Feasibility Study Basics, The reason for the failure of start-up businesses is often attributed to not taking care of the pre-launch stage. Thus, you can distinguish between opportunities that are worth it and investments that have a higher risk of failure. You can verify this by preparing a feasibility study for your project. What is meant by a feasibility study? How do you accomplish it?
What is a Feasibility Study Basics?
A project Feasibility Study Basics can be defined as a preliminary design process through which the project can be explained, evaluated, and analyzed in its various aspects, whether technical, economic, legal, technological, etc.
The feasibility study aims to ascertain the possibility of implementing the project or not and to measure its feasibility, in addition to knowing and understanding the ability of the work team or company to move forward with the project according to the specified plan, while being aware of the difficulties and challenges that may hinder the completion of the task. Thus, you can identify the strengths, weaknesses, opportunities, and threats surrounding the work environment, and discover whether the project will achieve a positive return on investment or not.
The difference between a project Feasibility Study Basics and a business plan
Although the project Feasibility Study Basics is similar in many aspects to the work plan, there are fundamental differences between them. The first is to determine the extent of the project’s feasibility for implementation before allocating the necessary budget for the operation process. It is the first step in the project planning process and can later be developed into a business plan. It includes accounts and financial reports to know the capabilities of the project owner or company.
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As for the work plan, it is designed for projects that are about to be implemented, and it assumes that the project idea is applicable and realistic, that is, it follows the Feasibility Study Basics of the project directly, and contains the project’s objectives, strategies, and tactics that contribute to achieving its purpose. It also includes the management plan, financing requirements, and marketing methods to draw a comprehensive map for the work team to follow to achieve its desired goals.
It should be noted that the project’s feasibility study, which was designed based on false information, naturally leads to incorrect conclusions that may lead to wasting the company’s financial and human resources, especially in the event of starting to implement a project. But the work plan that is not good can be modified and make the necessary improvements and developments to become a successful work plan that helps in developing the project.
Advantages of conducting a Feasibility Study Basics for your project
The importance of the Feasibility Study Basics is that it prevents companies and entrepreneurs from wasting time and money on projects that are not profitable or do not provide a general benefit to society. It gives you answers to basic questions before launching a project, such as: Can the proposed project be implemented? Are the expected returns from the implementation of the project reasonable compared to the risks from the investment?
The feasibility study allows analyzing the project idea and determining the factors that affect it before proceeding with its implementation or development. Therefore, it is necessary for projects that require large investments, and even if the operating budget of the project is low, certainly no one will seek to lose and will be in dire need of a study that provides a clear picture of expenses, and capabilities and profits.
The following are the most important advantages of preparing a Feasibility Study Basics for any proposed project or plan:
- Knowing the best decisions and actions that can be taken regarding the project during its implementation and development.
- Identify the pros and cons of the project before investing time and money in it.
- Gather more important information about the project before making an implementation decision.
- Monitor the reasons that prevent the work team from implementing the project.
- Defining project objectives and knowing the target audience very accurately.
- Ensure that the project objectives are in line with the overall strategic plan.
- Analyze the characteristics of the work team responsible for the project.
- Generate new ideas that help the project succeed.
- Clarify the main motives for establishing the project.
- Helping organizations develop new businesses
- Discover errors and boost your success rate.
- Predicting the results and the possibility of improving and evaluating them.
Types of Feasibility Study Basics
Any effective feasibility study requires objectivity and credibility when preparing it to reach logical and insightful results, in addition to the need to understand the types of Feasibility Study Basics and the main elements that go into its formation. So what are these types? And what are its components?
Technical Feasibility Study
This type of Feasibility Study Basics aims to know and identify the technical resources, tools, and devices available to the company to implement the project, and then analyze and evaluate them in order to ensure its operational ability to complete it. In addition to studying whether the work team has sufficient experience to meet the tasks and requirements that must be completed for the success of the project, and measuring the ability of the technical team to transform ideas into successful work systems.
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For example, suppose you have a factory and plan to produce 200,000 packages of a new product. Through a technical feasibility study, it may be found that the devices you own are capable of creating only 100 thousand for a poor profit. So, your project will not be technically viable in this case.
This important element focuses on analyzing the financial cost of implementing the project, in addition to monitoring the expected financial risks. Thus, the economic Feasibility Study Basics seeks to know whether the project is feasible from a financial point of view, and what its benefit of it? This is done through a detailed assessment of all economic factors associated with the project.
These factors include costs of planning, design, equipment, operational cost, etc., and comparing these expenditures to the expected return on investment (ROI) before allocating financial resources. It also includes evaluating the feasibility of financial capabilities to know the company’s ability to collect project costs and identify the sources of financing needed to obtain capital, whether from financiers, investors, or banks.
Legal Feasibility Study Basics
The legal Feasibility Study Basics are based on the assessment of legal and ethical obstacles to project implementation. This entails understanding the laws and regulations related to the scope of the project and determining its relationship to other laws, such as licensing laws and decisions, copyrights, data protection, and social media posting.
For example, it is possible that you have plenty of money to start the proposed project, but it becomes clear from the legal feasibility study that some aspect of your project does not meet the legal requirements. Such as the absence of a physical headquarters for your project in a country that does not allow the establishment of this type of company except by establishing a headquarters on the ground first.