable land use.

A healthcare feasibility study may assess the demand for a new medical facility in a specific location by looking at factors like local population health statistics and existing healthcare infrastructure. This type of research helps determine whether a new facility would serve the community appropriately and utilize resources effectively.

Information technology

An IT feasibility study might analyze the technical requirements, cost, and market demand for a new software application to understand whether the development effort would offer a reasonable return on investment. This information helps project teams avoid sinking time and money into software that no one wants or needs.

Free feasibility study template

Download our feasibility study template for free:

Why are feasibility studies crucial in project management?

In project management, feasibility studies help you gauge whether your project is a go or a no-go, saving you time, money, and a lot of headaches in the long run. But it’s not just about giving your project a thumbs-up or down.

Feasibility studies are also invaluable for decision-making and risk assessment. They provide the data and insights you need to make informed choices. Whether it’s deciding on the project scope, budget, or timeline, these studies offer a comprehensive view of what you’re up against.

Plus, feasibility studies help you identify potential roadblocks and risks, allowing you to prepare effective contingency plans. Operating with a feasibility study as your project’s foundation is like giving your team both a roadmap and a weather forecast to help you better navigate your project journey.

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What is Feasibility Study in Project Management?

Feasibility studies play a crucial role in the early stages of project development, offering invaluable insights into a project’s viability and potential challenges. In this blog, we’ll explore the fundamentals of feasibility study, types, components, Its Importance in project management, the process of conducting a feasibility study with real-world example, and the the difference between feasibility studies and business plans. 

Whether you’re new to project management or seeking to deepen your understanding, this guide provides a solid foundation on this critical aspect of project planning.

Table of Contents

• What is feasibility study?

Why Feasibility Study is Important During a Project?

What are the different types of feasibility study, what is included in a feasibility study report, how to conduct a feasibility study, an example of feasibility study, feasibility study vs. business plan, what is feasibility study.

A feasibility study is a crucial assessment tool in project management . It offers a systematic evaluation of a proposed project’s viability. This comprehensive analysis encompasses various dimensions, including technical, economic, legal, operational, and scheduling considerations. 

By analyzing these factors, the feasibility study aims to unearth potential obstacles, assess risks, and identify opportunities associated with the project. 

Through this process, stakeholders gain valuable insights to make informed decisions regarding the project’s feasibility and advisability.

Ultimately, the feasibility study culminates in a detailed report outlining its findings, recommendations, and justifications. This report serves as a roadmap for stakeholders, clearly understanding the project’s prospects and potential challenges. 

Armed with this information, decision-makers can determine whether to proceed with the project, make adjustments to mitigate risks or abandon it altogether. 

Thus, the feasibility study is key in guiding strategic decision-making, ensuring that resources are allocated wisely and projects are set up for success from the outset.

A feasibility study is important during a project for several reasons. Firstly, it serves as a critical decision-making tool, allowing stakeholders to assess the viability and potential risks associated with the project before significant resources are invested. 

By conducting the study early in the project lifecycle , organizations can avoid pursuing ventures unlikely to succeed, saving time, money, and effort.

Secondly, a feasibility study helps identify potential obstacles and challenges during the project execution phase. By thoroughly analyzing technical, economic, operational, and legal aspects, the study enables stakeholders to anticipate and mitigate risks, thus enhancing the project’s chances of success.

Moreover, a it provides a structured framework for evaluating different project alternatives and determining the most suitable action. By comparing various scenarios and assessing their feasibility, stakeholders can make well-informed decisions that align with organizational goals and priorities.

Additionally, the findings of a study help in securing buy-in and support from key stakeholders, including investors, sponsors, and senior management. 

A comprehensive feasibility study report communicates the motive behind the project, the potential benefits, and the associated risks, thereby instilling confidence and trust in the project’s viability.

Master Feasibility Study and Project Management skills by enrolling in our top project management courses now!

In bringing a project to completion, it’s crucial to gauge its feasibility from multiple angles. This comprehensive assessment examines various aspects, from technical capabilities to market demand. 

This section demonstrates the types of feasibility studies essential for project evaluation. From examining technological readiness to analyzing economic viability, operational compatibility, schedule adherence, and market potential, each study plays a crucial role in determining the project’s feasibility. 

Join us as we explore the significance of these studies in ensuring successful project outcomes.

Technical Feasibility Study

This study evaluates whether the proposed project can be implemented from a technical perspective. It evaluates factors such as available technology, expertise, infrastructure, and compatibility with existing systems. The goal is to determine if the necessary technical resources and capabilities are available to execute the project successfully.

Economic Feasibility Study

It helps evaluate a project’s financial viability. They analyze costs, benefits, and financial projections to determine whether the project is economically feasible and can generate a satisfactory return on investment (ROI). This study helps stakeholders understand the potential financial risks and rewards associated with the project.

Operational Feasibility Study

Operational feasibility studies consider whether the project aligns with the organization’s operational capabilities and objectives. 

They examine factors such as staffing requirements, workflow processes, organizational culture, and potential impacts on day-to-day operations. The goal is to ensure the project can be implemented smoothly and effectively within the existing operational framework.

Schedule Feasibility Study

Schedule feasibility studies evaluate whether the project can be completed within the specified time frame. They analyze project timelines , resource availability, dependencies, and potential risks to determine if the proposed schedule is realistic and achievable. This study helps stakeholders identify and mitigate potential schedule delays or bottlenecks.

Market Feasibility Study

Market feasibility studies focus on assessing the demand for the product or service in the target market. They analyze market trends, customer needs, competitive landscape, and potential market share to determine if there is sufficient demand to support the project. This study helps stakeholders understand the market dynamics and potential opportunities or challenges for the project.

Conducting a feasibility study is essential when initiating a project in project management. This study aims to assess the viability and potential success of the project idea. Several crucial factors are evaluated, including market demand, competition, financial stability, and resource requirements. 

A feasibility study in project management encompasses analyzing the technological needs, resource allocation and projected return on investment (ROI).

The findings of the feasibility study are consolidated into a report, typically comprising the following sections:

• Executive Summary
• Project Specifications
• Technological Considerations
• Market Analysis
• Marketing Strategy
• Organizational Structure and Staffing
• Project Schedule
• Financial Forecasts
• Recommendations based on Research

This structured approach ensures that project managers have a comprehensive understanding of the project’s feasibility, enabling informed decision-making and successful project execution.

Conducting a feasibility study is crucial for assessing the viability of a project or business opportunity. By analyzing financial projections, market demand, and operational requirements, organizations can make informed decisions about whether to proceed. 

This section explores the essential steps in conducting a feasibility study, assisting in effective decision-making and project success.

• Preliminary Study and Definition : Begin by conducting a preliminary study of the business case to define the scope of the feasibility study. Identify the key components to examine and establish realistic objectives. This step sets the foundation for the entire study.
• Forecast Income Statement : Generate a forecasted income statement to understand the project’s potential revenue sources and profitability. Analyze how the project will generate income and assess the feasibility of achieving financial goals. Additionally, conduct a market study to evaluate demand and market potential for the product or service.
• Plan Company Structure and Operations : Develop a plan for the company’s structure and operations. Determine the organizational structure needed for the project and assess resource requirements. Identify any specific personnel needs and outline operational processes to ensure efficient functioning.
• Generate Balance Sheet : Prepare a balance sheet to outline the projected income and expenses associated with the project. Evaluate the financial health of the project and assess the ability to achieve return on investment (ROI). This step provides insights into the project’s financial sustainability.
• Data Examination and Final Decision : Review and analyze all collected data before deciding whether to proceed with the project. Consider factors such as market demand, financial feasibility, operational capabilities, and risk assessment. Based on the findings, determine whether the project aligns with organizational goals and if it presents a viable business opportunity.

Conducting a feasibility study is imperative in manufacturing before embarking on projects like electric vehicle (EV) production. Manufacturers can ensure informed decisions and successful ventures by assessing market demand, financial viability, and technical feasibility. 

This comprehensive approach guarantees alignment with market dynamics and technological requirements, fostering competitiveness and sustainable growth in the manufacturing sector.

• Manufacturing Aspect: Let’s consider the production of electric vehicles (EVs) as an example within the manufacturing sector. Before starting the manufacturing process, a comprehensive feasibility study is essential to assess various aspects of the endeavor.
• Financial Aspect: Assessing the financial viability of manufacturing EVs involves analyzing the estimated costs of production, including labor, materials, components, and overhead expenses. Additionally, projected revenue from EV sales must be compared against production costs to determine if the venture is financially possible and can generate a sustainable return on investment.
• Market Aspect: Conducting a market feasibility study involves identifying target demographics for EVs and analyzing consumer preferences and purchasing behaviors. Market research helps estimate potential market demand, determine pricing strategies, and identify market trends and growth opportunities.
• Technical Aspect: Evaluating the technical feasibility of manufacturing EVs entails analyzing production processes, resource requirements, and technological capabilities. This includes assessing manufacturing facilities, equipment needs, supply chain logistics, and compliance with regulatory standards. Technical feasibility studies ensure that the manufacturing process is optimized for efficiency, quality, and scalability.

A feasibility study is conducted early in project development to assess its viability. At the same time, a business plan serves as a detailed roadmap for executing the project post-feasibility study, outlining strategic objectives and operational plans. 

it evaluate practicality, market demand, and risks, informing stakeholders’ decisions, whereas business plans provide comprehensive details for guiding the growth and development of the business over time.

Understanding the key role of feasibility studies in project management is essential for aspiring project managers. From grasping the fundamentals of feasibility studies to exploring their significance in project success, this guide provides comprehensive insights into this critical aspect of project planning. 

Professionals can make informed decisions, mitigate risks, and maximize project success by mastering the art of conducting feasibility studies. Ready to elevate your project management skills? Enroll in Project Management Courses at Invensis Learning today and embark on a journey towards becoming a proficient project management professional. 

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Difference between Feasibility Study and Business Plan

Entrepreneurs face many challenges when creating a new venture.  Although the business plan is one of the most well-known documents, the feasibility study may be just as important.  Before the entrepreneur can seek funding, he or she must demonstrate that the idea is truly a good one.

Rochester.edu explained that a feasibility study, “can be defined as a controlled process for identifying problems and opportunities, determining objectives, describing situations, defining successful outcomes, and assessing the range of costs and benefits associated with several alternatives for solving a problem.”

In order to create a feasibility study, entrepreneurs need to define dimensions of business viability including:  market viability, technical viability, business model viability, management model viability, economic and financial model viability, and exit strategy viability.

A good outline for a feasibility study includes:

• Introduction
• Product or Service
• Market Environment
• Competition
• Business Model
• Market and Sales Strategy
• Production Operations Requirements
• Management and Personnel Requirements
• Regulations and Environmental Issues
• Critical Risk Factors
• Financial Predictions Including:  Balance Sheet, Income Statement, Cash Flow Statement, Break Even Analysis, and Capital Requirements

A feasibility study is not the same thing as a business plan.  The feasibility study would be completed prior to the business plan.  The feasibility study helps determine whether an idea or business is a viable option.  The business plan is developed after the business opportunity is created.  StrategicBusinessTeam.com explained, “A feasibility study is carried out with the aim of finding out the workability and profitability of a business venture. Before anything is invested in a new business venture, a feasibility study is carried out to know if the business venture is worth the time, effort and resources. A feasibility study is filled with calculations, analysis and estimated projections while a business plan is made up of mostly tactics and strategies to be implemented in other to grow the business.”

While it may seem the feasibility study is similar in many ways to the business plan, it is important to keep in mind that the feasibility study is developed prior to the venture.  StrategicBusinessStream pointed out that “a feasibility study can readily be converted to a business plan.”  It’s important to think of the business plan in terms of growth and sustainability and the feasibility study in terms of idea viability.

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From Idea to Innovation: What Is a Feasibility Study In Research

Learn the process behind feasibility study in research, how it helps research projects, and the factors that make up a successful project.

Have you ever thought of doing something but wondered whether it’s doable or not? Obviously, there will be several constraints when we wish to do something unique. To understand all these constraints and to check whether the idea that we have in our mind is beneficial or not, we do this preparatory work called a feasibility study.

A feasibility study is like a reality check for your idea, helping you determine if it’s really worth pursuing. In this article, we will discuss what is a feasibility study in research , various aspects of the feasibility study, how it is engaged, how it has to be checked, and how it helps us create a perfect model for our idea.

What is a Feasibility Study in Research? 

A feasibility study is an in-depth assessment conducted to determine the practicality and viability of a proposed project or idea. It involves evaluating various factors such as technical, economic, legal, operational, and scheduling aspects to ascertain whether the project can be successfully implemented.

The purpose of a feasibility study is to provide objective and unbiased information to decision-makers, enabling them to make informed choices regarding the project’s future. It helps identify potential risks, challenges, and opportunities associated with the undertaking, allowing stakeholders to gauge its potential outcomes.

By conducting a feasibility study, decision-makers can determine if the project aligns with organizational goals, identify potential hurdles, and develop contingency plans. This systematic assessment ensures that resources are allocated efficiently and that projects with a high chance of success are pursued.  

What is the Purpose of the Feasibility Study?

A feasibility study serves as a vital tool for assessing the practicality and viability of a proposed project or initiative before committing significant resources to its implementation. It is a comprehensive evaluation that considers various factors such as technical, economic, legal, operational, and scheduling aspects, providing stakeholders with crucial insights to make informed decisions.

First and foremost, a feasibility study helps identify the project’s objectives and determine whether they align with the organization’s overall goals. It allows stakeholders to assess the project’s potential benefits and weigh them against the associated risks. By conducting a feasibility study, decision-makers can gain a clearer understanding of the project’s potential impact on the organization’s resources, capabilities, and market position.

Examination of technical feasibility

One key aspect of a feasibility study is the examination of technical feasibility. This involves evaluating whether the proposed project can be implemented using available technology, infrastructure, and expertise. It helps identify potential technical constraints or challenges that may arise during project execution and allows for appropriate contingency planning.

Furthermore, a feasibility study evaluates the economic viability of a project. It involves conducting a detailed cost-benefit analysis to determine the financial implications associated with the project. This analysis helps stakeholders understand the potential return on investment, project profitability, and the timeline for cost recovery.

Related Article: What is Geospatial Analysis? The Plan Before the Actual Plan

Types of Feasibility Studies

There are several types of feasibility studies, each with its own specific focus and objectives. Some of the most common types of feasibility studies include:

• Technical feasibility study: This type of study assesses whether the proposed project can be implemented using available technology, infrastructure, and expertise. It identifies potential technical constraints or challenges that may arise during project execution and allows for appropriate contingency planning.
• Economic feasibility study: This type of study involves conducting a detailed cost-benefit analysis to determine the financial implications associated with the project. It helps stakeholders understand the potential return on investment, project profitability, and the timeline for cost recovery.
• Legal feasibility study: This type of study examines the legal and regulatory requirements associated with the project. By identifying any legal hurdles or compliance issues early on, organizations can ensure that the project aligns with legal frameworks and minimizes the risk of legal complications down the line.
• Operational feasibility study: This type of study assesses whether the project can be smoothly integrated into existing systems and processes. It examines factors such as staffing requirements, training needs, and potential impacts on day-to-day operations.
• Scheduling feasibility study: This type of study helps establish a realistic timeline for project completion. It considers the availability of resources, dependencies, and potential bottlenecks, allowing stakeholders to develop a well-structured project plan and set achievable milestones.
• Market feasibility study: This type of study evaluates the potential demand for the proposed project in the marketplace. It examines factors such as customer preferences, competition, and market trends to determine whether the project is likely to be successful.
• Environmental feasibility study: This type of study assesses the potential environmental impacts of the proposed project. It examines factors such as air and water quality, habitat destruction, and waste management to ensure that the project is sustainable and environmentally responsible.

Overall, the type of feasibility study conducted will depend on the specific objectives of the proposed project and the information needed to make informed decisions about its implementation.

How to Conduct a Feasibility Study?

A feasibility study is an important step in evaluating the viability of a proposed project or business venture. The study is typically conducted before any significant investment is made to determine whether the project is feasible, both financially and operationally. Here are the general steps to conduct a feasibility study:

Step 1 – Define the scope of the study

Clearly define the objectives of the feasibility study and the specific questions that need to be answered. Identify the stakeholders who will be involved in the study and their roles and responsibilities.

Step 2 – Conduct market research

Research the market and competition to determine the potential demand for the product or service, as well as the size and characteristics of the target market. Analyze the existing competition and identify any gaps in the market that the proposed project could fill.

Step 3 – Evaluate the operational feasibility

Assess the operational feasibility of the proposed project, including the availability of resources, skills, and expertise needed to execute the project.

Step 4 – Identify potential risks

Identify potential risks and challenges that could impact the success of the proposed project. Develop contingency plans to mitigate these risks.

Step 5 – Make recommendations

Based on the results of the feasibility study, make recommendations about whether or not to move forward with the proposed project and, if so, what steps should be taken to ensure its success.

It’s important to note that the specific steps and level of detail required for a feasibility study may vary depending on the nature and complexity of the project. A feasibility study is a critical step in the decision-making process and should be conducted thoroughly and objectively to ensure that all aspects of the proposed project have been evaluated.

How to Write a Feasibility Study?

Writing a feasibility study involves conducting a systematic analysis to determine the viability and potential success of a proposed project or initiative. Here are the steps to help you write a feasibility study: 

• Executive Summary: Provide a brief overview of the project, its objectives, and the purpose of the feasibility study.
• Introduction : Describe the background and context of the project, including its goals, scope, and any relevant background information.
• Project Description: Provide a detailed description of the project, outlining its objectives, deliverables, and expected outcomes. Include information on the target audience or beneficiaries.
• Market Analysis: Assess the market conditions and demand for the proposed project. Identify the target market, competitors, and potential customers. Analyze market trends, growth prospects, and any potential challenges or risks.
• Technical Feasibility: Evaluate the technical aspects of the project, such as the required infrastructure, technology, resources, and expertise. Determine if the necessary resources and capabilities are available or can be acquired within the project’s constraints.
• Financial Feasibility: Conduct a thorough financial analysis of the project. Estimate the initial investment costs, operational expenses, and projected revenues. Evaluate the project’s profitability, return on investment (ROI), payback period, and other financial indicators. Consider potential funding sources and financing options.
• Organizational Feasibility: Assess the project’s compatibility with the existing organizational structure and capabilities. Evaluate the availability of skilled personnel, management support, and any potential impact on the organization’s operations. Consider any legal, regulatory, or compliance requirements.
• Risk Analysis: Identify and evaluate potential risks and uncertainties associated with the project. Analyze both internal and external factors that may impact the project’s success. Develop risk mitigation strategies and contingency plans.
• Implementation Plan: Outline a detailed plan for implementing the project. Define the necessary steps, timelines, and responsibilities. Consider resource allocation, project management methodologies, and any potential challenges during the implementation phase.
• Summarize your findings: Write a clear and concise summary of your findings and conclusions. This should include an assessment of the project’s overall feasibility, a description of any risks or challenges, and a recommendation on whether or not to proceed with the project.

Examples of Feasibility Studies

It typically examines various aspects such as technical, economic, legal, operational, and scheduling factors. Here are some examples of feasibility studies conducted for different purposes: 

• New Business Venture: A study to determine the feasibility of opening a new restaurant, including analysis of market demand, location suitability, competition, and financial projections.
• Real Estate Development: An evaluation of the feasibility of constructing a shopping mall, considering factors such as land availability, market demand, construction costs, potential tenants, and expected return on investment.
• Renewable Energy Project: Assessing the feasibility of establishing a solar power plant, including examination of solar resources, land requirements, grid connectivity, financial analysis, and environmental impact.
• Information Technology System: A study to determine the feasibility of implementing a new software system within an organization, analyzing factors like system requirements, compatibility, cost-benefit analysis, and potential impact on existing operations.

These are some examples of feasibility studies and it is very important to note that though the process looks the same for every domain of work, the concept will be different for each one of them so it is important to analyze the domain before getting to work on it.

What is a feasibility study?

A feasibility study evaluates the potential success of a project or idea, usually conducted before its implementation. It examines various factors like technical, economic, legal, and operational feasibility to determine whether the project is viable.

Why is a feasibility study important?

A feasibility study is important because it helps to identify potential risks and challenges that may arise during the project implementation. It also helps to determine the project’s potential profitability, return on investment, and overall success.

Who conducts a feasibility study?

A feasibility study is typically conducted by a team of experts, including engineers, financial analysts, legal experts, and other relevant professionals, depending on the nature of the project.

What are the key elements of a feasibility study?

The key elements of a feasibility study include market analysis, technical analysis, financial analysis, legal analysis, operational analysis, and risk analysis.

What is market analysis in a feasibility study?

Market analysis in a feasibility study involves researching the target market and analyzing factors such as demand, competition, pricing, and customer behavior.

What is technical analysis in a feasibility study?

Technical analysis in a feasibility study involves examining the technical requirements of the project, such as equipment, materials, and construction methods.

What is a financial analysis in a feasibility study?

Financial analysis in a feasibility study involves examining the financial aspects of the project, such as the expected costs, revenue, return on investment, and profitability.

What is a legal analysis in a feasibility study?

Legal analysis in a feasibility study involves examining the legal requirements and regulations that may affect the project, such as permits, licenses, zoning laws, and environmental regulations.

What is an operational analysis in a feasibility study?

An operational analysis in a feasibility study involves examining the day-to-day operations of the project, such as staffing, management, and workflow.

What is a risk analysis in a feasibility study?

Risk analysis in a feasibility study involves identifying potential risks and challenges that may arise during the project implementation, such as technical problems , market changes, or regulatory issues.

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Table of Contents

What is a feasibility study, understanding a feasibility study, types of feasibility study, importance of feasibility study, benefits of a feasibility study, what is included in a feasibility study report, tools for conducting a feasibility study, examples of a feasibility study, what is the purpose of a feasibility study, how do you write a feasibility study, 7 steps to do a feasibility study, how to conduct a feasibility study, feasibility study vs. business plan, reasons to do or not to do a feasibility study, enroll today with these pgp on project management to enhance your skills, feasibility study: importance, types and examples.

Reviewed and fact-checked by Sayantoni Das

The growth and recognition of project management training have changed significantly over the past few years, and these changes are expected to continue and expand. And with the rise of project management comes the need for a feasibility study.

It can be thrilling to start a complex, large-scale project with a significant impact on your company. You are creating real change. Failure can be scary.  This article will help you get started if you have never done a feasibility study on project management.

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A feasibility study is a comprehensive evaluation of a proposed project that evaluates all factors critical to its success in order to assess its likelihood of success. Business success can be defined primarily in terms of ROI, which is the amount of profits that will be generated by the project.

A feasibility study evaluates a project's or system's practicality. As part of a feasibility study, the objective and rational analysis of a potential business or venture is conducted to determine its strengths and weaknesses, potential opportunities and threats, resources required to carry out, and ultimate success prospects. Two criteria should be considered when judging feasibility: the required cost and expected value.

As the name implies, a feasibility analysis is used to determine the viability of an idea, such as ensuring a project is legally and technically feasible as well as economically justifiable. It tells us whether a project is worth the investment—in some cases, a project may not be doable. There can be many reasons for this, including requiring too many resources, which not only prevents those resources from performing other tasks but also may cost more than an organization would earn back by taking on a project that isn’t profitable.

A well-designed study should offer a historical background of the business or project, such as a description of the product or service, accounting statements, details of operations and management, marketing research and policies, financial data, legal requirements, and tax obligations. Generally, such studies precede technical development and project implementation.

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Project management is the process of planning, organizing, and managing resources to bring about the successful completion of specific project goals and objectives. A feasibility study is a preliminary exploration of a proposed project or undertaking to determine its merits and viability. A feasibility study aims to provide an independent assessment that examines all aspects of a proposed project, including technical, economic, financial, legal, and environmental considerations. This information then helps decision-makers determine whether or not to proceed with the project.

The feasibility study results can also be used to create a realistic project plan and budget. Without a feasibility study, it cannot be easy to know whether or not a proposed project is worth pursuing.

A feasibility analysis evaluates the project’s potential for success; therefore, perceived objectivity is an essential factor in the credibility of the study for potential investors and lending institutions. There are five types of feasibility study—separate areas that a feasibility study examines, described below.

1. Technical Feasibility

This assessment focuses on the technical resources available to the organization. It helps organizations determine whether the technical resources meet capacity and whether the technical team is capable of converting the ideas into working systems. Technical feasibility also involves the evaluation of the hardware, software, and other technical requirements of the proposed system. As an exaggerated example, an organization wouldn’t want to try to put Star Trek’s transporters in their building—currently, this project is not technically feasible.

2. Economic Feasibility

This assessment typically involves a cost/ benefits analysis of the project, helping organizations determine the viability, cost, and benefits associated with a project before financial resources are allocated. It also serves as an independent project assessment and enhances project credibility—helping decision-makers determine the positive economic benefits to the organization that the proposed project will provide.

3. Legal Feasibility

This assessment investigates whether any aspect of the proposed project conflicts with legal requirements like zoning laws, data protection acts or social media laws. Let’s say an organization wants to construct a new office building in a specific location. A feasibility study might reveal the organization’s ideal location isn’t zoned for that type of business. That organization has just saved considerable time and effort by learning that their project was not feasible right from the beginning.

4. Operational Feasibility

This assessment involves undertaking a study to analyze and determine whether—and how well—the organization’s needs can be met by completing the project. Operational feasibility studies also examine how a project plan satisfies the requirements identified in the requirements analysis phase of system development.

5. Scheduling Feasibility

This assessment is the most important for project success ; after all, a project will fail if not completed on time. In scheduling feasibility, an organization estimates how much time the project will take to complete.

When these areas have all been examined, the feasibility analysis helps identify any constraints the proposed project may face, including:

• Internal Project Constraints: Technical, Technology, Budget, Resource, etc.
• Internal Corporate Constraints: Financial, Marketing, Export, etc.
• External Constraints: Logistics, Environment, Laws, and Regulations, etc.

The importance of a feasibility study is based on organizational desire to “get it right” before committing resources, time, or budget. A feasibility study might uncover new ideas that could completely change a project’s scope. It’s best to make these determinations in advance, rather than to jump in and to learn that the project won’t work. Conducting a feasibility study is always beneficial to the project as it gives you and other stakeholders a clear picture of the proposed project. 

Below are some key benefits of conducting a feasibility study:

• Improves project teams’ focus
• Identifies new opportunities
• Provides valuable information for a “go/no-go” decision
• Narrows the business alternatives
• Identifies a valid reason to undertake the project
• Enhances the success rate by evaluating multiple parameters
• Aids decision-making on the project
• Identifies reasons not to proceed

Apart from the approaches to feasibility study listed above, some projects also require other constraints to be analyzed -

Preparing a project's feasibility study is an important step that may assist project managers in making informed decisions about whether or not to spend time and money on the endeavor. Feasibility studies may also help a company's management avoid taking on a tricky business endeavor by providing them with critical information.

An additional advantage of doing a feasibility study is that it aids in the creation of new ventures by providing information on factors such as how a company will work, what difficulties it could face, who its competitors are, and how much and where it will get its funding from. These marketing methods are the goal of feasibility studies, which try to persuade financiers and banks whether putting money into a certain company venture makes sense.

When starting a business, one of the most important steps is to conduct a feasibility study. This study will help to determine if your business idea is viable and has the potential to be successful. Several factors need to be considered when conducting a feasibility study, including the marketability of your product or service, the competition, the financial stability of your company, and more. A feasibility study should cover the amount of technology, resources required, and ROI.

The results of your feasibility studies study are summarized in a feasibility report, which typically comprises the following sections.

• Executive summary
• Specifications of the item or service
• Considerations for the future of technology
• The marketplace for goods and services
• Approach to marketing
• Organization/staffing
• The financial forecasts
• Recommendations based on research

Suggested Best Practices

While every project has its own goals and needs, the following are best practices for conducting a feasibility study.

• Do a preliminary analysis. This includes getting feedback from relevant stakeholders on the new project. Also, look for other business scenarios.
• To ensure that the data is solid, determine and ask queries about it in the initial phase.
• Take a market survey to identify market demand and opportunities for the new concept or business.
• Create an organizational, operational, or business plan. This includes identifying how much labor is required, what costs, and how long.
• Make a projected income statement that involves revenue, operating expenses, and profit.
• Create an opening day balance sheet.
• You will need to identify and address any vulnerabilities or obstacles.
• Take an initial decision to go ahead with the plan.

Suggested Components

Here are the some suggested components for conducting a feasibility study:

• Executive Summary: Write a narrative describing the project, product, or service.
• Technological considerations: Ask yourself what it will take. Are you able to afford it? How much will it cost?
• Current marketplace: Find out the market for your product, service, or plan in the local and global markets.
• Marketing strategy: Define in the detailed description.
• Required staff: What human resources are needed for this project?
• Timeline and schedule: Use important interim markers to indicate when the project will be completed.
• Project financials. Project financials are the different ways managers can account for money spent and earned on projects. One of the most important aspects of financial management is creating and tracking accurate project financials.

A local university was concerned about the state of the science building, which was built in the 1970s. School officials sought to determine the costs and benefits of expanding and upgrading the building, given the scientific and technological advances over the past 20 years. A feasibility study was therefore conducted.

School officials looked at several options and weighed the costs and benefits of updating and expanding the science building. There were concerns expressed by school officials about the project's cost and public reaction. The proposed new science building will be larger than the current one. The community board rejected similar proposals in the past. The feasibility study will address these concerns and any possible legal or zoning issues.

The feasibility study examined the technology requirements of the proposed concept(new science building), the potential benefits for students, and its long-term viability. Modernizing the science facility will increase the scientific research potential and ameliorate its modules. It also would allure new students.

Financial projections provided information about the scope & cost of this project and also provided information on raising funds. This covers issuing an investor's bonds and tapping into its endowment. Projections also help determine how the new science program attracts more fresh students to enroll in offered programs, increasing tuition and fees revenue.

The feasibility study proved that the proposed concept was feasible, which allowed for the expansion and modernization of the science building. The feasibility study would not have allowed school administrators to know if the expansion plans were feasible without it.

A feasibility study is an important first step in starting a new business. It is a detailed examination of whether or not a proposed business venture is likely to be successful. A feasibility study aims to provide information that will help business owners make informed decisions about their new venture.

The feasibility study will answer important questions about the proposed business, including:

• What is the target market for this business?
• Who are the competitors?
• What are the costs associated with starting and running this business?
• What are the potential risks and rewards associated with this venture?
• How much revenue can this business generate?
• What are the estimated profits and losses for this business?
• What is the potential for growth in this industry?

This feasibility study will outline why your business idea is worth pursuing and will also help you identify any potential risks or problems that could occur. When writing a feasibility study, there are a few key things to keep in mind:

• Outline your target market and how you plan to reach them.
• Discuss your product or service in detail and explain why it is unique and needed.
• Outline your financial projections and explain how you plan to make a profit.

1. Conduct a Preliminary Analysis

A preliminary investigation is necessary to determine whether a full feasibility study is warranted. During this stage, key information will be gathered to assess the project's potential and make a preliminary decision about its feasibility. This should include a review of relevant documents, interviews with key personnel, and surveys of potential customers or users.

2. Prepare a Projected Income Statement

To do a feasibility study, you must create a projected income statement. Your projected income statement will show how much money your business is expected to make in the coming year. It will include both your estimated revenue and your estimated expenses. This document will be essential in helping you make informed decisions about your business.

3. Conduct a Market Survey, or Perform Market Research

Conducting market research is an important step in any feasibility study. By understanding the needs and wants of your potential customers, you can determine if there is a market for your product or service. You can also get an idea of what your competition is doing and how to best position your business to meet the needs of your target market.

There are a variety of ways to conduct market research. One popular method is to conduct a survey. You can survey potential customers directly or use data from secondary sources such as surveys conducted by other organizations. You can also use focus groups or interviews to get feedback from potential customers.

Once you have gathered your data, you can use it to create a profile of your ideal customer. This will help you understand your target market and how to reach them.

4. Plan Business Organization and Operations

When starting a business, one of the first things you need is to plan your organization and operations. This involves creating a structure for your company and figuring out the logistics of how you will run it. There are many factors to consider when planning your organization and operations, such as:

• Company Structure: What type of company will you be (sole proprietorship, partnership, corporation, etc.)? What will the hierarchy look like?
• Location: Where will your business be located? Will you have a physical storefront or operate online only?
• Marketing: How will you promote your business?

5. Prepare an Opening Day Balance Sheet

The opening day balance sheet is a snapshot of the company's financial position at the beginning of the business venture. The purpose of the opening day balance sheet is to give an idea of the amount of money that the company has to work with and track its expenses and income as they occur. This information is vital to making sound business decisions. The opening day balance sheet will include the following:

• Cash on hand
• Accounts receivable
• Prepaid expenses
• Fixed assets
• Accounts payable
• Notes payable
• Long-term liabilities

6. Review and Analyze All Data

The feasibility study should include reviewing and analyzing all data relevant to the proposed project. The data collected should be verified against source documentation, and any discrepancies should be noted. The purpose of the feasibility study is to provide a basis for making a decision, and the data should be sufficient to support that decision.

The analysis should consider both the positive and negative aspects of the proposed project. The financial analysis should be thorough, and all assumptions should be documented. The risk assessment should identify any potential risks and mitigation strategies. The team assigned to the project should review the feasibility study and recommend the organization's leadership.

Organizational leadership should decide whether to proceed with the project based on the feasibility study's findings. If the project is approved, the organization should develop a project plan that includes a detailed budget and timeline

7. Make a Go/No-Go Decision

It is important to know when to cut your losses when starting a business. The go/no-go decision in a feasibility study comes in. The go/no-go decision is a key part of a feasibility study, and it can help you determine whether or not your business idea is worth pursuing.

Making the go/no-go decision is all about risk assessment. You need to weigh the risks and rewards of starting your business and decide whether the potential rewards are worth the risks. If the risks are too high, you may want to reconsider your business idea.

Now, let's discuss a few of the steps we take in order to do the feasibility study.

• To begin, we do a preliminary study of the business case to define what is included and what we are examining and attempting to find is realistic.
• Following that, we generate a forecasted income statement. We need to understand the revenue sources; how are we going to profit from this? Where does the income originate? Additionally, we must do a market study.
• We need to find out whether this is a demand for our product. How much demand does this have? Is there a market for this product or service?
• Plan your company's structure and operations, which is the fourth step. Specifically, what type of organization do we need, and what resources do we have? Do we have any specific personnel needs?
• We also plan to generate a balance sheet on the first day. What are the income and expenses, and how can we be confident we'll be able to decide whether we're going to make our ROI?
• As a result, we plan to go through and examine all of our data before making a final decision on whether or not to go forward. In other words, are we going to pursue this project or business opportunity?

When starting a business, you must create two very important documents: a feasibility study and a business plan. While they may seem similar, they are two different things with different purposes.

A feasibility study is a preliminary document that assesses the feasibility of a proposed business. It looks at the market potential, the competition, the costs and benefits of starting the business, and the risks and rewards involved.

On the other hand, a business plan is a more detailed document that outlines how a business will be run and what its goals are. It includes information about its mission statement, its products and services, its target market, its finances, and its management team.

There are many factors to consider when deciding whether or not to conduct a feasibility study. The most important question is whether the study will help you make a better decision.

Some reasons to do a feasibility study include:

• You are considering a major change or investment
• You want to assess the viability of a new business or product
• You need to understand the risks and potential rewards associated with a project

On the other hand, some reasons not to do a feasibility study include:

• You are pressed for time and don't think the study will provide enough value to justify the time commitment.
• You are confident that your idea is feasible, and a study will only confirm what you already believe.
• The change or investment is not significant enough to warrant the study.
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This article introduces the concept of a feasibility study and provides a few tips on conducting one. A feasibility study is an important tool for evaluating a project before starting it. By understanding the feasibility of a project, you can make better decisions about whether to move forward.

We hope this helped you understand the concept of feasibility study better. To learn more about similar project management concepts , explore our library of Project Management articles or check out our Post Graduate Program in Project Management that covers new trends, emerging practices, tailoring considerations, and core competencies required of a Project Management professional .

Q1. What Is the Main Objective of a Feasibility Study?

Feasibility study helps decision makers to determine the success or failure of a proposed project or investment. It evaluates the predicted cost and benefits of the proposed project. 

Q2. What Are the Steps in a Feasibility Study?

The first step in a feasibility study is to conduct the primary analysis and create the projected income statement. Followed by doing a market survey and accordingly planning business operations. The last step is to create a balance sheet to review and analyze data. Based on your analysis, you can decide whether to go or not go ahead with the proposed statement. 

Q3. Who Conducts a Feasibility Study?

Feasibility study is done by the senior management of the organization. Sometimes, they take help from mid-senior employees to complete the analysis in short span of time. 

Q4. What Are the 5 Types of Feasibility?

The 5 types of feasibility study are Scheduling Feasibility, Operational Feasibility, Legal Feasibility, Economic Feasibility, and Technical Feasibility. 

Q5. Why is a Feasibility Study Important?

A feasibility study helps in identifying the financial, market and logistical challenges of a proposed project. It is done by evaluating the estimated funds for the project and return of investment.

Q6. When is the Feasibility Study Done?

The feasibility study is done before the business plan is created. 

Q7. What is the Primary Purpose of Conducting a Feasibility Analysis?

The objective of feasibility study is to assess the financial viability of developed plan and whether it will be successful or not.

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What Is a Feasibility Study? How to Conduct One for Your Project

Why is a feasibility study so important in project management? For one, the feasibility study or feasibility analysis is the foundation upon which your project plan resides. That’s because the feasibility analysis determines the viability of your project. Now that you know the importance, read on to learn what you need to know about feasibility studies.

What Is a Feasibility Study?

A feasibility study is simply an assessment of the practicality of a proposed project plan or method. This is done by analyzing technical, economic, legal, operational and time feasibility factors. Just as the name implies, you’re asking, “Is this feasible?” For example, do you have or can you create the technology that accomplishes what you propose? Do you have the people, tools and resources necessary? And, will the project get you the ROI you expect?

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Feasibility study template

Use this free Feasibility Study Template for Word to manage your projects better.

What’s the Importance of a Feasibility Study?

A project feasibility study should be done during the project management life cycle after the business case has been completed. So, that’s the “what” and the “when” but how about the “why?” Why is it important to conduct a feasibility study?

An effective feasibility study points a project in the right direction by helping decision-makers have a holistic view of the potential benefits, disadvantages, barriers and constraints that could affect its outcome. The main purpose of a feasibility study is to determine whether the project can be not only viable but also beneficial from a technical, financial, legal and market standpoint.

What Is Included in a Feasibility Study Report?

The findings of your project feasibility study are compiled in a feasibility report that usually includes the following elements.

• Executive summary
• Description of product/service
• Technology considerations
• Product/service marketplace
• Marketing strategy
• Organization/staffing
• Financial projections
• Findings and recommendations

Free Feasibility Study Template

Use this free feasibility study template for Word to begin your own feasibility study. It has all the fundamental sections for you to get started, and it’s flexible enough to adapt to your specific needs. Download yours today.

Types of Feasibility Study

There are many things to consider when determining project feasibility, and there are different types of feasibility studies you might conduct to assess your project from different perspectives.

Pre-Feasibility Study

A pre-feasibility study, as its name suggests, it’s a process that’s undertaken before the feasibility study. It involves decision-makers and subject matter experts who will prioritize different project ideas or approaches to quickly determine whether the project has fundamental technical, financial, operational or any other evident flaws. If the project proposal is sound, a proper feasibility study will follow.

Technical Feasibility Study

A technical feasibility study consists in determining if your organization has the technical resources and expertise to meet the project requirements . A technical study focuses on assessing whether your organization has the necessary capabilities that are needed to execute a project, such as the production capacity, facility needs, raw materials, supply chain and other inputs. In addition to these production inputs, you should also consider other factors such as regulatory compliance requirements or standards for your products or services.

Economic Feasibility Study

Also called financial feasibility study, this type of study allows you to determine whether a project is financially feasible. Economic feasibility studies require the following steps:

• Before you can start your project, you’ll need to determine the seed capital, working capital and any other capital requirements, such as contingency capital. To do this, you’ll need to estimate what types of resources will be needed for the execution of your project, such as raw materials, equipment and labor.
• Once you’ve determined what project resources are needed, you should use a cost breakdown structure to identify all your project costs.
• Identify potential sources of funding such as loans or investments from angel investors or venture capitalists.
• Estimate the expected revenue, profit margin and return on investment of your project by conducting a cost-benefit analysis , or by using business forecasting techniques such as linear programming to estimate different future outcomes under different levels of production, demand and sales.
• Estimate your project’s break-even point.
• Conduct a financial benchmark analysis with industrial averages and specific competitors in your industry.
• Use pro forma cash flow statements, financial statements, balance sheets and other financial projection documents.

Legal Feasibility Study

Your project must meet legal requirements including laws and regulations that apply to all activities and deliverables in your project scope . In addition, think about the most favorable legal structure for your organization and its investors. Each business legal structure has advantages and disadvantages when it comes to liability for business owners, such as limited liability companies (LLCs) or corporations, which reduce the liability for each business partner.

Market Feasibility Study

A market feasibility study determines whether your project has the potential to succeed in the market. To do so, you’ll need to analyze the following factors:

• Industry overview: Assess your industry, such as year-over-year growth, identify key direct and indirect competitors, availability of supplies and any other trends that might affect the future of the industry and your project.
• SWOT analysis: A SWOT analysis allows organizations to determine how competitive an organization can be by examining its strengths, weaknesses and the opportunities and threats of the market. Strengths are the operational capabilities or competitive advantages that allow an organization to outperform its competitors such as lower costs, faster production or intellectual property. Weaknesses are areas where your business might be outperformed by competitors. Opportunities are external, such as an underserved market, an increased demand for your products or favorable economic conditions. Threats are also external factors that might affect your ability to do well in the market such as new competitors, substitute products and new technologies.
• Market research: The main purpose of market research is to determine whether it’s possible for your organization to enter the market or if there are barriers to entry or constraints that might affect your ability to compete. Consider variables such as pricing, your unique value proposition, customer demand, new technologies, market trends and any other factors that affect how your business will serve your customers. Use market research techniques to identify your target market, create buyer personas, assess the competitiveness of your niche and gauge customer demand, among other things.

7 Steps to Do a Feasibility Study

If you’re ready to do your own feasibility study, follow these 7 steps. You can use this free feasibility study template to help you get started.

1. Conduct a Preliminary Analysis

Begin by outlining your project plan . You should focus on an unserved need, a market where the demand is greater than the supply and whether the product or service has a distinct advantage. Then, determine if the feasibility factors are too high to clear (i.e. too expensive, unable to effectively market, etc.).

2. Prepare a Projected Income Statement

This step requires working backward. Start with what you expect the income from the project to be and then what project funding is needed to achieve that goal. This is the foundation of an income statement. Factor in what services are required and how much they’ll cost and any adjustments to revenues, such as reimbursements, etc.

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3. Conduct a Market Survey or Perform Market Research

This step is key to the success of your feasibility study, so make your market analysis as thorough as possible. It’s so important that if your organization doesn’t have the resources to do a proper one, then it is advantageous to hire an outside firm to do so.

Market research will give you the clearest picture of the revenues and return on investment you can realistically expect from the project. Some things to consider are the geographic influence on the market, demographics, analyzing competitors, the value of the market and what your share will be and if the market is open to expansion (that is, in response to your offer).

4. Plan Business Organization and Operations

Once the groundwork of the previous steps has been laid, it’s time to set up the organization and operations of the planned project to meet its technical, operational, economic and legal feasibility factors. This isn’t a superficial, broad-stroke endeavor. It should be thorough and include start-up costs, fixed investments and operating costs. These costs address things such as equipment, merchandising methods, real estate, personnel, supply availability, overhead, etc.

5. Prepare an Opening Day Balance Sheet

This includes an estimate of the assets and liabilities, one that should be as accurate as possible. To do this, create a list that includes items, sources, costs and available financing. Liabilities to consider are such things as leasing or purchasing land, buildings and equipment, financing for assets and accounts receivables.

6. Review and Analyze All Data

All of these steps are important, but the review and analysis are especially important to ensure that everything is as it should be and that nothing requires changing or tweaking. Take a moment to look over your work one last time.

Reexamine your previous steps, such as the income statement, and compare them with your expenses and liabilities. Is it still realistic? This is also the time to think about risk and come up with any contingency plans .

7. Make a Go/No-Go Decision

You’re now at the point to make a decision about whether or not the project is feasible. That sounds simple, but all the previous steps lead to this decision-making moment. A couple of other things to consider before making that binary choice are whether the commitment is worth the time, effort and money and whether it aligns with the organization’s strategic goals and long-term aspirations.

Feasibility Study Examples

Here are some simple feasibility study examples so you have a better idea of what a feasibility study is used for in different industries.

Construction Feasibility Study

For this construction feasibility study example, let’s imagine a large construction company that’s interested in starting a new project in the near future to generate profits.

• Pre-Feasibility Study: The first step is to conduct a preliminary feasibility study. It can be as simple as a meeting where decision-makers will prioritize projects and discuss different project ideas to determine which poses a bigger financial benefit for the organization.
• Technical Feasibility Study: Now it’s time to estimate what resources are needed to execute the construction project, such as raw materials, equipment and labor. If there’s work that can’t be executed by the company with its current resources, a subcontractor will be hired to fill the gap.
• Economic Feasibility Study: Once the construction project management team has established what materials, equipment and labor are needed, they can estimate costs. Cost estimators use information from past projects, construction drawings and documents such as a bill of quantities to come up with an accurate cost estimate. Then, based on this estimate, a profit margin and financial forecasts will be analyzed to determine if there’s economic feasibility.
• Legal Feasibility Study: Now the company needs to identify all potential regulations, building codes and laws that might affect the project. They’ll need to ask for approval from the local government so that they can begin the construction project .
• Market Feasibility Study: Market feasibility will be determined depending on the nature of the project. For this feasibility example, let’s assume a residential construction project will be built. To gauge market potential, they’ll need to analyze variables such as the average income of the households in the city, crime rate, population density and any trends in state migration.

Manufacturing Feasibility Study

Another industry that uses feasibility studies is manufacturing. It’s a test run of the steps in the manufacturing production cycle to ensure the process is designed properly. Let’s take a look at what a manufacturing feasibility study example would look like.

• Feasibility Study: The first step is to look at various ideas and decide which is the best one to pursue. You don’t want to get started and have to stop. That’s a waste of time, money and effort. Look at what you intend to manufacture, does it fill an unserved need, is the market able to support competition and can you manufacture a quality product on time and within your budget?
• Financial Feasibility Study: Find out if your estimated income from the sale of this product is going to cover your costs, both direct and indirect costs. Work backward from the income you expect to make and the expenses you’ll spend for labor, materials and production to determine if the manufacturing of this product is financially feasible.
• Market Feasibility Study: You’ve already determined that there’s a need that’s not being served, but now it’s time to dig deeper to get realistic projections of revenue. You’ll want to define your target demographic, analyze the competitive landscape, determine the total market volume and what your market share will be and estimate what market expansion opportunities there are.
• Technical Feasibility Study: This is where you’ll explore the production , such as what resources you’ll need to produce your product. These findings will inform your financial feasibility study as well as labor, material, equipment, etc., costs have to be within your budget. You’ll also figure out the processes you’ll use to produce and deliver your product to the market, including warehousing and retail distribution.

There could be other feasibility studies you’ll have to make depending on the product and the market, but these are the essential ones that all manufacturers have to look at before they can make an educated decision as to whether to go forward or abandon the idea.

Best Practices for a Feasibility Study

• Use project management software like ProjectManager to organize your data and work efficiently and effectively
• Use templates or any data and technology that gives you leverage
• Involve the appropriate stakeholders to get their feedback
• Use market research to further your data collection
• Do your homework and ask questions to make sure your data is solid

If your project is feasible, then the real work begins. ProjectManager helps you plan more efficiently. Our online Gantt chart organizes tasks, sets deadlines, adds priority and links dependent tasks to avoid delays. But unlike other Gantt software, we calculate the critical path for you and set a baseline to measure project variance once you move into the execution phase.

Watch a Video on Feasibility Studies

There are many steps and aspects to a project feasibility study. If you want yours to be accurate and forecast correctly whether your project is doable, then you need to have a clear understanding of all its moving parts.

Jennifer Bridges, PMP, is an expert on all aspects of project management and leads this free training video to help you get a firm handle on the subject.

Here’s a screenshot for your reference!

Pro tip: When completing a feasibility study, it’s always good to have a contingency plan that you test to make sure it’s a viable alternative.

ProjectManager Improves Your Feasibility Study

A feasibility study is a project, so get yourself a project management software that can help you execute it. ProjectManager is an award-winning software that can help you manage your feasibility study through every phase.

Once you have a plan for your feasibility study, upload that task list to our software and all your work is populated in our online Gantt chart. Now you can assign tasks to team members, add costs, create timelines, collect all the market research and attach notes at the task level. This gives people a plan to work off of, and a collaborative platform to collect ideas and comments.

If you decide to implement the project, you already have it started in our software, which can now help you monitor and report on its progress. Try it for yourself with this free 30-day trial.

Transcription

Today we’re talking about How to Conduct A Feasibility Study, but first of all, I want to start with clarifying what a feasibility study is.

Feasibility Analysis Definition

Basically, it’s an assessment of the practicality of a proposed plan or method. Basically, we’ll want to want to know, is this feasible. Some of the questions that may generate this or we can hear people asking are, “Do we have or can we create the technology to do this? Do we have the people resource who can produce this and will we get our ROI, our Return On Investment?”

When to Do a Feasibility Study

So when do we do the feasibility study? So it’s done during a project lifecycle and it’s done after the business case because the business case outlines what we’re proposing. Is it a product or service that we’re proposing?

So why do we do this? The reason we do this is that we need to determine the factors that will make the business opportunity a success.

How to Conduct a Feasibility Study

Well, let’s talk about a few steps that we do in order to conduct the feasibility study.

Well, first of all, we conduct a preliminary analysis of what all’s involved in the business case and what we’re analyzing and what we’re trying to determine is feasible.

Then we prepare a projected income statement. We need to know what are the income streams, how are we gonna make money on this. Where’s the revenue coming from? We also need to conduct a market survey.

We need to know, is this a demand? Is there a market for this? Are customers willing to use this product or use this service?

The fourth one is to plan the business organization and operations. What is the structure, what kind of resources do we need? What kind of staffing requirements do we have?

We also want to prepare an opening day balance sheet. What are the…how again, what are the expenses, what’s the revenue and to ensure that being able to determine if we’re gonna make our ROI.

So we want to review and analyze all of the data that we have and with that, we’re going to determine, we’re going to make a go, no-go decision. Meaning, are we going to do this project or this business opportunity or not.

Well, here are some of the best practices to use during your feasibility study.

One is to use templates, tools and surveys that exist today. The great news is, data is becoming more and more prevalent. There are all kinds of technologies. There are groups that they do nothing but research. Things that we can leverage today.

We want to involve the appropriate stakeholders to ensure that input is being considered from the different people involved.

We also want to use again the market research to ensure we’re bringing in good, reliable data.

Do your homework, meaning act like is if this is your project, if it’s your money. So do your homework and do it well and make sure you give credible data.

What Is a Feasibility Report?

So ultimately in the end what we’re doing is, we’re producing and we’re providing a feasibility report. So in that report, think of this is like a template.

So what you’re gonna do is give it an executive summary of the business opportunity that you’re evaluating and the description of the product or the service.

You want to look at different technology considerations. Is it technology that you’re going to use? Are you going to build the technology?

What kind of product and service marketplace and being able again, to identify the specific market you’re going to be targeting? Also, what is the marketing strategy you’re going to use to target the marketplace?

And also what’s the organizational structure? What are the staffing requirements? What people do you need to deliver the product or service and even support it?

So also we want to know the schedule to be able to have the milestones to ensure that as we’re building things, that as we’re spending money that we’re beginning to bring in income to pay and knowing when we’re going to start recuperating some of the funding. Again, which also ties into the financial projections.

Ultimately in this report, you’re going to provide the findings and the recommendations.

Again, we’ll probably talk about technology. Are you going to build it? Are you going to buy it? What are the marketing strategies for the specific marketplace organization? You may have some recommendations for whether you’re going to insource the staff, maybe you are going to outsource some staff and what that looks like and also financial recommendation.

If you’ve been looking for an all-in-one tool that can help with your feasibility study, consider ProjectManager. We offer five project views and countless features that make it seamless to plan projects, organize tasks and stay connected with your team. See what our software can do for you by taking this free 30-day trial.

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What is a Feasibility Study and its Importance?

This blog talks about how a study that assesses the potential success of a proposed project. Let’s dive in to learn how to conduct this study and comprehend what determines the viability of a project. It will help you understand how the Feasibility Study evaluates the necessity of a project in terms of legal aspects. Read more!

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A Feasibility Study is a crucial assessment that is during Project Management conducted to determine the viability and potential success of a project. By thoroughly examining such factors, stakeholders can make informed decisions regarding the project’s feasibility. Apart from the technical and financial considerations, this study ensures a project’s compliance with relevant laws, regulations and industry standards. To give you a better overview, this blog will talk about the multiple aspects associated with this. So, let’s dive in to comprehend the significance of a Feasibility Study. After reading this blog, stakeholders can make well-informed decisions that enhance the chances of a project’s success.

Table of Contents 

1) Feasibility Study - An overview

2) Importance of a Feasibility Study 

3)  Types of Feasibility Studies

4) What is included in a Feasibility Study report?

5) Examples of a Feasibility Study

6) Seven steps to do a Feasibility Study

7) Conclusion

Feasibility Study - An overview

A Feasibility Study is an initial investigation into the potential benefits and viability of a project or endeavour. An impartial appraisal that looks at a project's technical, financial, legal, and environmental elements is what this study provides.

Importance of a Feasibility Study

A Feasibility Study may reveal novel concepts that fundamentally alter the Scope of a Project . Feasibility Studies are of the greatest importance in the decision-making process when it comes to projects, businesses, and investments. They are mostly structured assessments that are focused on various aspects of a proposed project`s Feasibility. The following are some of its advantages:

a) Increases the focus of project teams 

b) Finds fresh opportunities 

c) Gives important information to help make a "go/no-go" choice. 

d) Reduces the number of available business options 

e) Finds a good cause to start the project

f) Increases the success rate through the assessment of several factors 

g)  Assists in making project decisions 

h) Identifies grounds for not moving forward

Types of Feasibility Studies

Technical Feasibility Study

A technical Feasibility Study aims to verify whether the organisation is eligible to use its technical in-house resources and expertise to perform successfully. This assessment involves scrutinising various aspects, including the following:

a) Production capacity: Does the company have the resource base to produce that number of products and services for the customers? 

b) Facility needs: Will today’s facilities fulfil the standards required, or will new facilities be constructed?

c) Raw materials and supply chain: Are there enough purchases, and have the organisation maintained a supply chain?

d) Regulatory compliance: Does the Project Execution follow the relevant guidelines and professionals bear the relevant certifications to meet the requirements and the industry standards?

Economic Feasibility Study 

It is a financial Feasibility Study that primarily examines the project's financial viability. The economic Feasibility Study typically involves several steps:

a) Determining capital requirements: Calculate funding collection, overhead, and other capital.

b) Cost breakdown: Determining and listing all the project costs including the purchase of materials, hardware, labour, and overheard costs are too.

c) Funding sources: Trying out a variety of possible solutions like banks, stakes, or grants.

d) Revenue projection: By using prediction tools such as a cost-benefit analysis or business forecasting to get the level of income, return on investment and profit margin.

e) Financial analysis: Projecting the performance of the Project based on means that are related to a financial analysis and are characterised by the utilisation of such things as cash flow statements, balance sheets and financial projections.

Learn the tools and methods to manage projects by signing up for our  Running Small Projects Training  now! 

Legal Feasibility Study  

Legal Feasibility is a type of analysis that seeks to confirm that a pProject follows all the relevant laws and regulations. Key considerations include: 

a) Regulatory compliance: Briefing the whole project team about all required laws and regulations that the project has to comply with. 

b) Business structure: Assessing the legal systems (e.g., LLCs vs. corporations) that would best protect liability, governance, and minimising taxation, if any. 

Operational Feasibility Study

An operational Feasibility Study looks at how effectively a product will meet its needs. It also talks about how easy it will be to use and maintain once it is in place. In addition, this study enumerates the necessity of evaluating a product's utility and the response and suggestions of  application development team.

Scheduling Feasibility Study

Proposed project schedules and deadlines are the main subject of a scheduling a Feasibility Study. This evaluation concerns how long team members will need to complete the project. It also highly impacts the business because if the programme isn't finished on time, the planned result might not be realised.

Acquire the necessary skills to effectively deliver projects by signing up for our Project Management Office Fundamentals Training now! 

What is included in a Feasibility Study report? 

You should make a Feasibility Study report before starting a project. This way you can analyse if your business idea is really viable and will bring you success. When you conduct this study, you would have to consider lots of factors such as if the people are going to buy your product or service, how much competition is out there, if the company can afford it and so on. 

The Feasibility Study must include things like how much technology and resources you need and how much you can hope to earn from your investment. The results of this study are put together in a report, which usually includes the following sections:

a) Executive summary

b) Approach to marketing

c) Organisation/staffing

Examples of a Feasibility Study

Feasibility Study has helped decide if big ideas can work. Here are two examples:

University Science Building Upgrade

This example is about a university that wanted to upgrade its old science building from the 1970s. They thought it was outdated and needed a change. To implement this, they evaluated different options and determined how much they would approximately cost. Some people were worried about the project being too expensive or its potential to causeissues in the community. The study also analysed what technology the new building would  require, and how effectively it would help students, and also, if it would attract more students.

Along with this, they looked at the financial aspect too, as to how they would sponsor for it and if they would make more money from having additional students. The study showed that the project could work, so they went ahead with the upgrade.

High-speed Rail Project

This example  is timed when the Washington State Department of Transportation wanted to see if they could build a fast train connecting Vancouver, Seattle, and Portland. To initiate this, they first focused on how to make decisions about the project in the future.

They discussed it with several people and groups to ensure everyone was okay with the plan. Later, they looked at how to pay for it and thought it would cost between $24 billion and $42 billion. They would get money from the government and maybe from loans and investors.

The study showed that the train could bring lots of good things like better jobs and less traffic. They started looking into this in 2016 and finished the study in 2020. They then shared the report with the government.

Seven steps to do a Feasibility Study

As Feasibility Study is a crucial step in determining a potential of a project, it involves a substantial period of time and resources. Let’s take you through some of the steps involved in the following points:

1) Do a preliminary analysis and define the scope of the study

Before going through a Feasibility Study, it is wise that you do just one small check. The time and resources involved in Feasibility Studies may be burdensome; hence, it is imperative to determine if it is worth it as early as possible.

Through this form, one can establish whether the study holds awarding potential and who else should be involved on a higher level. You further this stage by answering questions like what you might win, what pitfalls you will face, and what you need for the success of the project.

2) Prepare a projected income statement

First, while doing a Feasibility Study, you should obtain the income statement projection. In this, the statement calculates earnings and expenditures in subsequent one-year amounts. It is made up of the sum of what you will surely get and the cost you will need to cover.

Smaller businesses tend to need marketing strategies to grow into bigger companies. These facts are extremely important because they help business owners make smart decisions regarding the stage of the business.

3) Carry out market research

Market research is of paramount importance or, naturally, it will be of no use when developing the Feasibility Study. Primarily, it operates to ascertain the viability of the project. This point tells you time, which gives you knowledge of the current market state: Who your customers are, who your competitors are, how big the market is, and how many of it you could have. One way of doing this market research is by asking people questions, referring to experts, and checking very broad social media and other public info to find out what's going on.

4) Organisation and operations plan

Once you've figured out how the market behaves and the scope of your organisation, you can draft the setup of your plan. The detailed work plan for the project will provide the answer to how it will work in a practical form. It tests three aspects of your project, like whether it can be run, whether it is cost-effective, whether it complies with the law, and whether the technology fits.

This is to help you comprehend everything you can do and what you may require to get this project going, for example, the equipment, the materials to start the project, additional costs, and if you need to hire or train people. If you need to, you may make that change if the information you have brought is enough.

5) Calculate and prepare the initial balance of expected revenue and expenses

In this step, you must be expert in handling things from the financial part. You’ll make estimates on how much you may initially spend starting up your project, and then how much your project could make and spend based on that estimate. Among the many issues involved are such as the amount of money you are receiving from your customers, money you owe to others and assets that you own. 

Fixed costs, such as variable costs that will change based on the number of goods you produce, and equipment costs also need to be factored in money you may borrow or pay for land and service other companies. Keeping this in mind, you should also consider your business’ off seasons and how much risk you are willing to take. These calculations save a lot of time and effort and can be used to answer the most difficult questions of Feasibility.

6) Review and analyse all data

After going through all the steps, it's crucial to do a thorough review and analysis. This helps ensure that everything is in order and there's nothing that needs adjusting. Take a moment to carefully look back at your work, including the income statement, and compare it with your expenses and debts. Ask yourself: Does everything still seem realistic?

This is also the perfect opportunity to consider any risks that might come up and create contingency plans to handle them. By doing this, you'll be better prepared for any unexpected challenges that may arise.

7) Make a go/No-go decision

Now, it's time to decide if the project can work. This might seem simple, but all the work you've done so far leads up to this moment of decision-making. Before making the final call, there are a few more things to think about. First, consider if the project is worth the time, effort, and money you'll be putting into it. Is the commitment worth it?

Secondly, think about whether the project fits with what your organisation wants to achieve in the long run. Does it align with the organisation’s strategic goals and plans? These factors are essential to consider before making your decision.

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Conclusion 

You are now more familiar with how a well-executed Feasibility Study is a cornerstone of informed decision-making in Project Management and business ventures. It acts as a critical guide, helping organisations assess the practicality and viability of their initiatives, ultimately minimising risks and increasing the likelihood of success. 

Frequently Asked Questions

Employers value skills like analysis, problem-solving, attention to detail, and communication in Feasibility Study specialists. They need to be good at crunching numbers, finding solutions, and explaining complex ideas clearly.

Many industries need expertise in Feasibility Studies, like Construction, Healthcare, Tech, and more. It helps decide if projects are doable.

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The Knowledge Academy offers various Project Management Courses , including Introduction to Project Management Certification Course and Project Management Masterclass. These courses cater to different skill levels, providing comprehensive insights into Project Resource Management .

Our Project Management Blogs cover a range of topics related to Project Management Skills, offering valuable resources, best practices, and industry insights. Whether you are a beginner or looking to advance your skills in Project Management, The Knowledge Academy's diverse courses and informative blogs have you covered.

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Difference between Feasibility Study and Business Plan

Feasibility Study and Business Plan are essential tools in the business development process. They serve different purposes and are conducted at different stages. A feasibility study helps determine the viability of a business idea; whereas, a business plan provides a detailed roadmap for executing that idea and achieving business goals.

What is a Feasibility Study?

A feasibility study is a comprehensive assessment conducted at the early stages of a business idea or project to evaluate its potential viability and identify potential risks and challenges. The primary purpose of a feasibility study is to determine whether the proposed business venture is feasible and worth pursuing further.

Features of the Feasibility Study are:

• Market Analysis: Feasibility Study evaluates the target market , including its size, growth potential, demographics, and competition. This involves researching customer needs, preferences, and behavior to assess demand for the proposed product or service .
• Technical Feasibility: A feasibility study assesses the technical requirements and capabilities needed to develop and deliver the product or service. This may involve evaluating technology, equipment, facilities, and expertise required for production or implementation.
• Financial Feasibility: A feasibility study conducts financial analysis to estimate the costs involved in starting and operating the business, as well as potential revenue and profitability. This includes preparing financial projections, such as income statements , cash flow statements , and Return on Investment (ROI) calculations.

What is a Business Plan?

A business plan is a comprehensive document that outlines the goals, strategies, operations, and financial projections of a business. It serves as a roadmap for the organization’s future direction and provides a detailed blueprint for how the business will be structured, managed, and operated.

Features of a Business Plan are:

• Executive Summary: A business plan gives a brief overview of the business concept, objectives, products or services offered, target market, competitive advantage, and financial projections.
• Company Description: It gives detailed information about the business, including its history, mission statement, vision, values, legal structure, location, and ownership.
• Market Analysis: A business plan is formed after analyzing the target market, including its size, growth potential, demographics, buying behavior , market trends, and competition. This section also outlines the business’s market positioning and competitive strategy.

Feasibility Study and Business Plan – FAQs

When should a feasibility study be conducted.

A feasibility study is typically conducted at the early stages of developing a business idea or project, before significant resources are invested. It helps entrepreneurs and stakeholders make informed decisions about whether to proceed with the venture.

Who conducts a feasibility study?

Feasibility Studies are often conducted by entrepreneurs, business owners, project managers, consultants, or other professionals with expertise in the relevant industry or field. They may also involve collaboration with specialists such as market researchers, engineers, financial analysts, and legal advisors.

When should a business plan be developed?

A business plan is typically developed after a feasibility study has been conducted and the decision to move forward with the business venture has been made. It provides a detailed blueprint for executing the business idea and achieving its objectives.

Who uses a business plan?

Business plans are used by entrepreneurs, startups, existing businesses, investors, lenders, partners, employees, and other stakeholders interested in understanding the organization’s goals, strategies, operations, and financial prospects.

What are the benefits of conducting a feasibility study?

Benefits of conducting a feasibility study include minimizing risks, identifying potential challenges and opportunities, validating assumptions, attracting investors or lenders, guiding decision-making , and increasing the likelihood of success for the proposed business venture.

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