A feasibility study is a business analysis that is conducted to assess the practicality and suitability of a new business venture or investment option. In this study, the potential benefits and drawbacks of the new business or investment options are evaluated, along with technical, financial, logistical, and managerial factors. The feasibility study helps to understand the viability of a new business venture and its potential for success.
The main objectives of a feasibility study include:
- Assessment of Business Potential: A feasibility study aims to understand the potential of business options. If a business option is viable and has the potential for significant profit, it can be pursued further.
- Costs and Investment: The study evaluates different investment and funding options. This helps determine the amount and type of investment needed and the potential returns.
- Risk Assessment: Feasibility studies also analyze potential risks. This helps identify major risks that could impact the business option and consider strategies to mitigate those risks.
- Identification of Key Influencing Factors: The study helps identify key factors that would influence the success of the business option. If a certain factor is crucial for business success, it can be given more attention.
- Estimated Costs and Profits: The feasibility study provides estimates of costs and potential profits. This assists in understanding the financial aspects of the business.
- Technical Assessment: For projects requiring technical elements, the study evaluates the technical feasibility, including whether the necessary resources and technology are available.
A feasibility study essentially provides a structured analysis of whether a proposed business venture is worth pursuing, considering its practicality, potential benefits, and any challenges or risks that might be encountered.