Why Feasibility Study First? Among the word “feasible” meanings are possible, reasonable, practical and achievable. A feasibility study dynamically addresses these queries. These possible issues that have been floating in the mind of entrepreneurs and investors about the proposed business idea are studied analysed and represented in a comprehensive report.What is the benefit of a feasibility study? – who performs feasibility studies? – How and what to expect? – The Results? Also, how to appraise the feasibility study if it is reliable to influence the investment decision?
Benefits of a feasibility study
First, it is important to see how a feasibility study can turn the initial beliefs to invest in a project and by doing so it saves the entrepreneurs/investor time, effort, frustrations and money otherwise spent in the proposed project. Economic studies -as part of the feasibility study- are also considered a risk mitigation tool, that if it is built well and supported by a dynamic business plan, it will highlight the pitfalls in the life cycle of the project and ways to mitigate its risks.
It is one of the most important decisions to take!
Size and Charge
Second, the feasibility studies can range in size and fee. From a relatively small feasibility study done for small business – defined by the Central Bank of Egypt as companies with 1 million egp of sales, have less than 10 employees for the existing ones. For the newly formed companies, sales of 50 thousand egp to 5 million egp of sales and less than 10 employees – to a relatively much detailed feasibility study for a large infrastructure project that has a huge capital investment. It is equally important in all cases and the fundamentals and approaches behind it are the same, differs from the intensity of the data!
Approaches and Results
There are different approaches to build a feasibility study. The analyst has to plan the project, understand the business and the main forces that drive it to be able to build the main blocks of the feasibility study.
Porter 5 forces could be the start of understanding the drivers that impact the business, therefore, the analyst must be qualified to be able to collect and analyse the data with diligence.
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