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How to Do a Feasibility Study

Afeasibility study can be one

of your most valuable
marketing tools when you are
searching for investors to
fund your business' start up.
This is why you should know
how to conduct a feasibility
 Determine if you actually need to
conduct a feasibility study. If a
company is already doing the same
thing that you plan to do and they
are making a profit, your business
idea is feasible and you don't need a
study to prove it. However, if you
have a novel idea or a new take on a
current business, a feasibility study is
 Create an outline for your feasibility
study. You may want to use an
example of another company's
feasibility report to help you in this
stage. In general you want to include
a cover sheet, executive summary,
table of contents, descriptions of
your product or service, definition of
the technology used, business
model, marketing strategies, critical
risk factors, financial projections and
a conclusion.
 Describe your products and/or
services. Include a physical
description of the product, how it will
be used by customers, how it will be
tested for safety and effectiveness,
and how it will be upgraded in the
 Describe the technology that will be
used by your company. This may be
technology used to produce a
product, to allow a product to
function or to manage the regular
operation of the company. Also
include information about your
research and development plans and
needs to keep your company on the
cutting edge of the industry
 Describe your market environment. This
will need to include a description of
your target market, how the customers
will benefit from your products or
services, what niche or need your
products or services will fulfill, estimate
of market size, targeted geographical
area and factors that will impact the
sales volume of your products or
services. This might include how
frequently shoppers buy items like
yours, psychographic factors, and
 Describe your competition. Make sure
that this section identifies both direct
and indirect competition. Also identify
key competitors and outline their
market share, business strengths,
assets, goals, strategies, etc. This
section will also need to include
barriers that your company will need to
overcome to enter the market. Then
you will want to list your company's
potential advantages, including the
uniqueness of your product, your
 Define your industry. To do this,
state what your industry is, what
products or services are contained
within the industry, how large it is,
how fast it is growing, the outlook for
the industry, the industry's demands,
the industry's current supply factors
and any other factors that may
influence the health of the stated
 Draft your business model. To do
this, you will need to identify how
your company will generate revenue,
what recurring revenue you expect,
and include enough detail to support
your financial projections (included in
a later section).
 Describe your marketing and sales
strategy. Include information about
anticipated marketing partnerships, how
you will gain market access, what your
basic marketing and sales strategies are,
how you plan to distribute your
merchandise or services, how you plan to
price your products or services, set out an
amount you plan on budgeting for the first
year's marketing, and identify any other
factors that may influence the productivity
of your proposed marketing campaign.
 Describe both your production requirements and your
operating requirements. Include how items will be
manufactured, where they will be manufactured, how
items will be transported, how much space you will
need to manufacture your goods, how much space
you will need to contain the operational staff, disclose
whether you plan to rent or buy your warehouse
facility and headquarters, how much money you plan
to use for renovations and how complex it is to
manufacture your product. You will need to disclose
any information about your suppliers, a description of
any pre-existing contracts you have in place, how
services will be designed, how services will be
delivered to customers, how services can be improved
or modified and whether there are any stakeholders
already in place.
 Describe the management and
personnel of your business. This
section can be a list of prospective
key employee names, titles,
respective duties and responsibilities
and the costs associated with
employing these people. You will also
want to outline support staff
positions and employment costs.
 Describe the intellectual property
that your company will develop and
utilize. This should include all
patents, copyrights and trademarks.
Also include any licensing
agreements that you have secured
for another company's intellectual
 : Describe the regulations and
environmental issues that your
company will need to address. This
should include local, state, and
federal laws that you will need to
follow, as well as environmental
factors like waste disposal plans,
international trade policies, etc. that
you will need to take into
consideration when developing,
producing or delivering merchandise
or services.
 Describe any critical risk factors, like
economic stability and forecasts,
investments, internal organization of
the company, etc.
 : Outline your start-up schedule.
Include important events and
projected dates of completion such
as having financing in place, etc.
Make sure that you also connect the
milestone with a specific business
function such as financial
requirements, personnel
requirements, etc.
 Provide documentation for your
financial projections. You will need to
include the following financial
reports: balance sheet projection for
three years with highlight inflows of
capital, cost benefit analysis, income
projections for the first year, break-
even analysis and income projections
for the first year.
 Describe your capital requirements
and your strategy. This section will
need to outline how much capital you
need to start up your business, what
assets the company has in place to
secure financing, what types of
funding the company is looking for,
the anticipated debt to equity ratio
the company hopes to maintain and
when investors will be paid a return
on their investment.
 Outline your final findings and
recommendations. This section should
analyze the findings outlined in the
feasibility study. You should examine the
company's market viability, exit strategy
viability, technical viability, economic and
financial viability, business model viability
and management model viability. Then
make recommendations on how your start-
up plan can be improved, what areas need
more research and development, etc.
 Draft your executive summary to
reflect what will be included in the
feasibility study. Keep this section