How to Do a Feasibility Study

To be successful in business you need to have good business planning, which calls for setting long-term goals and objectives. A feasibility study can help you determine if you can meet your goals. Your business model needs to be profitable and a feasibility study can help insure your success. You can adapt these guidelines to your business to get you started.

Instructions

Difficulty: Moderate

1. Analyze the market for the feasibility of your product. Consider if you are entering an expanding market or if there are a number of competitors already in the market. Study how readily the supplies for your business are available compared with the demand for the finished product.
2. Project sales figures compared to costs of production. Factor in fixed costs as well as variable costs. Also figure in distribution costs as well as your access to market outlets.
3. Look at the technicalities of production. Consider how much you need to spend on buildings and equipment upgrades or purchases versus the final projected income. Remember to factor in environmental and governmental costs as well.
4. Determine that you have a labor pool large enough to produce the item. Factor in wages, salaries and benefits in this part of the feasibility study. Also consider if the labor force may need special training in order to make the product.
5. Calculate the capital requirements both to get the business started as well as to keep it going until you are in profit and in full production. Identify credit sources as well as costs to borrow money.
6. Assess the desire of the founders to make the product a success. Evaluate their past experience and success with similar products. Analyze which type of business organization works best for your particular situation.