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Conduct preliminary analysis
It sounds strange to say that you need to do a pre-feasibility study in order to know if you need to do a feasibility study, but it’s true! A little bit or early research will help you determine if you need to proceed with a full-blown investigation.
Consider your options
Completing a thorough feasibility study is a time-consuming and sometimes expensive process. You may want to save your time and money for investigating only the most promising of your ideas. For example, if you’re thinking about selling cooked food through Internet orders, you should also carefully identify other possible alternatives to this venture; like selling just foodstuff.
Assess demand
Before you decide to invest time and money into a complete feasibility study, you need to realistically assess whether or not there is a need or demand for your idea. If there is, then you can proceed to study the idea in more depth. If not, then you can move on to your next idea. You may visit existing business dealing in what you want to do. If the particular product or service is not well patronised; this could mean that there is no demand for the product. And vice versa
Assess the competition
Perhaps you’ve determined that there is in fact a demand for your idea or service. However, you also need to get an idea of how much competition you’ll be up against. For example, if there are 10 other vendors who deal in the same business, you’re going to have to think about whether or not you’ll be able to compete, or offer consumers a different, more appealing product.
Set time-table
Conducting a feasibility study can be an involved process, and can easily take up a lot of time. If your initial analysis has indicated that you’re sitting on a good idea and that you thus need to complete a more detailed study, you’ll want to make sure that you can get the job done in a timely manner. Having a strict and realistic time table will be helpful.
Learn about the market
Once you’ve determined that you have a potentially workable idea, you need to learn as much as you can about what the market currently is like for your product or service, and how you can fit into it. Though you’ve already done your initial survey of the market, now you need to dive in deeper.
Analyse competition’s claim on the market
It’s important that you try to determine how much of a share your top competitors have, and how long they’ve held on to that position. This would let you know whether you’ll realistically be able to take a significant portion of the market for yourself.
Identify your potential share of the market
Once you understand how your competitors fit into the market, you should be able to estimate how you’ll be able to fit in too. You want the results of your feasibility study to outline, with specific numbers and percentages, how you’ll fit in and how you’ll likely grow over time.
Determine where you’ll work
Part of your feasibility study should be devoted to exploring the details of where you’ll be working. For example, you may need an office space to serve as headquarters for your business operation, or you may need arable land, if for example, you are planning to go into farming. Make sure that you have access to the space and facilities you’ll need, and research any leases or permits that you’ll need.
Decide company/team structure
If you won’t be heading the project alone, you’ll have to think about what sort of help (paid or volunteer) you’ll need from others. You need to give serious thought to the following questions: What are your staffing needs? What qualifications will your staff need? How do you see these staffing needs changing as the business grows? Will you need a board of directors, etc.
Outline start-up costs
An important part of your feasibility study is a detailed budget, which should include the costs that you’ll need to handle as you start your business or project. For example: Do you need special tools or machinery? Determine exactly how much all of this will cost. Your start-up costs are those that you’ll have to cover to get off the ground, but which, typically, won’t be regular expenses once the business or project is underway.
Identify your funding sources
You need to know how you’ll be able to cover all of your costs. Thus, carefully outline all of your available sources of income and funding. For example, do you have savings upon which you can draw? Will you need investors, and if so, have you identified them? Will you need to secure a bank loan?
Compile all the information
Once you’ve completed all of the stages of the study, you’ll need to organise your findings. Gather together your surveys, the evidence brought in by any of your team-members or hired consultants, your budget, etc. You also need to balance your estimated business profits against your personal financial needs. If you hope to make a living off your new business venture, you will need to have your personal budget outlined. Once you estimate the profit you’ll make from your business, determine whether or not it will it be able to cover your living expenses. You should however remember to factor in unexpected costs, such as needing to pay for equipment repairs, or medical emergencies etc.
Consider the human cost
Even if the numbers look decent to you, you should think about how much time, effort, and attention this new venture will demand. Are you, your family members, and/or team members up for the challenges?