When it comes to setting up a new project or expanding an existing business, conducting a feasibility study is vital. The feasibility study aims to assess the financial, economic and commercial aspects of the proposed project. This study is an analytical tool that helps investors and entrepreneurs make an informed decision about the feasibility of the project and expectations of the potential financial return.
Feasibility study concept and importanceCopy
What is the concept of a feasibility study?Copy
At the beginning of your establishment of the project, you expect it to achieve future returns in exchange for sacrificing some resources at the present time, and therefore the success of your project depends on the success of God first and then on the soundness of the investment decision you have taken, which requires data, information and many studies to reach a high degree of safety. Hence, we can define the economic feasibility study of the project: it is a scientific method to estimate the probability of success of an investment idea before its actual implementation, in light of the ability of the project or investment idea to achieve certain goals for the investor, and therefore the feasibility study is a practical tool to avoid the project potential risks and increase the likelihood of its success.
What is the importance of a feasibility study?Copy
Did you know that some small projects fail at their beginning due to the absence of a feasibility study? Some start-up entrepreneurs even make a common mistake by overlooking, thinking that the scarcity of a business idea is enough to ensure its success.
The lesson is not only in finding an innovative idea, but in the implementation, application and continuity that achieves you profitability and growth, so your study of the feasibility of the project is the most important steps that you must take before implementing and launching the product or service, which gives you a clear perception of all aspects of the project such as estimating demand, pricing, how to promote the product or service provided - and what are the requirements of the project from buildings, tools, devices, what is the expected annual income, when you will recover the capital, and what is The return on investment and what is the added value of the project to the economy, as well as the opportunities for expansion or the threats posed by the project
There are even many details that help you compare between several projects and choose the most appropriate project based on criteria that interest you.
We can highlight its importance through the following things:
It represents a practical tool to judge the feasibility of an investment project or not before and during implementation.
It represents a scientific tool used by the investor to compare between investment projects and choose the best ones in a way that combines achieving his own profitability and the general profitability of society.
Financing institutions or institutions supporting the project may require a feasibility study form to ensure the feasibility of the project economically and developmentally
It is considered a methodology and reference for the project owner to ensure the safety of application and implementation and to take the necessary measures in the event of deviations, such as increasing costs from the budget allocated to it.
It gives the investor a prior vision about the expected economic, political, social and legal changes during the life span of the project and their impact on the revenues and costs of the project and then the future profitability of the project.
Components of the feasibility studyCopy
After you know the concept of the feasibility study and its importance, we would like to inform you that it consists of a sequential set of specialized studies in order to measure all aspects of the marketing, technical, financial, economic, social and environmental project, and before you get acquainted with specialized studies, we would like to inform you
In practice, not all of these studies may be used in all projects, so we will only mention the basic studies that must be available in the various feasibility studies.
Before moving on to specialized studies, we would like to note that there are stages for preparing a feasibility study,
The first stage, which is known as (study feasibility-pre) or study of the idea of the project, in which an exploratory report is prepared in order to verify the likelihood of success of your project by studying the idea of the project and the extent to which the market needs the good or service to be provided
The second stage in which specialized feasibility studies are prepared
The last stage in which a report is prepared for the investment proposal that includes the results of the second phase and submitted to the funding bodies, and in the event that the financing is internal, the last stage may be dispensed with.
The feasibility study includes several key elements related to the financial and commercial aspects of the project. These items may include:
The target market is analyzed and the demand for the product or service provided is assessed. This includes studying competitors, analyzing market trends, and identifying potential opportunities and challenges.
Study Marketing Article( Click Here )
This study includes aspects related to operations, marketing, organization and management. How the project is implemented, operated, and the product or service is marketed.
Technical Study Article( Click Here )
The financial aspects associated with the project are evaluated. This includes estimating the costs required to set up and operate the project, evaluating the financial projections of future income and expenses, and determining the expected financial return and capital payback period.
Financial analysis article ( Click here )
Identify and assess potential risks that may face the project, and develop strategies to deal with them. Potential risks can include changes in the market, legislation and laws, or economic conditions.
Legal Study Article( Click Here )
Study Marketing Article( Click Here )