11 Steps to a Successful Feasibility Analysis

The term feasibility analysis, as its name implies, is a tool used to determine the viability of a company idea. A feasibility study identifies all the resources needed to start a company and analyze the financial and legal aspects of the business plan. So, what’s a business plan? A business plan is a document that details the business idea. The goal of the business plan is to accurately describe the project, its expected results, and financial requirements.

What is feasibility analysis?

Most people think of feasibility analysis as a product like an automobile that needs to undergo various tests. There is no need to invest huge amounts of money testing a car that does not require it. In other words, the car should perform well but without a risk of an unexpected failure.  Since most businesses are not as simple as the car, the concept of feasibility study also applies to business plans. Feasibility analysis are usually expensive but they are a must for any startup. A feasibility analysis identifies all the resources needed to start a company and projects the financial and legal aspects of the business plan. The following sections will help you with the feasibility study process.

First Step: Ideation & Defining the scope of the project

Ideation is the “getting it all off the ground” stage of a feasibility analysis. It involves identifying the problem, what needs to be done, the solution, and how the company will succeed. For example, you might get an idea for a baby pacifier glove. You want to make these baby gloves for day-care providers who deal with drooling and soap. What do you need to do? First, you need to identify the end goal. Will your pacifier glove be used for daycare providers or children?

You need to know what will be the focus of your business and how you plan to market your product. After all, a business plan without a marketing plan is like driving a car without a steering wheel.  This is also the stage when you determine if the company is feasible.

Second Step: Market Analysis

The next step involves an in-depth assessment of the market for the product being developed. This assessment entails identifying the current market for the product or service, a detailed survey of current companies in the targeted market, and a list of competitors. The market analysis determines the market for the product, along with the legal and logistical requirements, who can make the investment required to market and produce the product, and how competitive the product will be.

Third Step: Industry Research

When thinking of your venture, go beyond marketing and sales and start looking for the industry. Is the industry niche? Does it require special expertise? What industries are similar to yours? How will these factors affect the overall cost of production? Determine who the competition is, what their market share is, and if the industry will still exist in the future.

Fourth Step: Opportunity Analysis

Following the industry research, we will perform an opportunity analysis to determine the market niche, business model, revenue, and other factors which may have the greatest impact on the financial success of the startup. An opportunity analysis takes into account factors such as the role that existing or potential markets have on an idea’s viability during the feasibility analysis.

Fifth Step: Operational Research

Operational research is a type of research that explores various options and contingencies to help an investor or entrepreneur understand the feasibility of a project. The process involves brainstorming and evaluating different options and problems, ultimately generating new options, potential outcomes, and solutions to the problems that were originally identified.  These steps are just some of the fundamentals of startup feasibility analysis.

If you want to start a successful company, you must do the research required to understand your market and your competitors, along with every possible opportunity that can help your company grow.  How else can you prepare your company for the future?  As with any venture, preparation is the key.

Sixth Step: Competitor Analysis

The next step in the feasibility analysis process is the competitive analysis, to come up with a competitive advantage that is unique to your business idea. What’s a competitive advantage? It’s a strategy that can be used to take advantage of the existing market or a strategy that can allow a company to achieve market dominance. A competitive analysis is a quick visual inspection of your industry, looking at your competition to determine how they’re doing. Although this step may seem minor, it’s one of the most important steps in the feasibility study process.

Seventh Step: Industry Best Practices

There’s a lot of research to be done to determine which industry best practices are most pertinent for your business and your target market. However, as mentioned before, this research is not limited to the needs of the industry. Companies have found ways to adapt to different markets. From shoe manufacturing to sandal making, and even selling hot dogs for a living, each industry needs to determine what they need to change to stay competitive. Even the smallest companies have this process of constantly evolving to help them stay successful.

An industry best practice is a set of standards that members of an industry follow. To remain competitive, the standard defines how the industry behaves, how they adapt to change, and what they need to achieve in the future. While doing feasibility analysis you should do this in-depth.

Eighth Step: Business Model Generation

Once the financial and legal aspects have been analysed, the business plan can be generated. The name business model generation implies that, essentially, you should be able to generate a working business plan for your idea. Once you have a business model that would work, you can then develop it into a working business plan. If you are a first-time entrepreneur and want to write a business plan for your idea, take a look at my “Write a business plan like an expert in 2021”.  Congratulations, you’re almost ready to start building your startup.

Ninth Step: Risks & Mitigation Study

The next step in the feasibility analysis is to conduct a risk analysis to determine the amount of risk the project poses. To do this, divide the business plan into smaller and more manageable sections. Allocate some time to go through each section and perform a risk analysis. First, you’ll need to determine the risk that the project faces by identifying the top threats. In many cases, the top threats will include cash flow concerns and threats of losing investment funds. You should also list all of how the project can be improved upon. The goal of this step is to gain more control over the project by addressing all of the top threats.

Tenth Step: Budgeting & Financial Assessment

Budgeting is an important part of the feasibility analysis. A company is only as good as its budget. The success of an organization depends on how well it manages its funds and resources. The financial assessment is another important part of the feasibility study. It helps to determine whether an organization can afford a new project or not. It also helps to predict future cash flow for the organization based on past financial information, which helps it decide if it can undertake new projects now or in the future.

As per this section, financial assessment and budgeting are integral parts of any feasibility analysis. They are needed to ensure that the company has done its due diligence before deciding on any investment opportunities or changes in management strategy.

Eleventh Step: Implementation Roadmap

The main purpose of the implementation roadmap is to put the actual project into motion. It’s all about executing the project that you have planned.

In conclusion, conducting a feasibility analysis can help you determine your chances of success. A well-done feasibility study will not only look at the market potential, but will also help you understand the people, processes, policies, costs, competition, and even the culture of the industry you are considering entering. The key to success with any business venture is to take the time to do your research. Hiring professional feasibility study services will help you with your feasibility analysis and make sure you don’t miss vital information. They can save you time and money in the long run.

References:
– Feasibility Study – Investopedia
– Business Planning for Startups & Entrepreneurs