What is a feasibility study?

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In order to make wise investments in a marketplace experiencing increasing levels of risk, companies are turning to feasibility studies to determine if they should offer new products, services or undertake a new business endeavor. The purpose of a feasibility study is to determine if a business opportunity is possible, practical, and viable. When faced with a business opportunity, many optimistic people tend to focus on just the positive aspects.

A feasibility study enables a realistic view at both the positive and negative aspects of the opportunity. A feasibility study is an important tool for making the right decisions. A wrong decision often leads to business failure. For example, only 50% of start-ups are still in business after 18 months and only 20% are in business after 5 years.
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Feasibility studies are useful when starting a new business or identifying a new opportunity for an existing business. Ideally, the feasibility study process involves making rational decisions about a number of enduring characteristics of a project, including:

* a) Definition of the project
* b) Current market segmentation
* c) Projected growth in each market segment
* d) Current market offerings
* e) Customer profile(s)
* f) Estimation of customers/revenues
* g) Determination of competitive differentiation and advantage(s)
* h) Vision/mission statement
* i) Definition of proposed operations/management structure and management methods and
* j) Financing and projected cash flows
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