Feasibility Studies: A “go” or “no go” decision
Either move forward or don’t—this is the ultimate decision that results from a Feasibility Study, which is a systematic analysis of whether or not a proposed project, venture or approach is practicable. Such a study involves:
- Understanding the scope of the proposal
- Identifying potential risks and obstacles to completion
- Formulating viable alternatives
- Analysing available and needed resources
Determining the likelihood of completion and success of the proposed project, venture or approach is crucial for any business that will need to make a significant investment into it.
Feasibility Studies protect businesses from involvement in high-risk situations that could lead to serious financial losses, underlining the importance of conducting these Studies correctly. These Studies are also useful when seeking investors or financial support for the proposal.
Many businesses look to independent accounting firms to conduct Feasibility Studies, not just because these Studies are time-consuming and labor-intensive, but also because of the internal biases or vested interests that may be involved in a proposal.
Testing the waters.
Feasibility Studies are unique to each proposal, but there are common denominators in the way they’re carried out. The team conducting a Study usually performs data gathering and market research, asks for insights from everyone involved, and prepares project plans and cost estimates, as well as projected income and financial statements.
Expect the team to use tools such as financial models, return analyses, and capital budgets. Note that the proposal itself may be adjusted while the Study is being conducted as areas for improvement come to light, to make sure that the implementation of the proposal stays within budgetary and regulatory limits.
In conducting a Feasibility Study, our team also calculates potential ROI, as well as prepares and assesses the viability of backup proposals or alternatives to the subject of the Study.
Visualizing the outlook.
Completed Feasibility Studies cover the financial, industrial, organizational, and technical aspects of the proposal’s practicability within the context of the business and its objectives. A Study generally includes:
- An executive summary
- An industry or market overview
- A detailed description of the project, venture or approach
- Staffing requirements
- Technological requirements
- Marketing strategies
- A schedule or timeframe
- Financial requirements
- Insights and recommendations
Remember that cutting corners when conducting a Feasibility Study can, at best, give key decision makers an incomplete or inaccurate projection of the proposal’s intended outcome. It’s essential to give the Studies the necessary time and attention to ensure the success of the proposal to ultimately benefit the business.