What is a feasibility study report?

A feasibility study report is a document that reflects the outcome after testing how good a business idea is, or after testing its viability. Feasibility is usually done through market research, market analysis, market survey, etc. A feasibility report is usually carried out to identify the potential size of market, types of customers, and their age bracket. Feasibility report is always written before a business plan.  A feasibility report has a couple of sections that must be explained in a simplest form.



In your feasibility report, the introductory aspect should reflect the advantages and importance of the business you intend doing. In this section, must contain the full explanation of your business, its benefits the process to follow and how it will all entirely be achieved. The feasibility report must show, in this section the methods and how you intend to carrying out your business. Also, state and describe the business you want to go into. Description of your business includes; the business name, location of the business, personnel, analyse the industry you intend going into, the market, the competition, your market strategy, management plan and operation plan of your business.

Why you need to do a feasibility study

  1. Feasibility studies show the viability of your vision: Reason why you need to do feasibility study is because it you need to look at landscape that surrounds your vision, who are your customers are? Who are you competing with? With this, you will be able to measure the likelihood of achieving success.
  2. It will give you an identity: say your product is selling of babies wears, you will have a general idea of who you are targeting and how you achieve your target. However, to attract this prestigious audience, you must understand their needs as well as the competitive landscape.
  3. Feasibility studies help execute that plan: generally, the highest benefit of a feasibility study I that it give you definite information about your business and what it require to be sustainable. By understanding development costs, where potential customers will come from, and revenue potential, you will have a feel for the sources of capital, partners, and business model needed to achieve success.
  4. Feasibility studies help you develop a plan: goals are useful when they are back up by work. The way you state your goals with the help of feasibility study, you will have a better understanding of the next steps in the development cycle.


Steps to follow in creating your feasibility study

  1. Conduct a preliminary Analysis

The first thing you need to consider in writing your feasibility report should focus on satisfied need and demand of the customers. That is, identify a place where demand is greater than supply, and that the products or services you are offering has a potential to fill the gap that has been left open in the market. Then, you need to determine if the factors to be considered in for feasibility are too high or too expensive.

  1. Prepare a projected income Statement

This step requires you to work on expected income from the business you are doing, this is one of the aspects of income statement.  You also need to consider estimated expenditure for the business. This is seen as those cost you intend incurring into your business. To determine your operating profit or loss, you need to take the difference between expected income and estimated expenditure. Hence, if expected income is greater than estimated expenditure, then there is profit. However, if otherwise, there is a loss.  In doing this, you need to understand those factors that constitute expected income and estimated expenditure over a period of time.  Items such as; proceeds from sale, revenue from sale of business assets, any form of discount receive from supplier.


  1. Conduct a Market survey, or Perform Market Research

In your feasibility report, you need analyse your market and carry out market research on the product you are selling, how to sell it and how to penetrate into the market. It is so important for you to properly carry out your market research to give you a clear picture of the revenues and return on investment you can actually expect from your business. Things to consider are the geographic influence on market, analysing competitors, the value of market and more.




  1. Plan Business Organisation and Operations

In this section, you try to set up your business and operations of the planned business to meet its technical, operations, economic and legal feasibilities factors. In addition, this includes your start-up cost and operating costs. These costs include things like equipment, methods, personnel, supply availability, overhead, e.t.c.

  1. Prepare a Balance sheet

The analysis of balance sheet; this includes the estimate of asset and liabilities, to do this; you need to identify items such as costs and financing. You also need to consider liabilities; such as the purchase of plant and equipment, purchase of land, finance for receivables, e.t.c.


  1. Review and analyze all data

You make a review of all you all your business activities, making a step to re-examine your previous steps, such as the income statement, and compare it with your expenses and liabilities. Is it still realistic? This is also the time to think about the risk, analysing and managing, and outcome and come up with any contingency plans.


  1. Make a favourable decision

At this stage, after you’ve carried out a thorough business feasible plan, you need to make a decision, whether to go on into the business or not. This is done after proper analysing and research about the business. A couple of things to consider before making the decision is whether the commitment is worth the time, effort and resources as it conform with the organisation’s strategic goals and long term desires.

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