A ‘feasibility study’ is the assessment that you do to check and validate your business idea. It starts and finishes even before you indulge in your detailed business plan. It finds out market scenarios, and detailed analysis to check that your idea is a ‘feasible’ one and will not phase out in due course of time.
To find out whether your business will be viable, or is even possible to proceed with, is more important than you can imagine. You need to make sure that a particular business venture is even worth your time and energy. This will save a lot of ill-health and failures.
Rochester.edu established that" it is defined as a controlled process for identifying problems and opportunities, determining objectives, describing situations, defining successful outcomes, and assessing the range of costs and benefits associated with several alternatives for solving a problem".
It contains all the bulk data, calculations, assessments, cost viability, production viability, product or service demand validation and various other assumptions about market threats, etc. In simple words, a feasibility study validates the ‘potentiality' of a business idea.
When to proceed with it?
A feasible business idea is the one that has the proper reasons to proceed with it. If it is a product-based business, the market demand of the product needs to be determined first, as basic groundwork. You proceed with a business venture when it is found to be able to generate enough cash-flow and profits, sustain the threats and risks that it faces, hold the ground for a long-term investment, and bring back returns for the owners.
A feasibility study must be conducted very meticulously. A proper and attractive feasibility study can help validate the entire project in the minds of investors and helps gain in on funds even before a proper business plan has been worked out!
Since a feasibility study is an extensive study, often entrepreneurs prefer to indulge in a pre-feasibility assessment. This means making certain rough drafts and simple phone calls, that give you a simple outline of the more elaborate feasibility study that you undergo next. Of course, you don't proceed if the pre-feasibility study gives you negative results, and this also saves you a full-fledged feasibility study.
Conducting crude market surveys is another part of the pre-feasibility assessments, where you determine things like your targeted audience, the demand of the product or service that you plan to provide, how you plan to spend on transport, and other such details, which might seem trivial but actually prove to be very crucial before you go ahead with the much-hyped feasibility study.
Conclusion
The feasibility study, always done at the beginning of a new venture is almost as important as the strategic business plan. Both are almost alike, yet different in more than a few contexts. A successful feasibility study definitely proves to be the start of a successful business venture.