A feasibility study is an analysis of the possibility of an idea. It focuses on answering the main question, “should I carry on with the idea I’ve got?” …and it helps you find and reach your answer. A feasible business project is one that generates good cash-flow and profit and helps you reach your goals that you want and need in your business. Knowing that a business idea will not work saves a lot of time, money and effort. The project can be a new enterprise for a business that exists, expansion of a current business or a start-up business.
Reasons To Do a Feasibility Study
A feasibility study is a written plan that helps you know if your business is viable, and includes useful facts that help you in decision making. The main reason for business failure is lack of planning and research. Researching, planning learning more and more things will help your business grow and become strong. You will find problems in your idea but with a feasibility study you will find the solution to your problem.
Feasibility Study vs. Business Plan
A feasibility study is not the same as a business plan. A feasibility study focuses on the question “is my business idea viable?” while a business plan outlines the transition from idea to reality. A feasibility study is a way of finding possible problems in the future of your business and also allows you to find the solution to that problem. Testing out different scenarios and seeing where they will go, a feasibility study narrows down the best scenario for your business, this is the source of your business plan.
The feasibility comes before the business plan. A business plan is only done after you are sure that the business is practical. In business planning you lay out a map, this map explains how the business will be developed and it provides a plan for project execution. This is why you need a feasibility study in case a business idea is not going on the path you want it to go; it saves you a lot of time effort and money. Once you have done your feasibility study you’re just one step away from a business plan, one step closer to success.
Here’s a typical example of where a feasibility study is needed in hotel planning:
Many people, when planning for their new hotel ideas, tend to make assumptions. They haven’t thought about planning different alternatives and scenarios associated with possible problems, this usually causes people to go down the road to failure. Some hotel planners like to use flat nightly rates in their projections. They don’t realize they need to change their price for different seasons, high and low. If they stick with this simplistic approach competitors will see this as a chance to differentiate on the basis of price and add extras to make it seem like the rooms have more value. How do you avoid problems like these? That’s right a feasibility study is the answer.