The Value of Feasibility Studies for Startups

It is standard procedure and good business practice to undertake a feasibility study before launching any major commercial initiative. This analysis aids in making decisions by drawing attention to potential danger spots and highlighting key factors that may have been overlooked in the original company plan. Before beginning a project or business, it is crucial to do a feasibility study to identify key concerns, such as those related to the product or service to be offered, the target market, the competition, the technology and technical aspects, and the required financial and human resources.

The ultimate goal of any business feasibility study is to ascertain whether or not the proposed firm, project, or concept would be lucrative. Making this kind of decision is not a breeze. The technical feasibility of the project must be determined before any financial considerations can be made. Massive amounts of information must be gathered and analyzed, with input from relevant parties. The technical, operational, financial, marketing, human resource, etc. aspects of a firm can be addressed in several phases of a comprehensive feasibility plan. But here are the mainstays of all feasibility studies:

1. Preliminary Analysis

As was said in the previous paragraph, there is a monetary expense associated with doing a feasibility study. For this reason, a preliminary analysis is performed to see if the proposed project/idea merits going with a detailed feasibility study rather than investing time and money in a full-fledged feasibility study at the outset.

Outlining expected results, evaluating similar initiatives, scoping out new markets, weighing risks, and assessing competitive advantages are all part of the early study. Preliminary research concludes with a verdict on whether or not to continue with a more in-depth investigation of the topic or project.

2. Scope Definition and Option Selection

Now that the big picture is in place, we can focus on the finer points. The first step is to carefully examine the legal, financial, and operational aspects of the project to ensure that it can actually be carried out. At this point, we will also lay out a comprehensive timeline for the project’s individual phases. Additionally, this phase entails the selection of appropriate solutions when more than one approach to a task or purpose exists. For instance, there may be a number of technology options for addressing a specific problem.

3. Target Market Analysis

This is a crucial step that requires extensive research into the intended audience. Information can be gathered in a number of ways, including through surveys, interviews, analysis of the market competition, and the purchase of data from market research firms. Information gathered may include market share, consumer trends, product demand predictions, competitive offerings, etc.

4. Financial Analysis

If a project cannot be completed profitably, it will not be given any further consideration. At this point, decisions are made on the equity, loan, or internal funding of the project. When will interest rates and the price of stock start to rise? Cash flow forecasting and income/expenditure analysis for the project. At this point, you’ll have your initial balance sheet, income statement projections for the coming years, and end-of-year balance sheet projections all worked out.

5. Assessment of Risks

What could go wrong at each stage of the project needs to be analyzed and evaluated. All of the potential dangers are catalogued, categorized, analyzed, and rated. This also outlines the plans made to mitigate each potential disaster.

6. Information Gathering and Reporting

Based on collected information and analyzed results, a final report is written. Important facts and required conclusions are drawn to help the relevant parties decide whether to proceed with the project. The following is a sample feasibility report’s table of contents:

a)   Executive Summary

b)   Description of business project

c)    Technology

d)   Product service marketplace

e)   Marketing strategy

f)     Organizational structure/Human resources

g)   Time schedule

h)   Financial projections

i)     Findings & recommendation:

·        Technology

·        Marketing

·        Organization

·        Financial

Feasibility Study Plan

The ElucidationAcc has a team of professionals ready to help with any kind of business feasibility study. We have conducted fruitful feasibility studies in the healthcare, manufacturing, retail, and hospitality industries, among others. When conducting a feasibility analysis, we always consider the thoughts of everyone involved. The next step in developing a business plan is dependent on the findings of a feasibility study.

Before putting money into a startup, it’s vital to conduct a feasibility study to ensure the concept has a chance of succeeding.

Training

As experienced Chartered, Certified, and Public Accountants, we at Elucidation for Accounting (ElucidationAcc) believe it is our duty to share what we’ve learned with our peers and colleagues. Our training services are given by seasoned instructors who have extensive hands-on expertise in the relevant sector. Our courses are flexible, covering everything from the very fundamentals to more advanced topics as requested by the client. Sessions can take place either in person or digitally, depending on the preferences of the client.

We provide training for a wide variety of audiences, from junior accountants learning how to enter data into accounting software to top bank executives learning about AML/CFT and credit modelling.