What is a Feasibility Study?

A feasibility study is an complete evaluation and analysis of the potential of a proposed business or project which is based on an extensive investigation and research to support the process of decision making. Feasibility studies aim to objectively and rationally uncover the strengths and weaknesses of an existing business or proposed new venture, opportunities and threats present in the environment surrounding the business or project, the resources required to carry the business or project through, and ultimately the prospects for success of that business or project.

The main goal of a feasibility study is to assess the viability of the proposed business. The feasibility study needs to answer a very important question: “Does the idea make economic sense”? The feasibility study should provide a thorough analysis of the business opportunity, including a look at all the possible roadblocks that may stand in the way of the operation’s success. The outcome of the feasibility study will indicate whether or not to proceed with the proposed venture. If the results of the feasibility study are positive, then the business can proceed to develop a business plan.

It is tempting to overlook the importance and need for a feasibility study. Often, management may face resistance from members/owners of the business on the need to do a feasibility study. Many people will feel that they already know the proposed venture is a good idea, so why spend money just to prove what they already know? The feasibility study is vital because it force management/ owners to put its ideas on paper and to assess whether or not those ideas are realistic.

Normally a consultant will be hired to conduct the feasibility study. Because the consultant is independent of the business, he or she is in a better position to provide an objective analysis of the proposed venture. The consultant should have a good understanding of the industry as well as the new generation model of the business.

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