According to Startup Genome’s 2019 Global Startup Ecosystem Report, only one out of every 12 businesses that start, succeed. That’s a piddling success rate of 8% or a sobering 92% failure rate.
Of course, most entrepreneurs feel optimistic that they will become part of the 8%. However, as the above statistic shows, the odds are against it. To put it simply, businesses are much more likely to fail than to succeed.
If you are planning to launch your own business, there is a way you can improve your chance of succeeding. It’s by commissioning feasibility study consultants who can conduct a feasibility study so you can answer one crucial question. Is your business idea feasible?
It makes sense to find out early on — before you pour all your time and resources into your plan — if your idea has merit. If it does, it is more likely to succeed than fail.
A feasibility study is an exploratory study that assesses the practicality of a proposed plan or project.
Feasibility studies are not only for assessing business ideas. Anyone with a plan can use it to ascertain whether his proposed project is practical. In fact, a feasibility study is a tool that investors, entrepreneurs, executives, and all types of stakeholders use to assess if an idea, plan, investment, or project is likely to succeed or fail.
The complexity of a feasibility study lies in how it is conducted and the many factors feasibility consultants have to consider in their assessment. When concluding a project or plan’s feasibility, you must look at these factors together.
For clarity and guidance on how a feasibility study can help you, read on for some of the questions a feasibility study answers.
1. Is my project or plan technically sound?
Technical feasibility is one of the core components of a comprehensive, professional feasibility study. This section tries to answer the question: Is your project or plan technically feasible?
Suppose you are thinking of launching a revolutionary pair of shoes — breathable, barely there, comfortable, multi-purpose, waterproof trainers.
A technical feasibility assessment will tell you if your product can perform as designed. Therefore, you may have to translate your product blueprint into an actual working model at this stage. At the very least, you must articulate every step in the production process.
A technical feasibility assessment also involves determining whether you have the technical capacity to produce your planned product or service. In a technical feasibility study, you will:
- Analyze every step of the process.
- Identify all the required materials, tools, technology, personnel, and logistics.
Thus, the technical feasibility component of a feasibility study will help firmly grasp your project or plan’s technical resource requirements and uncover technical risks and challenges, if any.
2. Is it legal?
Your feasibility study specialists will also analyze your project or plan from a legal perspective to answer the question: is your project or plan legal?
In this core feasibility study component, the specialist will identify the laws that apply to the project or plan. For instance, suppose you want to put up a gas station. In this case, your legal feasibility specialists will have to check whether your project complies with existing land use and environmental planning laws.
Going back to the earlier example on revolutionary trainers, legal considerations include finding out if your product might be violating existing patent owner rights. What if your business will be funded entirely by a foreign entity? Your legal feasibility analysts will have to check if your project or plan is permissible under existing foreign ownership laws.
The above are just limited examples of what a legal feasibility analysis involves. At this stage of a feasibility assessment process, you must identify all potential legal requirements and barriers. Then, you have to decide whether you can overcome the legal obstacles, if any.
3. Are the project/plan objectives attainable within the stipulated time?
If your project or plan cannot take off within the specified time, it will cost you money and resources you may not have to keep it going. Thus, it is crucial that a feasibility study also answer the question: Can you complete your project within the specified timeline?
Your feasibility consultants will conduct a scheduled feasibility analysis to answer this question.
Suppose a home and office wallpaper distribution company plans to institute an enterprise resource planning system to streamline processes and centralize company data within one year. Likewise, an entrepreneur wants to launch a delivery service app within three months.
In either case, the goal of the feasibility analyst is to assess the possibility that the project or plan can be completed on time. If the answer is yes, it gains a high schedule feasibility score. Otherwise, it should be ascertained if the deadline or timeline is mandatory or adjustable.
4. Are there any better alternatives to this project/plan?
Since a feasibility study is an exploratory analysis of a project or a plan, it is very effective at uncovering barriers and challenges. In answering how one might overcome these barriers and challenges, a feasibility study can lead to potentially better alternatives.
For instance, if your idea’s technical resource requirements are too steep, you will have no choice but to explore the possibility of lowering your requirements or tweaking your idea to bypass the requirements you cannot afford or do not have.
While analyzing the market, particularly your competitors, you may be able to identify an unmet need that you might use as an entry point. To illustrate, through a feasibility study, a delivery app company realized that the grocery and food delivery segments are oversaturated. However, they saw a service gap in the fresh produce sector. Consequently, they decided to launch a fresh produce delivery app instead.
Go or No?
A feasibility study will tell you whether or not your idea will work and explain why it will succeed or fail. Among other things, it will tell you if your idea is technically sound, legal, and attainable within the given timeframe. It will also help you uncover opportunities and better alternatives.
In other words, a feasibility study provides a solid basis for deciding if you should go ahead with your plan or project, reframe it, or scrap it altogether. This is superior to proceeding or ceasing based on gut feel.
AUTHOR BIO
Mini Madhavan is a Management Consulting Partner at Affility, a comprehensive advisory services firm assisting clients in the UAE and worldwide with IT, risk and management consulting solutions. A specialist Audit and Consulting Professional with over 12 years of experience, Mini is an EY alumnus, a Fellow Member of ACCA who helps Entrepreneurs and Business leaders to accomplish their business goals by planning, optimizing and implementing their business processes.
Also published on Medium.
