Many prospective entrepreneurs and businessmen talk about the need for a business plan before launching out on their new projects, but they rarely mention the need for a feasibility plan for their projects. This shows they are either ignorant of what a feasibility report really is, or they do not know its value and importance for any prospective business.
A business plan is a detailed breakdown of your business idea and how to achieve it among several intervening factors. But a business feasibility report or plan is much more detailed. It examines the unknown chances of success or failure for any proposed business idea. It examines the viability, possibility, probability, likelihood, practicability and achievability of a new business idea.
Based on the reports of a detailed feasibility study, a prospective businessman can decide to go ahead with a new business idea or ultimately forgo it if it is apparent that it won’t work in the long run. A feasibility study is best undertaken before the commencement of any new business or before the modification of an existing business – because it serves to guide an investor into making the right decisions.
As soon as an investor decides to accept the prospects of a feasibility plan for his business idea, he starts to estimate the initial capital that would be needed for the business, the location to cite the business, how to hire staffers, requirements for employees, and a structure for running the business to make profits and meet customers’ needs.
A feasibility study is best carried out by a consultancy firm who is paid to do the work, simply because they have the experience and the resources to get detailed information and statistics needed by the prospective investor to base his decisions.
There are various types or aspects of a feasibility report depending on the type of business in question, but it should typically contain the following components –
- Introduction of business report
- Description of business
- Market consideration – a preliminary evaluation
- Management team
- Technical specifications and production plan
- Marketing plans
- Examination of the critical risks and problems
- Financial and economic plans
- Projection of revenues, profits and losses
- Evaluation of viability and conclusion