A feasibility study is conducted by identifying potential problems for a business that could cause it to be unsuccessful. This is accomplished by examining the three main areas affecting business success: finance, marketing and organization.
Feasibility studies typically begin with a market analysis. The study must examine the target market and whether or not it is growing and by how much. Other aspects that must be identified include projected supply and demand, the quantity and quality of competition and the appropriateness of the proposed location.
If the research yields favorable results for marketing, organization should be addressed next. The potential business must have an organizational structure that includes management and outlines other types of employees. The qualifications needed and desired for each type of employee must also be considered.
Technology must be researched, as technology cost for start-ups is critical for planning the budget. Without an accurate analysis of technology needs a business can fail soon after it begins.
Finances are the final issue to review. The study must include start-up as well as operational costs. All sources of financing should be listed, as well as projected revenue and profitability.
At the end of the study it should be clear to everyone involved whether or not the proposed business idea should proceed.