A feasibility study is created to minimize risk and determine the feasibility of a project. As soon as it is certain that a specific project could be carried out profitably, only then could it be implemented. It is not merely an investigation but also a plan or a framework on how to carry out the operation of a business project.
A feasibility study contains five main components, namely: marketing study, technical study, management study, financial study, and social desirability.
During the marketing study, the researcher must determine whether there is sufficient demand for the product and the company’s competitive position in the industry. The sales projection for the project should also be researched as part of the market study.
The manufacturing process, plant size, production schedule, machinery, plant location and layout, structure, raw materials, utilities, and waste disposal are all taken into account when dealing with of a technical study.
The management study involves how the project will be managed, such as the business organization, including the organization chart and the role of the management personnel of each unit, the skills and the amount of manpower required.
In the financial study, the researcher must include the evaluation of total capital requirements, break-even products, sales and prices, the amount of sales required to make a certain amount of profit, and the cash payback period.
Last but not least is social desirability, which is measured by the economic benefits to people living in and around the community.
It is not surprising that one of the important steps in business development is a feasibility study. The feasibility study is used to determine the potential for success of a proposed business venture. The success of a feasibility study is based on the careful identification and evaluation of all the important aspects for business success.
