This document presents an objective and systematic accounting of the strengths and weaknesses of a proposed enterprise. It identifies the opportunities and threats foreseen in the economic, regulatory and political environments. The human, financial, and technical assets required to carry out the proposed endeavor are identified, and the probability of financial success is assessed and weighted against the overall cost and risks in pursuing the endeavor.
There are some overlaps between a feasibility study and a business plan document. The common elements are essential because it is always necessary to view enterprise assessments from a proper perspective. An expertly done feasibility study will contain the following sections, at a minimum:
- Background of the Proposed Endeavor
- Description of the Product or Service
- Description of Proposed Organizational Processes
- Business Processes
- Technical Processes
- Market Analysis
- Segmentation, Targeting & Profiling
- Customer Purchasing and Usage Behavior Assessment
- Environmental Analysis
- Organizational Design
- Human Resource Requirements
- Organizational Expertise & Skill Inventory Requirements
- Financial Behavior Forecast
- Investment Requirements
- Sources & Uses of Funding
- Profitability/Payback Potential
A feasibility study is often used by lending institutions or regulators in deciding whether to approve applications for loans or operating licenses, respectively. Therefore, in producing a feasibility study the audience must be left with no doubt regarding the objectivity of the analysis performed. Recommendations put forth by the feasibility analyst must be based on evidence and verifiable experience.
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