Do you have an idea for a new product? Maybe your homemade apple jam is popular with your friends and family and you're thinking about turning your hobby into a business. Or maybe you want to start a babysitting service but aren't sure if the demand in your neighborhood is high enough for this project to be worth the time and effort. Or maybe you work in local government and are tasked with overseeing the construction of a new park, but aren't sure how to start your research. In all of these cases, you will benefit from conducting a feasibility study. Simply put, a feasibility study is a process when you test the viability of an idea: will it work? While the specific questions you should ask will vary depending on the nature of your project or idea, there are some basic steps that can be applied to all feasibility studies. Read on further to learn the basic steps.
Step
Part 1 of 5: Deciding if You Need to Conduct a Feasibility Study
Step 1. Do a preliminary analysis
It sounds odd to say that you need to do a preliminary feasibility study to find out if you need to do a feasibility study, but it's true! A little preliminary research will help you decide if you need to do further thorough investigation. We will explain more in the following steps.
Step 2. Consider your options
Conducting a thorough feasibility study is a time-consuming and sometimes quite expensive process. So, you want to try to save your time and money to investigate your most promising ideas.
If you are thinking of turning jam into a business, for example, you should identify other possible alternatives to this business before you decide to do a thorough feasibility study. For example, have you considered selling only apples in the market?
Step 3. Start to estimate the demands of your idea
Your friends and family may all be happy to receive the jam you make and give as a gift, but however much they like your product, there is a general sense that consumers are not willing to spend extra money on organic, homemade produce.
- Before you decide to invest time and money in a complete feasibility study, you need to realistically assess whether or not there is a need or demand for your idea. If so, then you can move on to delve into the idea in more depth. If not, then you can move on to your next idea.
- If you want to sell locally, visit stores and survey their shelves: if they don't have shelves to display organic jams or homemade produce, this could mean that there is no demand for those products. Similarly, if there are no or very few sellers at the farmer's market offering jam products, this could be because buyers are not interested.
- If you want to sell online, you can create a keyword search for your product and pay attention to the initial letters that come out: if it seems like a lot of people are doing business fast and furious, there's a good chance that there's a demand for your product. You will have to be determined if you want to be able to compete.
Step 4. Start estimating to do the competition
Perhaps you are already convinced that there is indeed a demand for your idea or service. However, you also need to know what kind of competition you will face.
- For example, even if your city has an active agricultural market, if there are ten vendors selling homemade jams, jellies and spreads, you should think about whether you can compete or offer consumers a different and more valuable product.
- Similarly, if you want to sell online, you want to start by finding out how people sell the same product, or if there is a leading brand that dominates the market. Can you compete? Start thinking about how you can achieve a special market position.
Step 5. Consider the challenges at hand
Before you move on to conducting your feasibility study, you should consider whether there are any insurmountable obstacles.
- For example, if you have pets that come into your home at any time, you cannot make food for sale in your home. You need to prepare your jam in a separate building.
- If you can't meet this need, spend the necessary funds, or do something related, then it's a good idea to put this idea aside for a moment.
Step 6. Decide whether you will hire an expert consultant
If your initial investigation shows that your idea's feasibility is successful, hiring the services of a consultant can help to organize and carry out your feasibility study. Depending on the nature of your project, you may also need additional reports from professionals such as technicians (if, for example, you are assigned to see if a public works project is feasible).
- Thoroughly research your needs for hiring a specialist, and learn how much it will cost. You need to make sure your budget is sufficient to cover these costs, or if costs are too high at this stage, you may be unwilling or unable to continue your studies.
- You want your final report to be as objective as possible, so make it clear to anyone you hire that you want honest answers, and that you're not hiring them to give you the answers you want.
Step 7. Create a time table
Conducting a feasibility study can be an involved process, and can easily take up a lot of your time. If your preliminary analysis indicates that your idea is a good one and that you need to complete a more detailed study, you want to make sure that you are able to complete the work on schedule.
Is the report based on your potential investors, your boss, or the city council by date? If so, work backwards by date and set a deadline for when the individual phases of the study need to be completed
Part 2 of 5: Conducting Market Analysis and Research
Step 1. Learn about the market
Once you are sure that you have a potential work idea, you need to learn as much as you can about the current market conditions for your products and services, how they are changing, and how you can enter them. You have done your initial survey of the market, but now You need to dive deeper.
- If you're hoping to sell your jam, go out and talk to vendors and shop owners about where they get their wares and how much the business makes for them. For example, see if the sellers at the farmer's market are willing to talk about their experiences whether they are able to work full time selling their goods, or is it just a hobby or a side business?
- You may find a number of local shops willing to sell local produce; You'll want to learn what items are most in demand, or if they experience a decline in sales of certain items at a certain time period of the year. For example, do they see spikes in sales around the holidays, but a big drop-off in January? You want to find out how stable your sales are.
Step 2. Use data from the Economic Census
You should be able to find more detailed information about the demand for your product or service by studying the government's Economic Census, which is usually conducted every five years.
- Business owners are asked about their sales, number of employees, business expenses and product types, and other things.
- You can find up-to-date Economic Census data online, and tailor your search to learn as much as you can about your business area, its market, and your community in particular.
Step 3. Direct community survey
The best way for you to learn as much as you can about the wants and needs of your potential customers is to interview them and ask them specific questions.
For example, see if customers at the farmer's market are willing to fill out surveys or be interviewed about their shopping habits and interests, perhaps you can provide free samples of your products in exchange
Step 4. Do a market survey
In addition to interviewing people in person, you can also reach people you think will buy or benefit from your idea by writing them a survey for them to fill out. If you do this, make sure to include a prepaid reply envelope so they can send the survey results back to you.
Depending on your customer, you can get better results by conducting surveys by phone or email. You can also direct people to survey sites using social media such as Twitter or Facebook
Step 5. Design your survey carefully
Make sure whichever method you choose to learn about customer needs and wants, you take the time to create detailed, specific questions for your survey.
- For example, if you want to sell your jam, be sure to ask who bought the jam for the people at home, and who it was bought for (is it for their children, for example?). they tried ma, um can't be found, and how much money they are willing to spend.
- Also ask them what they like about their current brand: color, consistency, company that makes it, and so on.
Step 6. Analyze your competitors' claims in the market
It's also important for you to know how much of a market share your competitors have, and how long they have held in position. This will tell you whether you can realistically own a significant share of the market.
- For example, if you find that local companies dominate the jam market and the results of your interviews show that buyers are very loyal to the brand, you can move on to your next idea.
- If you haven't already, be sure to use up-to-date information from the Economic Census.
Step 7. Identify your potential market share
Once you understand how your competitors are getting into the market, you have to estimate how you can enter as well. You want the results of your feasibility study to come out, with as specific numbers and percentages as possible, how you entered and how you will grow in the future.
For example, would you be able to cater to the 10% of people who indicated they prefer organic jam? Will this affect how much jam you will produce?
Part 3 of 5: Conducting Organization and Technical Analysis
Step 1. Decide where you will work
Part of the feasibility study should focus on knowing in detail where you will work.
- For example, you will need an office space that serves as the headquarters for your business operations or project, or you will need a special addition, if for example, you are planning to expand the garden for your business.
- Make sure you have access to the premises and facilities you need, and research any rental contracts or permits you need.
Step 2. Decide how to structure your company or team
If you are not heading this project alone, you need to think about what help (rent or volunteer) you need from others. You need to think seriously about the following questions:
- What do your staff need? What qualifications are required of your staff? Does anyone meet the criteria for hiring or recruiting voluntarily? How do you see staff needs growing your business or project development?
- Do you need a board of directors? What qualifications are required? Who will take office?
Step 3. Decide what materials you will need
This is the point where you should carefully investigate and list all the items you will need for each specific stage of your project:
- What basic materials do you need? Where can they be found? For example, are you able to grow all of your fruit or do you need to buy it from another garden, especially if it is out of season? How much sugar and pectin are needed for daily activities? Do you need to go to a wholesaler to get them, or can they be delivered regularly?
- You should also think about the smaller details like what materials you will need to wrap and ship your product if you are making something to sell. Also, don't neglect to include necessities such as office supplies.
Step 4. Know your material costs
While you will be more specific with the details of your budget in the later stages of the feasibility study, be sure to take note of the prices of the materials you will need while you research their availability.
Make a note of whether you can compare stores for the materials you need, or whether you are tied to a single source
Step 5. Identify any required technology
You also need to think about whether or not you need a specific technology, and investigate its availability and pricing.
For example, even if you don't plan to physically open your store and hope to sell your products online, you will still need access to a reliable computer, a quality camera, and perhaps software to manage orders and payment information
Part 4 of 5: Performing Financial Analysis
Step 1. Outline your startup costs
An important part of your feasibility study is a detailed budget, which should include the costs you will need to start your business or project.
- For example: what equipment to buy or rent? Do you need special land or buildings? Do you need special equipment or machinery? Determine exactly how much this will cost.
- Your start-up costs are the costs that must be incurred to start your business, but are not (usually) regular expenses once the business or project is up and running.
Step 2. Estimate your operating costs
There are day-to-day expenses for running a business, and they include costs such as rent, materials, and salaries that you will need to cover on a regular basis.
Step 3. Estimate your predicted earnings
Use your initial research on the current prices of comparison items to help you determine the price of your service or product. Based on how much market share you expect you can reach, and based on your expected production costs and prices, what are your expected profit margins?
- You should include information about whether your income graph is steady or growing over time. To be able to calculate this, start by carefully estimating your fixed costs (what you always spend on rent, necessities, salary, etc.). You can calculate a rough and simple prediction of your profit growth.
- The simple form predicts slower growth with appropriate increases in your fixed costs, while the rough form is more optimistic about how much you can expect to grow if demand for your product increases steadily and your operating costs remain relatively stable?
Step 4. Estimate the results of other types of projects
Maybe you don't plan to sell a product or service, instead doing a feasibility study to see if a public works project is possible. If so, you don't have to worry about financial results, but you still want to estimate the benefits to the community from your project.
- How many people will benefit from this service, and in what way? You should be able to use the results from your survey to help you answer this question.
- For example, if you are studying the feasibility of a new park, you should first ask the locals how often they visit the park, why they visit, and whether they would go there more often if the existing park was redesigned or a new special park. made. You can use all of these to estimate the long-term impact of the project on the city.
Step 5. Identify your funding sources
You need to know how you can afford to cover all of your overall implementation costs. So, carefully describe all your sources of income and funds.
For example, do you have any savings you can take? Do you need investors, and if so, how do you identify them? Do you need to secure a bank loan? Have you been pre-approved?
Step 6. Crunch the numbers
The final step when preparing the financial aspect of your idea is to do what is called a profit analysis.
- Subtract all estimated costs by the estimated earnings to see if you can afford the start-up and operating costs and turn a profit. You must be able to determine whether the profit margin is large enough or not.
- Even if the project is not focused on making money, you still need to pay attention to the numbers: given the amount of time and effort that has been expended, are there enough people to benefit in the long term to make the project worth working on?
Part 5 of 5: Completing the Feasibility Study
Step 1. Gather all the information
After you have completed each stage of the study, you need to organize your findings.
Gather the results of your survey, the evidence brought by your team members or the consultants you hired, your budget, etc
Step 2. Pay attention to your financial predictions first
In most cases, the greatest viability of your idea will lead to the question of money. Take a serious and honest look at what profit margins you expect from your business, and determine if you are satisfied and safe with those numbers.
- Do you have sufficient financial security to be able to cope with the inevitable or expected impact? For example, even if you can afford new kitchen equipment for your jam-making business, there may be times when you may need to pay for repairs. Similarly, will your business be able to withstand a bad harvest season?
- If your numbers are too tight before you even notice the unexpected (and usually inevitable) impact or impact, you may have to put it off.
Step 3. Balance your estimated business profits with your personal financial needs
If you hope to make a living off your new business, you need to have a personal budget plan.
- Once you have estimated the profit you will make from your business, determine whether the profit will cover your living expenses.
- Plus, you have to keep in mind the factor of unforeseen expenses, such as paying for car repairs or an emergency medical fund.
Step 4. Pay attention to the human costs of your project
Even if the numbers look decent to you, you have to think about how much time, effort, and attention this trip will require. Do you, your family and/or your friends take up challenge after challenge?
Step 5. Analyze your findings
Considering all the associated risks and potential benefits, does this project look promising to you?
You may have been assigned to organize this study, and the decision to give the green light for this project rests with someone else. However, you should do your own analysis based on what you find in order for you to include your conclusions in the report
Step 6. Write and share
Study results are useless until they reach the right people. You may have to complete this feasibility report for your own sake, to learn for yourself whether your idea is workable or not.
- Plus, you want your findings to be clearly organized and written for your future reference, and it's very likely that your potential investors will want to study your study results as well.
- If you are assigned to complete this study for someone else perhaps by your company or a city department, you will need to ensure that the results of your research reach the right people in a timely manner.
- If it is your responsibility to report your findings, make sure you practice your presentation, and have hand-outs and/or visual displays that can help participants to clearly follow your process and see how you arrived at your final conclusion.
