The feasibility study reveals factors that have the biggest influence on the business idea, and can identify so called “make or break” factors. They are used to define whether the idea can succeed commercially, or not. Before you put a lot of time and resources into the development of business plan, it is wise to clarify the major questions about the business idea.
The feasibility study uncovers many problems, which can be divided into such categories as organizational transfer, economic feasibility, technical feasibility, resources and availability, time planning and legal issues. Some examples of economic feasibility are demand analysis, target markets and audience, analysis of competitors in the market segment and location. In the economic feasibility, the financial problems are the most important ones.
- Start-up costs: How high are the costs for the launch of your project or company?
- Operational costs: How high are operational costs, e.g. rent, goods, salaries, taxes, or maintenance?
- Income projection: What should the price of the products or services be? What are the realistic sales figures?
- Funding: Which sources of funding are available? Under what conditions?
- Profitability: Do I reach break-even point? If yes, when? Is the project profitable? If yes, to what extent?