Why do I need a feasibility study?
A feasibility study is a formalized, written approach to evaluating your idea and can help you identify: * if your idea is viable or not
* useful facts and figures to aid decision-making
* alternative approaches and solutions to putting your idea into practice There are many reasons why new community ventures fail, but lack of planning and research is the main one. As you plan, your knowledge of your market, customers and the environment in which you will work will grow. You'll also find out obstacles to your idea as well as solutions to deal with them! This process considers all areas of your idea and ensures you have something concrete on paper. What does a feasibility study involve?
It can involve some or all of the following:
* An assessment of the current market
* An assessment of your potential position in the market
* An evaluation of the possible options for entry into the market * A short list of the possible options
* The development of a financial model to size the market and estimate the potential income and expenditure for each of the short listed options * An assessment of the impact of each main option on your group's structure and products
Who undertakes such studies?
Commissioning a feasibility study may seem pointless if you are confident that your idea is a sound one, but a decision made without thorough research can be costly. A feasibility study reduces the risk of making poor decisions and increases your success. It gives you an objective and independent view of your idea potential and enables you to make informed decisions about how it could be launched.
How do I format and write my Feasibility Plan?
This can be broken down into several sections:
a) Executive Summary - the main purpose is to gain the reader's attention. Give a brief and clear overview of the key points of each section of your plan. While it is the first section, it is the last to be written. Two pages is more than enough! b) Product/Service - describe the benefits of your product or service from the customer's point of view. What is your product or service? How is it different from what's already available? If a product, will you manufacture it and how? Who are your suppliers? What are your distribution channels? Describe patents, trade secrets, or other information. You must determine if the concept is a working and tested product or service. c) The Market - is there a market for your idea? Can this be proven? Describe the size of your market (both in terms of customers and finances). This requires research and is perhaps the most difficult section, but also most important. What is your target market? What is your estimated market share percentage? Describe seasonal fluctuations, the potential annual growth of the total market for your product or service, and factors affecting that growth. d) Price and Profitability - how will you price your product or service; at a discount, at a premium or somewhere in between? The gross margin must be high enough to at least cover your expenses. Community businesses do make profit, but its what they do with the surplus that differentiates them. e) Plan for Further Action - the future! Does the feasibility plan show that the idea is worthwhile? If so then it is time to proceed to the business plan… What can help me get started? Try thinking about the following and make some notes… THE IDEA
How would you describe your idea? What is it? Will it work? How is it different from existing "businesses"? Who will buy from you? Can you put your idea on paper? It is not enough simply to say "a service for the community" or "a café for young people". Paint a picture of your idea in words so that anyone reading this description knows exactly what you are talking about. To start your Feasibility Study - start with your "business idea" on paper. Discuss it with others and adjust it as you obtain...