Feasibility-study
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What is a Feasibility Study?
What are the main elements of the Feasibility Study?
- Project Overview: A basic overview of a project that includes its services, business model and delivery.
- Financial Feasibility: It includes the type of funds, cash flows, balance sheets etc. It helps generate key financial data based on assumptions.
- Technical Feasibility: It includes various aspects of technicalities such as locations, technology needed and labor etc.
- Organizational Feasibility: It explains the legal and corporate framework of the company. It may include information regarding the previous work of the company and its founders.
- Market Feasibility: It explains about the buyers, industry, competitors, present and future market potential and estimation of sales.
What are the Purposes of a Feasibility Study?
It is important to identify and estimate the initial cost needed to start the business, these includes expenses like facilities, equipment, legal fee, inventory etc.
It is to analyze the expected revenue in future. This revenue is generated from the different services being offered over a specific time frame. In this step analysis of market demand, pricing strategies and sales is done.
Assessment of inflow and outflow of cash throughout the project is evaluated. The cost analysis is based on operational expenses that includes production cost, marketing expenses and other administrative costs.
It is important to know whether the market has any consumers in need of your project. The feasibility study lets you know about the market size and potential consumers.
There are several companies that are working on the same project, before starting a new project it is important to identify major competitors offering the same services.
Identifying potential financial risks that may occur during the project are important to be evaluated beforehand. Factors such as economic conditions, regulatory changes and competition may result in potential risks.
The feasibility study plays the most important part in deciding whether to go on with the project or abandon it, considering all important factors. By evaluating the points carefully, the correct decision can be made which can be beneficial for the business in the longer run.
A feasibility study helps gain investors’ confidence, if feasibility study is made to perfection with all important key elements for the investor to understand and analyze the prospects, it is likely that they will invest in the project after reading the study.
A proper feasibility study will help ensure that there is compliance with regulatory requirements and other financial standards.
It includes the assessment of the impact of various factors such as fluctuations in sale volume, costs and pricing on the financial outcomes of the business. This helps understand the project’s sensitivity towards external factors and identifying risk mitigation strategies.
How to conduct a Feasibility Study In UAE?
- Conducting a preliminary analysis
- Preparing a profit/loss statement of the project
- Streamlining your business operations
- Prepare an estimated balance sheet for opening dayss operations
- Analysis of the data collected
- Decision making
