Heres How You Can Write a Compelling Business Feasibility Study

Heres How You Can Write a Compelling Business Feasibility StudyHeres How You Can Write a Compelling Business Feasibility StudyIf you think you have a great idea for a new product, such as a homemade cherry jam handed down to you by your grandmother, it may be time to bring your idea or product to market. You may have even received so many compliments that you feel it could be a genuine business opportunity, which is great, but youll probably need to do some research to see if the idea will actually bring in any real profits. Whats a Feasibility Study? A business feasibility study is a process that tests your ideas viability. It helps you to get a handle on whether your idea will fly or if its likely to flop. Feasibility studies can also serve as a basis for creating a ?small business plan and a marketing plan, both of which youll also need going forward. A typical feasibility study titelbilds six areas, starting with a description of your business, the market, technology youll ne ed to use, financial and organizational details, and a conclusion of how youll move forward. Before starting the report, you can do some basic research to see if your idea has enough going for it to take the time to compile the report. These 10 steps and considerations can get you started on answering that question and working through your own study. Assess Potential Customer Demand Ifyoure thinking of selling your cherry jam in your area, start your research by visiting grocers and surveying their shelves. Do theyhave a paltry display with very few jam products? Thiscould mean that theresno demand for your product. Next, go to the Internet. Do a keyword search for your product if you plan to sell it online. If it looks like a lot of people are doing a brisk business selling cherry jam or a similar product, theres a good chance that demand exists for what you intend to sell. Assess the Competition Find out who youre up against. Lets say youd like to sell your jam at the loca l farmers market. Stop by the market at least twice, once on the busiest day and once on the slowest day. See how many- if any- vendors are selling jam, and sample their products. You should be able to judge fairly easily if your product is oben liegend or unique to those that youll be competing against. If you plan to sell your jam online, see if theres a leading brand that dominates the market and already has a devoted customer base, then sample it. Starting Your Feasibility Study Now youre ready to get started on your study, and that begins with understanding it in mora detail. A feasibility study typically includes six sections or components a description of your business, a market feasibility study, a technical feasibility study, a financial feasibility study, an organizational feasibility study, and your conclusions. Begin gathering necessary the information youll need to address all these issues. What do you need to accomplish to make your business work? What are some pot ential problems you might encounter? Devise some marketing strategies. Commit all this to writing- youll refer back to it a time or two or 10. Writing a Market Feasibility Study Prepare the market components of your feasibility study first, including a description of the industry, the current market, the anticipated future market potential, and industry trends, the level of your competition, sales projections, potential customers and clients, and other revenue-generating resources. Your challenge is to keep all this as brief as possible. Eliminate wishful thinking in your assessment of the current market and your competition and be conservative with your sales projections. Writing a Technical Feasibility Study The technical feasibility study focuses on the technical and logistical factorsthat must be in place so your business canproduce, store, and deliver its products or services to the public. A technical feasibility study includes details like the kinds of materials, labo r, technology, and transportation youll need, as well as where your business will be located. Remember, a loan officer or investor will be reading this, and yours is probably not the first feasibility study hes ever encountered. Hes experienced, you have his attention, and youre taking his time. He expects your study to be polished and professional. So give a comprehensive accounting of what you expect to need to get your business off the ground, including technology, materials, labor costs, and transportation and shipping costs in clear, concise order. Writing a Financial Feasibility Study The information included in your technical feasibility study must be supported by your financial feasibility study. Your technical feasibility study should flow seamlessly and directly into this component. Heres where youll address estimated startup capital. Identify and list your sources of capital, and the explain estimated potential returns on investments. Dont overlook an explanation of h ow an investor can expect to be paid for his support of your business. Your financial feasibility study should be comprehensive down to the most minute detail. Dont assume that your reader already knows or anticipates hearing this information. Make sure your projected capital is adequate to cover the technical and logistical factors youve already outlined. Writing an Organizational Feasibility Study This covers the important details of your businesss organizational structureand will help you make your feasibility study and your business plan more attractive to potential investors and clients. An organizational feasibility study defines the legal structure of your businessand offers pertinent professional background information about the founders, the partners, and other principals involved in the venture if any. It can be helpful to include a code of ethics here, along with your businesss principles and practices. Address issues of employee training and accountability, as well a s anti-discrimination and other labor policies. Feasibility Study Conclusions Heres where yousummarize and draw the conclusions you want your potential investors and customers to understand. You dont want to introduce statements here that have not been supported by the data and other information youve already presented. Your previous study components must support your conclusions clearly and without question. Use this section to enforce items youve already mentioned and to make sure previous points are crystal clear. Stick to facts. Avoid comments and phrases like, I think, or I believe. Other words to avoid include hope, anticipate, and opinion. Your reader wants facts, not speculation. Presenting Your Completed Feasibility Study This last but perhaps most important step involves assembling your feasibility study into a professional-looking package, as you might be presenting this report to several different parties. While contents key, the presentation is equally important because you want to engage people from the start or they wont pay attention to the details. Make sure your cover letter is personalized and has impact. Design a cover sheet and assemble a table of contents. Gather everything in a neat, professional binder or portfolio. Should You Hire an Expert Consultant? If you dont have thetime to complete a feasibility study, it might make sense to hire a consultant to manage and conduct it for you. Ask colleagues for referrals and thoroughly research consultants with expertise in your chosen product or service area. Learn what their fees are. If you decide to hire someone, be clear that you want his report to be as objective and honest as possible. Otherwise, roll up your shirtsleeves and get to work. Youcanwrite a useful and worthwhile feasibility study if you take your timeand educate yourself a little first.