An idea can change the world. That’s the core principle that entrepreneurship is based on. On some levels, the entire field of business predicates itself on this tiny notion. Given the influence that ideas command in the day-to-day operations of businesses, they are not objects dealt with in jest. Businessmen examine their ideas like a detective examines his/her crime scene. Details are of key import in both cases. That’s why businesses conduct feasibility studies. All ideas are not born equal, and merit-based discrimination of ideas is what keeps companies from falling to the ground.
What is a feasibility study?
A feasibility analysis is a simplistic term with huge implications. It means exactly what its name suggests. A feasibility analysis determines the chance of success of a business idea. It helps executives in taking complex decisions regarding the choices at their disposal. The results of the feasibility studies are not always straight-forward. At times, a feasibility examination renders a result that doesn’t fit the binary realm of a yes and a no. Sometimes, an idea is not worth pursuing in its base form. However, with certain tweaks, it can become feasible. But, how do businesses determine said tweaks? If you guessed that they hire consultants to engage in feasibility examinations, then pat yourself on the back. Furthermore, a project feasibility study puts heavy emphasis on timing. The business world respects the ticking of the clock more than someone counting his last breaths. This may seem far-fetched, but split-second decisions can determine whether a company will stay afloat, or sink under the weight of the competition. It is not a breezy world where men and women dressed in formals chit-chat all day and walk back home with a million dollars. At the executive-level, everything is like a high-stakes game of blackjack. The notion of a zero-sum game is also something that business leaders are quite familiar with. The point is that a feasibility analysis can be the difference between a great idea executed at the right time, and the same idea becoming a capital-ingesting singularity due to its untimely execution.
Why do businesses need feasibility analysis?
The importance of a feasibility study is self-explanatory. However, the business world doesn’t concern itself with surface-level explanations. As stated before, the real meat lies in the details. From a spectator’s glance, a feasibility evaluation is a failsafe of sorts that helps business owners from making dumb calls. However, upon a detailed examination, it turns out to be so much more. A project feasibility study isn’t like a coin-toss. It doesn’t gauge a few factors to render a binary result. The realm of considerations linked with the execution of a feasibility evaluation is vast. From an economic standpoint, business feasibility would not only encompass market conditions, but also the GDP of the country where the business idea is bound to be materialized. Factors such as ease-of-doing-business and sectoral growth will also come into play. The global economic conditions will also be taken into consideration. By using this multi-tiered approach, a team of consultants will determine whether your proposed project holds any merit or not.
How resource-heavy is a feasibility study?
For a meaningful analysis of any kind in the business world, time and capital are prerequisites. The case of a project feasibility study is no different. Sometimes, companies spend months in merely deciding the consulting firm that feels best-suited to conduct a feasibility analysis for them. Sometimes, companies even go out on a limb and establish internal departments that exist with the sole intent of conducting feasibility studies. The point is that a feasibility examination is a big deal even before it starts. Furthermore, after its initiation, it follows a pre-determined set of instructions and research methodologies to come up with concrete conclusions. Even the guess-work involved in a competent feasibility determination involves a statistical approach. Consultants don’t just rub a bottle and ask a genie for advice. They put in the hours, and conduct proper research. At times, a feasibility analysis is even unnecessary for certain projects. For instance, a mid-sized enterprise doesn’t think of the importance of a feasibility study when it needs to replace a vending machine on a given floor. As an entry-level entrepreneur, it is easy to get sucked into a loop of never-ending feasibility studies that lead nowhere. Furthermore, a badly conducted feasibility evaluation is worse than an impulsive business decision. When you deal with the latter, you mess with the gods of probability. But, when you act on the outcome of the former, you challenge the gods of rationality. The bottom line is that feasibility analysis is not the monitoring of a heartbeat with a stethoscope. It is a full-blown echocardiogram!
When does a feasibility assessment work?
Business leaders have different opinions on the relative importance of a feasibility study. However, the common consensus is that a feasibility assessment makes sense only when the project in consideration is scalable and at least somewhat resource-intensive. This dilemma can be best solved by associating with a bunch of professionals who serve the best interest of your company. Consultants worth the money will automatically make you aware of what the best approach is. As long as you don’t associate with snake-oil salesmen masking as consultants, you’ll never need to spend money on unnecessary feasibility assessments. Moreover, competent feasibility consulting firms even equip businesses with long-term strategies if the deployment of a project makes a strong sense in the future.
Feasibility studies are important. Without them, businesses would never have the confidence to take calculated risks, and thereby experience growth. Furthermore, the money that a feasibility study saves is significantly higher than the money it will eat up. In the case of a big project, moving forward without a feasibility evaluation is the business equivalent of committing suicide.
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