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What is a feasibility study?

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2011-11-30 09:18:29
2011-11-30 09:18:29

Feasibility Studies

In order to make wise investments in a marketplace experiencing increasing levels of risk, companies are turning to feasibility studies to determine if they should offer new products, services or undertake a new business endeavor.

The purpose of a feasibility study is to determine if a business opportunity is possible, practical and viable. When faced with a business opportunity, many optimistic people tend to focus on just the positive aspects.

A feasibility study enables a realistic view at both the positive and negative aspects of the opportunity. A feasibility study is an important tool for making the right decisions. A wrong decision often leads to business failure. For example, only 50% of start-ups are still in business after 18 months and only 20% are in business after 5 years.

Feasibility studies are useful when starting a new business or identifying a new opportunity for an existing business. Ideally, the feasibility study process involves making rational decisions about a number of enduring characteristics of a project, including:

  • Definition of the project;
  • Current market segmentation;
  • Projected growth in each market segment;
  • Current market offerings;
  • Customer profile(s);
  • Estimation of customers/revenues;
  • Determination of competitive differentiation and advantage(s);
  • Vision/mission statement;
  • Definition of proposed operations/management structure and management methods; and
  • Financing and projected cash flows

refer to link below for more information.

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