Feasibility Study Definition: How Does It Work?

A feasibility study is a study undertaken by a company to assess whether a particular activity is feasible. Essentially, these investigations attempt to establish whether a suggested action is economically or operationally sound. Organizations also utilize feasibility studies to understand better the risks associated with a specific activity and plan for those risks as the action is implemented.

A feasibility study is not similar to a business plan in that it focuses on the feasibility of a project. A business plan lays out the procedures necessary to make a concept a reality. In contrast, a feasibility study aids an established company in developing a strategy to improve its processes or grow into new markets.

What are the Types of Feasibility Study?

• Technical Feasibility: This entails analyzing whether or not your company has the necessary technical resources and experience to complete the project.
• Economic Feasibility: To determine the financial viability of your project, you’ll need to assess its economic variables. A cost-benefit analysis can be used to compare the financial costs against the expected benefits.
• Legal Feasibility: Your proposal must adhere to all applicable laws. This comprises all laws and regulations that pertain to your project’s operations and deliverables.
• Operational Feasibility: How effectively your project aligns with your organization’s capacity planning, resources, strategic goals, and business objectives is referred to as operational feasibility.
• Possibility in terms of time: Estimate how long the project will take to complete and set deadlines. Then consider how your project time frame fits in with your current operations, including demand forecasting and manufacturing schedules, among other things.

How Does it Work?

Follow these five steps to undertake a feasibility study:

1.Perform the Preliminary Analysis

A preliminary analysis is an ideal place to start when doing a feasibility study. This stage will have you thinking about the action’s viability and what it implies. During this stage, you should consider the following questions:

• What is the aim of this action?
• What are the advantages of taking this action?
• Is there any evidence that the same activity has been carried out elsewhere?
• What are the dangers related to this course of action?
• What will you do to ensure the project’s success?

It takes time and money to conduct a thorough feasibility assessment. The goal of a preliminary analysis is to assess whether or not a complete feasibility study is necessary. If you decide that the action you wish to take is worth additional investigation, you can perform a more thorough feasibility study.

2.Create a Study Online

Then, to specify each piece of your feasibility study, you might build an outline. The goal is to highlight the most important aspects of your research so that you can refer to them later. Consider how you’ll respond to the following questions during your feasibility study when you draught your outline:

• Do I have the necessary organizational structure in place to carry out this task?
• Do I have sufficient funds to take this step?
• Do I have the required technology to finish this project?
• Is it possible to do this assignment in a reasonable length of time?
• Will this action be beneficial to the company?
• Is there any evidence that our competitors have taken comparable steps? If that’s the case, how did it go?
• What laws must be aware of to take this action?

Make a detailed outline that addresses each of these concerns. Then explain how you’ll respond to each one and what kind of response you’ll need to prove that your plan is practical.

3.Conduct Market Research

Analyzing your competitors and the market might help you figure out whether or not your planned action is practical. If another company has carried out a similar activity, you can learn whether yours is doable and the steps to be taken for achieving your goal.

The following are some examples of standard approaches to conduct market research:

• Sending out questionnaires
• Customer interviews
• Experts interviews
• Organizing focus groups
• Examining the competition
• Trends in social media analysis
• Using data that is freely available to the public, such as search trends

Market research should assist you in providing more detailed answers to the issues posed in the previous stage. Sunshine Toys, for example, intends to introduce a new children’s toy, and they learn that people are interested in their new proposed toy by holding focus groups and sending out surveys. Their competitor’s websites also know that their significant competitors do not yet offer identical products, leaving the market free.

4.Conduct an Organizational Research

If you’ve determined that your action plan has a market, the next stage is to see if your company can carry it out. The financial aspect of the planned activity is an important consideration. During this phase, you should figure out how much you’ll have to pay upfront, what kind of long-term investments you’ll need to make, and any other charges your company will incur. Consider purchasing supplies or materials, making real estate investments, and changing people.

Consider whether your current team is capable of carrying out the recommended action. They may, for example, require additional training or personnel.

Finally, make sure you have all the necessary tools. For example, your operation may necessitate the use of specific equipment or specialist technologies. It will help if you think about how much this equipment will cost and whether your team will use it properly.

This phase will also show you what changes need to be made before moving forward with the activity.

5.Analyze Your Results

After you’ve gathered all of the data, you’ll need to examine the results to see if your company can handle the activity or if there’s a market for it. Reviewing each section of the report thoroughly and double-checking that you filled it out correctly may help guarantee that your findings are dependable, accurate, and in the best interests of your project.

This is where you’ll determine whether the action plan is realistic and what dangers are involved. Suppose the results indicate that your proposed action is viable. In that case, you can now utilize the information to plan out your next steps, such as developing a product outline or beginning the hiring process.

Here are a few details about the feasibility study, and you can conduct one as per your requirements.