Feasibility studies aim to objectively and rationally uncover the strengths and weaknesses of an existing business or proposed venture, opportunities and threats present in the environment, the resources required to carry through, and ultimately the prospects for success. In its simplest terms, the two criteria to judge feasibility are cost required and value to be attained.
A well-designed feasibility study should provide a historical background of the business or project, a description of the product or service, accounting statements, details of the operations and management, marketing research and policies, financial data, legal requirements and tax obligations.
Generally, feasibility studies precede technical development and project implementation.
Feasibility study evaluates the project’s potential for success; therefore, perceived objectivity is an important factor in the credibility of the study for potential investors and lending institutions.
•Gives focus to the project and outline alternatives.
•Narrows business alternatives
•Identifies new opportunities through the investigative process.
•Enhances the probability of success by addressing and mitigating factors early on that could affect the project.
•Provides quality information for decision making.
•Provides documentation that the business venture was thoroughly investigated.
•Helps in securing funding from lending institutions and other monetary sources.
•Helps to attract equity investment.