 |
 |
 |
Download feasibility study template in Microsoft Word format.
Business Feasibility Study: When a Business Plan Alone Is Not Sufficient
Have you been asked by a bank or an investor to create a business feasibility study for your new small business? Are you a bit confused about what that means or what it entails? In today’s turbulent economy, a time when banks and investors have become a bit more fastidious in their lending practices, a business plan is seldom enough to secure funding for a small business venture. Nowadays, to help ease the concerns of potential lenders, a business feasibility study is often required in addition to the business plan to prove you have done your homework with regard to economic viability. This may sound intimidating, but with the help of a quality feasibility study template—templates you can find online for little or no cost—you may be surprised by how uncomplicated these plans are to create.
About the Feasibility Study
The term “feasibility study” has been in existence for generations, and is one heard most often in project management circles, especially when the project requires a large amount of capital to implement. These types of studies, which are very common in large construction and building proposals, are often put together by a third party to examine the cost to benefit ratio of moving forward with the project. In other words, these studies analyze whether or not the project’s potential benefits (revenue) will outweigh the cost of building it.
This cost to benefit ratio is the same factor you will want to prove with your business feasibility study. Let’s face it: Money is everything in the business world, and what banks and investors really want to see when you approach them for funding is that your business, whether immediately or at some point in the future, will make them money. This is why feasibility studies are so vital, and the ability to create one—one that examines not only the success you expect, but also the myriad of potential problems and how you will address them—may be the difference in whether or not you obtain the capital you seek.
Factors to Consider When Developing Your Business Feasibility Study
When developing your business feasibility study it’s important to be honest and thorough, and although the temptation might be great to embellish in certain areas, keep in mind that if the facts don’t bear out your projections, if they don’t prove that your idea is “feasible,” you may be doomed from the start.
Unlike a project feasibility study, which studies one specific task, idea or problem, a business feasibility study should be comprehensive, looking at the entire structure of the business and how it will be operated. You will also need to identify potential problems and how you plan to solve them. These problems can arise in one of many different categories (categories listed below), and your ability to develop realistic and practical solutions in solving them, could very well be the difference in whether or not your business receives the funding you want.
The following list should give you an idea of the how the final product should look, although the exact order of items presented here is merely a suggestion:
• Cover Sheet. This page is always on top and should include your name, the name of the business and the words “Feasibility Study.”
• Table of Contents. (Self-Explanatory)
• Business Description. Here you will identify the type of business, the business sector and the products and/or services you plan to offer.
• Categories. The business feasibility study should be broken down into four or five distinct categories. These include market feasibility, organizational feasibility, financial feasibility, technical feasibility and, if applicable, legal feasibility. This section is really the heart and soul of the document, the place where you will list the business’ (and your own) strengths in relation to each category, as well as any potential problems and solutions.
• Feasibility Conclusions. This is sort of a wrap-up that will again identify and highlight your strengths, as well as how you will address impending problems both before commencing with your company and during the course of doing business.
• Attachments. Be sure to include any graphs, charts and reference materials that you utilized in the course of preparing the study.
Once you learn how to prepare a business feasibility study—a study that highlights your strengths and your aptitude as a problem solver—the chance of receiving funding from banks and investors will increase tenfold.