Why do a Feasibility Study?

Before a business proceeds with a new venture or project company decision makers often want to make sure that it is a viable idea. A feasibility study and a feasibility report helps managers determine whether they should proceed with the proposed project. The benefit of such as study is that it helps to determine early on whether or not an idea is feasible. This will eliminate much of the time, money, and stress that could result from an unsuccessful project.

There are many great reasons to proceed with feasibility studies. For starters, the process lends clarity to decision making, and brings formality and focus to the project. A well-executed study identifies potential problems that could cause difficulties down the road. It provides managers and potential clients with valuable documentation proving the company researched the idea. This, in turn, will assist in securing capital from banks and investors.

Once the study has been completed it is the responsibility of project managers to reach appropriate conclusions based upon the results of the study. Often it is not apparent based on the results whether or not it is a good idea to proceed with the project. While you may not be able to reach an easy and obvious conclusion, the information that was gathered during the process will ultimately guide you towards your a more confident, sound decision.

Feasibility Studies vs. Business Plans

These studies are sometimes confused with business plans, which are compiled in order to outline the actions needed to get a project underway. Feasibility studies on the other hand simply help you determine if your idea is viable in the business world. The feasibility is studied prior to the construction of the business plan. If the project, idea, or business does not emerge as viable, then it can either be modified or dropped completely. A feasibility study is investigative, while a business plan is a planning function. It serves as a map towards the completion of the project.