A feasibility study is probably the most important part of a business plan. The study determines if a business has a possibility for success by considering the market environment, operational requirements and the financial projections. The assessments should completely review the working and start-up processes of the business. According to the College of Business at Florida State University, a feasibility study should be no longer than five pages and take no longer than 12 to 16 hours to complete.
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Write up to a page on what your business is about. This is the preliminary study to determine if a feasibility study is even necessary. If the business sounds plausible however, this information will serve as an outline for the more in-depth aspects addressed in the remainder of the study.
Assess the market environment that your business will be entering in one to two pages.
Make a list of the probable customers for your business according to such aspects as age, gender, class and/or household size. Then consider the populations of customers in those categories near the intended location of your business. Make another list of the major competitors for your business--direct and indirect--and consider how, why, or if customers will choose your business instead. Also mention whether the overall market in your area is expanding, consistent or intermittent. Consider the challenges that face the market as a whole and how you will overcome them. Other considerations can include how you and your competitors will be reaching your intended customers.
Consider what will be required for your business to become operational in about two pages.
Make a list of the equipment and materials you will need, along with suppliers for those items. Determine how long it will take to become fully operational. Consider the infrastructure of employment and the various educational requirements of employees for your business. Compare that to the infrastructure of your competitors. Consider the costs for equipment and other start-up costs, including location preparation.
Asses the financial capital required for becoming operational and how you intend to cover or repay the start-up costs and remain operational in about a page.
Consider how your business will make money and how much you are projected to make in the first three, six and nine months, along with the first, second and fifth years of business. Take into consideration all the aforementioned assessments. Also consider the initial demand for your business and how you could increase demand. Consider the costs for advertising your new business immediately and long-term.
If the study finds that your business is not feasible, try to determine the cause and consider potential changes that could improve feasibility. If your business does not prove feasible however, remember that a successful idea is often preceded by many failures. If the study finds your business to be feasible and you are presenting the study or entire business plan to another party, it is important to utilise visual aspects such as charts, graphs and tables to condense and clarify information.
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