All About Feasibility Studies

All About Feasibility Studies

Essential Questions

• What is the purpose of a feasibility study?

• What benefits are derived from a feasibility study?

• When should a feasibility study not be conducted?

• What constitutes a well-conducted feasibility study?

• What course of action might be taken after a feasibility study is conducted?

What do you know?

See how well you answer these 3 quick questions about Feasibility Studies...

Multiple Choice

Which of the following is a reason to conduct a feasibility study:

• Considering a business expansion

• Closing down the business

• Planning an office holiday party

• Purchasing a new microwave for the break room

Multiple Choice

Feasibility studies help owners/managers to better understand

• manufacturing processes.

• risks and benefits.

• research and development.

• advertising strategies.

Multiple Choice

Feasibility studies can help businesses to prevent

• lawsuits.

• employee turnover.

• competition.

• wasting resources.

So What?!

_{How do you approach big decisions in your life? Do you jump right in, or do you spend some time thinking and planning? Most likely, if you’re making a major decision, you put some thought into it, especially if it involves money. If you’re buying a car, choosing a college to attend, or renting an apartment, you’ll probably sit down to carefully consider your options, list the pros and cons, and assess your budget. You have to see if your plan is feasible (possible).} 

_{Businesses go through a similar process when it’s time to make a big decision or to undertake a major project. It’s called a feasibility study. Learn more about feasibility studies—why businesses conduct them, what they include, and the benefits they provide.} 

Consider the Possibilities

Businesses and entrepreneurs must test their ideas before jumping in feet-first as well. They accomplish this task by conducting feasibility studies. A feasibility study is an organized inquiry into the possible success of a business idea or venture. These studies are used for a number of different potential endeavors, such as new products, expansions, mergers or acquisitions, or entirely new businesses.

Examples of Ventures that Might Require a Feasibility Study:

• An electronics company is considering producing a new type of tablet computer.

• A major fast-food chain is thinking about buying a smaller chain that is struggling financially.

• An accounting firm might hire new staff and upgrade its office facilities.

• Two entrepreneurs want to form a partnership and start a business building custom motorcycles. 

Open Ended

Can you come up with more?

Advantages

• Feasibility studies help owners/managers to fully understand the risks and benefits associated with the proposed venture.

• Feasibility studies can prevent businesses from wasting valuable time and resources on unfeasible (difficult, impractical) ideas.

• What’s unfeasible this spring might be an excellent project for next fall. Without a feasibility study, owners/managers might not realize this. Feasibility studies can shed light on the optimum timing for a business venture to take place.

• When it comes to starting a brand-new business, a feasibility study forms a solid foundation for a business plan. A business plan is essential for obtaining funding through bank loans or investors.

When not to do a Feasibility Study....

• Don’t conduct a feasibility study if your idea isn’t serious or promising—save your resources for your top proposals only.

• Don’t conduct a feasibility study if you already know you can’t finance the venture. You might have a great idea, but if you don’t currently have the resources to make it happen, there’s no sense wasting time and money on a feasibility study. Perhaps you can revisit the idea at a later time.

• Don’t conduct a feasibility study if you are already certain that the venture is feasible. This certainty might stem from a recent study for a comparable project or from a similar business model that is currently operating successfully.

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Total Recall....

Let's see what you remember from the lesson

Open Ended

What is a feasibility study?

Open Ended

What are the main purposes of a feasibility study?

Open Ended

What are the advantages of conducting a feasibility study?

Open Ended

When should owners/managers not conduct a feasibility study?

Steps For Conducting a Feasibility Study

• Step One: Determine whether or not you should hire a professional.

• Step Two: Write a description of your proposed project or venture.

• Step Three: Perform a market analysis.

• Step Four: Outline the financials.

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Steps continued....

• Steps Five: Create an organizational plan.

• Step Six: Assess your technical needs.

• Step Seven: Review your work carefully.

• Step Eight: Present the feasibility study.

Where do we go from here?

• What happens after a feasibility study has been completed and presented? There are three actions that owners/managers can take. They can: 

• Proceed with the venture

• Postpone the venture until a more optimal time

• Abandon the venture altogether 

Open Ended

How many steps are there to conducting a feasibility study?

Open Ended

What options do owners/managers have at the end of a feasibility study?