Business Feasibility Study
Before you invest in a new product or service, expand to a new market or start a new business, you should spend some time doing a Business Feasibility Study.
The purpose of a Business Feasibility Study is to get a clear understanding of the strengths and weaknesses of the existing business or proposed business venture, the resources required to launch it and to make profit, and ultimately the prospects for success.
A Feasibility Study can also include an evaluation of multiple business options (scenarios) in terms of cost, value, risk and a probability of success.
Business Feasibility Study – the components
Depending on your specific circumstances, a Feasibility Study should assess some or all of the following aspects of your business concept:
- Product/Service Feasibility
- Industry/Market Feasibility
- Organisational Feasibility
- Financial Feasibility
- Technical/Technological Feasibility
Product/Service Feasibility is an assessment of the overall appeal of the product or service being proposed. The idea is that before you spend money on developing a new product or service, you should first check if there is a market for it.
Is there potential for your product or service to return a profit? Are there enough customers in your target market who will purchase a sufficient quantity of your products/services so your business makes a profit? What other product/service options are open to your customers?
Industry/Market Feasibility Analysis is an assessment of the overall appeal of the market for the product or service being proposed.
Three aspects are being considered here: how attractive is the industry/sector in terms of maturity, growth, competition etc. Is the window of opportunity open (are your competitors making money?). Can you find a large enough niche for your products/services to make profit on a consistent basis?
Organisational Feasibility is conducted to determine whether a proposed business has sufficient management expertise, organisational competence and resources to successfully launch its business.
Financial Feasibility assess total start-up cash required, expected financial performance and cashflow, potential risks associated with this business and overall attractiveness of the proposed venture in terms of Return on Investment.
Technological Feasibility is conducted to assess if the business idea is technologically viable.
Are the machines, technology and know-how readily available? What are the substitutes or alternatives available at present? Is the proposed technology emerging, mature or soon to become obsolete?
Your Business Feasibility Study doesn’t need to be long or expensive.
Its depth very much depends on the size of your investment, on the competition you will be selling against, the risks involved, market conditions, whether you need to finance your business through loans or venture capital, and a few other factors.
A feasibility study should include market research, financial feasibility and other components, but it does not require in-depth analysis, industry-by-sector reports, breakdown of trends and statistics.
Of course the more research you do the better, but it is frequently just a simple reality check aimed at answering a couple of questions:
- Are the customers likely to buy my product or service?
- How should I price my product or service?
- Should my price be lower than the competition, or should I enhance my product’s value and charge a higher price?
- How likely it is that someone else could enter the same market and grab a substantial market share, before I establish my business? What are the barriers to entry? How would I deal with it?
- Is the business likely to sustain itself and achieve consistent sales?
- Am I and my team capable of getting the business off the ground and running it?
- How much money do I need to make my concept work and is this money going to be invested wisely (bring sufficient return)?
The outcome of a Feasibility Study provides an input for a Business Plan.
Feasibility Study Grants
Enterprise Ireland and City and County Enterprise Boards offer Feasibility Study Grants to eligible companies.
The maximum Feasibility / Innovation Grant payable for the S&E Region shall be 50% of the investment or €20,000 whichever is the lesser. The maximum Feasibility / Innovation Grant payable for the BMW Region shall be 60% of the investment or €20,000 whichever is the lesser.
You can get more information here.
Need help with completing a Feasibility Study?
If you need assistance with completing a Feasibility Study, contact us.