Importance of Feasibility Study in Business Expansion

A feasibility study takes all of a project’s relevant factors into account, including economic, technical, legal, financial and scheduling considerations in order to determine the likelihood of completing the proposed project successfully while evaluating and analyzing its actual potential. It is a thorough investigation and research to facilitate decision-making.

A feasibility study can also provide a company’s management with crucial insight that can keep the company from entering into risky businesses blindly. You can determine the profitability of your business venture by conducting a feasibility study. The management will learn about the flaws, challenges, strengths, weakness, opportunities and threats that could affect the success and sustainability of the business venture. A feasibility aims to uncover the strengths and weaknesses of an existing business or proposed venture.

The following are the most prominent elements of a feasibility study:

1. Marketing Study

It is one of the most important factor of feasibility study since it deals with the marketability of the product or service. The market study typically analyzes potential sales of the product, absorption, market capture rates and the project’s timing. It includes product description, current supply and demand as well as imports and exports. In addition, it also mentions market-mix, market strategy, selling price and product distribution channels. A feasibility study should also cover SWOT analysis to establish a better position in the market.

2. Technical Study

A technical study assesses the details of how you intend to deliver a product or service to customers . It is the logistical or tactical plan of how your business will produce, store, deliver, and track its products or services. It should include project and product descriptions, process, raw material, machinery and equipment. In addition to information about management and technical resources, the technical study should include capital and operating costs. The Technical study also covers the building and civil work and the loss prevention of the project.

3. Financial Study

A financial study projects how much start-up capital, sources of financing, cost of goods sold, annual sales, financial indicators, income statements, cash flow and balance sheet. It looks at how much equity and debt are required, where it will come from, and how it will be spent.

NKS Consultants has the experience, resources and methodologies necessary to evaluate and analyze a project in order to provide clients with the facts and market intelligence to support their decision-making process.

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