How Important is a Feasibility Study
The importance of a feasibility study has been debated within many companies for years. What has come out of the debate is there are those that think they know what the public wants and those that actually check to make sure their assumption is true.
By conducting a proper feasibility study, the target audience can be clearly identified along with their purchasing power. This process will determine the economic prowlness of a proposal by a business. This is an important part of a business case that should be done after a business idea is created but before it is technically developed and long before the production of any product is started.
In essence, a feasibility study is to determine the viability of a business venture in a specific area or sector of business. This is the process that will identify any possible problems that might occur between the acceptance of the product with the consumer and how profitable the business venture might be.
Just because a business has a great and needed product for a region, does not necessarily make it a good business opportunity. Not all ideas that make sense are great business opportunities. Like selling water in a desert, since there is a shortage of water, it sounds like a great idea. But since there is very little water present, there is not a population that sustains a living there and sales would not exceed the cost of importing the water to the arid region, this is not a good and viable business venture.
What can be learned from a feasibility study can better help a business and a project manager deciding if the business venture will be profitable. In the study, the logistics of the business should be determined. If there is a problem, can it be overcome in a cost effective manner?
The right marketing strategy can also be uncovered with a feasibility study. Determining how to properly reach the tragic audience is a vital step in creating a viable business in any region. The location of the business and how accessible to the target audience will also be a factor. A late night pizza delivery business would not perform well if based out of a mall that closes at 9 pm.
Finding out if your product or service is wanted, if the consumer is capable and willing to spend on it and will they have access to it when they want is can all be determined with a feasibility study. If a business skips this step in the development of their product, they very well could be throwing their investment dollars away.