Feasibility Studies

business feasibility study is just what it sounds like: a systematic study to understand whether or not a specific project, venture, or approach is feasible. The ultimate outcome of any feasibility report is a ‘go’ or ‘no go’ decision. You either move forward or you don’t.

Keys to Success

The study must be based in reality, not pure speculation or abstract theory. This usually requires primary and secondary market research, to understand whether or not customers will buy, or if investors will invest. The project, venture or approach must be sufficiently well defined that specific hypotheses can be tested. Without detailed product or service characteristics, nothing can really be determined to any degree of confidence.

Market Feasibility Study Types

Different feasibility study companies have different strengths. At LogicMethods our expertise is healthcare services market feasibility. We research and analyze market factors such as demographics, demand, market capacity, competition, regulation, cultural trends.

Typical Questions Asked in a Feasibility Study

  1. Has anyone attempted anything like this before? In this location? If so, what problems did they encounter? Did they ultimately succeed? If so, what kind of return on investment did they realize?
  2. What are the decision factors? What are the factors that will enter into the final decision as to whether the project, venture or approach is feasible and should move forward? Typical factors involve financing, staff resources, material resources, market demand, the competitive landscape, location availability, time and space constraints, etc.
  3. Are there benchmarks or hurdles that need to be surpassed? What business requirements are absolutely necessary for a successful solution? Are there unavoidable market risks or environmental risks? How can they be best mitigated?
  4. What data is available internally and externally? What is the quality and reliability of this data?

Why Conduct a Feasibility Study?

The most common reason would be to limit one’s losses. For example, suppose a Doctor is considering launching a new cutting edge dermatology care center, the cost of the equipment could easily cost run into tens of thousands of dollars, and the launch would be expensive. It could take a while before there was any possibility of recouping any costs through sales. Worse, such an entrepreneur could burn through a sizable amount of funds in this venture before giving up on the business. In this case, a feasibility study should be a high priority before significant resources become invested. If the feasibility study indicates a very low probability of success, it would be far less expensive to invest in the feasibility study and kill the project, than it would be to go forward without the study and see the project fail. We have all seen storefronts with three or four different restaurants in the span of a few years and wondered why they keep opening them even as they fail. If only feasibility studies were conducted, perhaps some losses could have been avoided.

Whether a study’s findings are positive or negative, the feasibility study can help entrepreneurs and managers better understand what aspects of the project are of greatest strategic importance to the success of the venture. If the feasibility study is negative, the findings still may uncover previously unknown market opportunities and can thus help set the stage for some other successful product or service commercialization. If the feasibility study is positive, the findings should provide useful insights and benchmarks for the project as it moves forward in the commercialization process.