The Power of Feasibility Studies in Making Informed Business Decisions

The world is full of ideas that initially seem attractive and profitable. You might be an investor thinking about expanding your expanding your portfolio by starting a new venture, such as an insurance intermediary. Alternatively, you could be a business considering adding a new line of service. For instance, a fashion design company might want to venture into the retail sector by opening boutique stores. Or perhaps you’re a mining company looking to enhance your existing operations by implementing a new fleet management solution.

These ideas might seem profitable and logical at first glance. You’ve considered how they can create value and synergize with your existing business lines and activities. However, it’s crucial to understand that initial ideas, which haven’t been thoroughly considered, can encounter unexpected hurdles.

In your insurance intermediary business, there might be regulatory requirements of which you’re unaware. In the fashion clothing retail business line, there could be unfavorable trends in your target market, such as intense competition in boutique shops or increasing consumer preference for famous global brands, which are your main competitors. Another aspect to consider is location: while the market might generally be favorable, the success of your shops could hinge on their location.

In mining fleet management, you need to decide whether to choose autonomous trucks. What are the benefits of the different solutions you’re considering? How compatible are they with your other systems?

These considerations could transform what initially seemed like a good idea into a poor decision and catastrophic investment. This is where a feasibility study comes in. Its job is to help you make better-informed decisions, foresee potential issues, analyze risks, and assist you in making a quantitative assessment and comparison of the upsides and downsides.

A feasibility study considers different aspects of your future business or project:

• How technically viable is it?
• How marketable is your product?
• How feasible are the financial projections?
• How should you choose locations?

It’s worth noting that there are instances when a more focused business analysis is required, one that doesn’t encompass all aspects of a feasibility study. For instance, you might need to choose between three locations or two different technologies. In such cases, a business case is more appropriate. However, regardless of what it’s called, the key is to opt for a systematic analysis of the situation, enabling decision-making based on facts.

A feasibility study helps you “measure twice before cutting.” And it incurs a small cost that can prevent the draining of your wealth. By providing a comprehensive analysis of all the factors involved in your proposed venture, a feasibility study can be a powerful tool in your decision-making process, helping to ensure the success and profitability of your business.