A vital initial step in determining a business venture’s potential is conducting a feasibility study. This preliminary evaluation determines a project’s chances of success by calculating potential financial advantages and avoiding hazards.
By carrying out a feasibility study, you may lower risk and boost return on investment. The process also makes decision-making simpler. If you want to start a new business or expand an existing one, a feasibility study gives you the necessary foundation to make informed decisions.
In this blog, we will explain the key components of feasibility studies, including their definition, benefits, types, and steps to conduct feasibility studies in UAE.
What is a Feasibility Study?
An extensive investigation of a proposed business or project, including a description of the idea, market dynamics, competition, technical challenges, organizational structure, financial forecasting, and time frame, is called a feasibility study.
It is a significant tool for companies, supporting decision-making concerning project execution and investment concerns. Feasibility studies provide valuable insights into a company’s operations and competitive environment for enterprises of all sizes.
Benefits of a Feasibility Study
Consultants for feasibility studies are essential instruments for business analysis; they help organizations assess the potential of their ideas. They give companies the ability to predict their start-up costs, analyze their financial gains, identify target markets, evaluate market competitiveness, and comprehend regulatory duties. Feasibility studies provide insights into improving entire business operations and procedure optimization in addition to financial considerations.
Types of Feasibility Studies in UAE
There are several different kinds of feasibility studies, and each one provides a different viewpoint for assessing a project’s viability.
Technical Feasibility Study
In technical feasibility studies, the team examines the tools or resources required to complete the project to ensure they have access to the resources they need.
Market Feasibility Study
Market feasibility studies comprise analyzing the market and assessing the marketing strategy, which includes determining the target demography and financial constraints of the project.
Operational Feasibility Study
Operational feasibility studies evaluate the organizational structure to ascertain whether a project can be controlled.
Financial Feasibility Study
The purpose of the study is to identify financial risks, calculate an approximate return on investment (ROI), and comprehend the economic benefits that the project will bring about.
Steps to Conduct a Feasibility Study
A feasibility study involves some crucial processes, such as technical, financial, operational, and market studies. The process concludes with an executive summary that outlines the project’s overall viability. This all-encompassing method guarantees a detailed evaluation of the project’s viability.
The steps in doing a feasibility study for any kind of business are as follows:
- Perform a Fundamental Analysis
Completing a feasibility study is a laborious process. Check for obstacles in the project before starting the investigation.
- Evaluate the Financial feasibility
This stage outlines the projected project income, and the total amount of money needed to complete the project’s goals. Analyze the project’s possible impact on your company’s cash flow.
- Assess the Market
To forecast the project’s success, it assesses the market potential and carefully considers the positions of competitors and statistical data. Information on projected revenue and possible market risks is provided in this research.
- Evaluate the Operational and Technical Feasibility
Examine operational viability while considering the amount of labor and equipment needed for the project; organizational resources, such as money and time, are necessary for successful operations.
- Examine the Project’s Sensitive Aspects
Part of this process involves ensuring that the income statement and the market analysis line up. Although it doesn’t provide a clear answer, feasibility analysis helps formulate pertinent queries and related answers so that decisions are made with knowledge.
- Submit a decision
The presentation of an executive summary, which contains a solution outline and an explanation of the main principles, is the last step of feasibility studies. Depending on the intricacy of the project, the feasibility study is either shared with stakeholders or given to the consultant, who provides real-time answers to inquiries.43
Tools for Performing a Feasibility Study
A product or service description, technical considerations, market analysis, operational viability, financial projections, and a project schedule are all included in a feasibility study. By using these tools, organizations may manage their budgets, evaluate the viability of their businesses, and decide which ideas are worth pursuing.
It is composed of the following stages:
- Market research and analysis are the first steps in determining the size of the market, potential customers’ price preferences, demography, competitive landscape, etc. This facilitates the development of a marketing strategy and product roadmap.
- During the operational feasibility stage, it is critical to examine production costs and revenue streams. It also includes investigating methods to increase revenue sources, including advertising or offering complementary products or services to the project’s one. It will be practical to assess if the project makes financial sense once this analysis is finished.
- The evaluation of funding sources and capital costs takes the status of the market into account. This helps businesses decide on their project timeline and final budget.
Conclusion
In short, a feasibility study is an essential part of the process of making decisions when starting a new company. It gives company owners the ability to evaluate available resources, spot possible changes that could improve a venture’s chances of success and make well-informed decisions. The purpose of this blog is to highlight the value of feasibility studies and offer advice from experts at TCA on how to carry them out effectively for a range of business ventures.
Contact us to get assistance in carrying out a comprehensive feasibility study procedure for your company!
