The people who work for companies get ideas all of the time, but it is difficult to tell which ideas are good ones and which are bad. Before a successful company tries a new idea, it first does a feasibility study. This is a process used to determine whether or not the idea fits in with the company’s goals, and if the idea will be able to achieve its intended results.
When Do I Need A Feasibility Study?
A feasibility study is often used in extreme situations such as relocating the company or expanding operations to include new product lines. Before a company makes a major step that will require a considerable financial investment or could have a significant effect on the company’s public reputation, a feasibility study is done to try and estimate the impact of the decision on the organization.
Start With A Preliminary Analysis
The preliminary analysis is done to investigate whether or not the feasibility study is even worth pursuing. For example, if moving the company could cause the company to go bankrupt, then there is no need to go any further with the feasibility study. But if there is evidence to show that a move would boost profits, then the study would continue.
Outline Study Objectives
This is a comprehensive section of the feasibility study that describes the question that the study will attempt to answer. The outline will explain what areas of the company will be affected by the proposed action, how those areas will be affected and what the long-term effects will be. The outline identifies every party that will be affected by the proposed action, and it will examine the strengths and weaknesses of each party as they apply to the proposed action.
Competitive Comparison
In some cases, a proposed action is inspired by something a competitor has done. For example, your chief competitor might have recently moved their company closer to its main shipping hub and can now deliver products faster and cheaper. You need to analyze what the competition has done and compare the results they got to what you feel would happen with your company. It is important to analyze the competition’s movements very closely and understand how certain actions create certain results.
Your Market Space
How will your move improve your position in your market? You need to do a complete analysis of the ripple effects your proposed action will have on your standing within the market.
Financial Analysis
Your financial analysis needs to be extremely comprehensive and include verifiable sources to give your projections credibility. Each financial aspect of your proposed action must be carefully examined and rationalized using real data and accurate projections.
Once you have constructed your feasibility study, it will be analyzed by all aspects of your organization to determine if the proposed action is a good idea or not. It is important to include all affected parties in the analysis process if you want your feasibility study to give you credible results.
Jim Treebold is a North Carolina based writer. He lives by the mantra of “Learn 1 new thing each day”! Jim loves to write, read, pedal around on his electric bike and dream of big things. Drop him a line if you like his writing, he loves hearing from his readers!