How to Do a Business Feasibility Study
Do you have a great idea for a new product? Perhaps your homemade apple jam is famous
among your friends and family and you've been thinking about turning your hobby into a
business. Or perhaps you would like to start a nanny cooperative but aren't sure that
there's enough demand in your area to make the project worth your time and effort. Or
maybe you work in local government and have been tasked with overseeing the development
of a new park, but aren't sure how to begin your research.
In all of these cases, you would benefit from performing a feasibility study. Put
simply, a feasibility study is a process during which you test an idea's viability:
will it work? Although the specific questions you will have to address will vary
depending upon the nature of your project or idea, there are some basic steps that apply
to all feasibility studies. Read on to learn about the basic steps.
Deciding if you Need to Do a Feasibility Study
Conduct a Preliminary Analysis
It sounds strange to say that you need to a pre-feasibility study in order to know if
you need to do a feasibility study, but it's true! A little bit or early research will
help you determine if you need to proceed with a full-blown investigation. We'll
explain more in the following steps.
Consider Your Options
Completing a thorough feasibility study is a time-consuming and sometimes expensive
process. Thus, you want to try to save your time and money for investigating only the
most promising of your ideas. If you're thinking about turning your jam-making into a
business, for example, you should carefully identify other possible alternatives to
this venture before you decide to jump full steam into a feasibility study. For example,
have you considered simply selling your apples at the market?
Assess the Demand for Your Idea
Your friends and relatives may all rave about the jam that you make and give as gifts,
but as much as they like your product, it may be the case that consumers in general aren't
willing regularly spend extra for an organic, homemade product.
Before you decide to invest the time and money into a complete feasibility study, you
need to realistically assess whether or not there is a need or demand for your idea. If
there is, then you can proceed to study the idea in more depth. If not, then you can move
on to your next idea.
If you're hoping to sell locally, visit grocers and survey their shelves: if they have
a paltry or non-existent display of homemade or organic jams, this could mean that there
is no demand for the product. Similarly, if no or very few vendors at the farmer's market
offer jam products, it could be because buyers aren't interested.
If you're hoping to sell online, you can do a key word search for your product and pay
attention to the initial results: if it seems like a lot of people are doing brisk
business, it's possible that there's demand for your product. You'll later have to
determine if you will be able to compete.