Building business ideas from the ground-up is a resource-intensive process. Thus, businesses perform heavy research before investing capital, time, and, labor on any project. Such research operations follow a step-by-step paradigm. Simply put, businesses conduct feasibility studies to determine whether a business idea has the potential to be successful or not. Such studies are very intricate nature and are performed on various domains. The most prominent domains of the types of feasibility study are detailed below:-
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Technical Feasibility
The domain of technical feasibility can be broken down int several factors. In this type of study, businesses determine the technical necessities required to kick off a proposed project. This study considers various factors. The most important ones are:-
- The ability of the workforce to handle the needs of the project.
- The technical equipment necessary for the completion of the project.
- The structural requirements of the workforce engaged in the project.
- Cultural differences between different divisions collaborating on the project.
- Factors likely to affect the productivity of all personnel associated with the project.
At the end of this study, businesses determine whether engineering constraints can derail the proposed project or not.
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Economic Feasibility
This analysis helps businesses in determining the economic concerns associated with deploying an idea. The key considerations often detailed in a feasibility study template in this domain are:-
- How long will a proposed project take to generate revenue? In other words, the economic feasibility study determines the timeframe in which a project can break even.
- What will be the return on investment if the project turns out to be a success?
- In the case of non-profit ventures, it is evaluated if the organization conducting the analysis has enough resources available.
It is important to go to gauge the financial implications of any business venture. An economic feasibility study serves that purpose.
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Financial Feasibility
If you’re wondering whether financial feasibility is any different from economic feasibility, the answer to that question is a yes. Economic feasibility is mostly concerned with the financial aftermath that follows the completion of a project. On the other hand, financial feasibility narrows down on the capital investment for the initiation of the project. The facets analyzed in this study are:-
- Is external financial aid needed to finance the project?
- What are the potential investment sources likely to fund the project?
- What are the costs associated with the purchase of resources necessary to run the project?
Simply put, financial feasibility study analyses if the capital investment needed to fund a project can be arranged or not.
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Managerial Feasibility
This feasibility study is concerned with the determination of the managerial structure that will maximize the chances of successful completion of the project. Questions relevant to this study are:-
- Which individuals match the required criteria for the management responsible for steering the project?
- What is the level of engagement that employees are expected to exhibit within the life cycle of the project?
- What structural arrangement will yield the highest levels of productivity for all personnel involved in the project?
The key agenda of this study is to determine which personnel are needed for the project, and how should they interact with each to maximize chances of success.
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Market Feasibility
All business ideas are subject to variables determined by the market. This type of feasibility study helps businesses in assessing what those variables are. The following questions encompass the main considerations of market feasibility:-
- What is the market demand for the solution implemented by the proposed project?
- How competitive is the market in the target-domain of the project?
- What are the cultural variables impacting the feasibility of the project?
- How will the competition impact the operational activities of the project?
- Does the market situation warrant for a contingency fund?
At its core, market feasibility elucidates how well can the proposed solution mitigate market-induced constraints. It helps businesses in figuring out whether an idea can be implemented in real-time or not.
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Social Feasibility
Business ventures are heavily influenced by the environment that they choose to work in. A social feasibility study analyses the degree to which the targeted environment of a project impacts its success. The most crucial questions that shape this study are:-
- Will the social structure encircling the proposed idea be accepting of its execution?
- Does the project align with the social values of the people involved with it?
- Does the workforce need additional training to account for the social needs of the proposed environment?
For instance, a social feasibility study can be deployed to determine the best way to restructure a department within an enterprise.
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Environmental Feasibility
This study accounts for the environmental implications of a proposed project or idea. In other words, the study deals in areas that determine the degree to which a venture is environmentally viable. Some key considerations of this protocol are:-
- The estimated time in which an enterprise can procure requisite environmental licensing.
- The cost associated with procuring the said license.
- Long-term as well as short term consequences of the project on the environment.
This study analyses the above-mentioned factors and proposes solutions to mitigate problems that come forth after the study.
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Legal Feasibility
A feasibility study in this domain concerns itself with the legal as well as ethical concerns arising out of the execution of a proposed project. The most pertinent considerations in a legal feasibility study template are:-
- Legal requirements linked with the procurement of real-estate necessary for the project.
- Concerns regarding the intellectual property of the business idea.
- Legal frameworks determining the working conditions of the workforce associated with the project.
- The ethics of deploying the proposed project into the market.
Upon completion of this study, a business entity is clear to launch a project without worrying about its legal or ethical consequences.
Performing multiple types of feasibility study help business owners in mitigating risk, and maximizing chances of project success. Thus, whenever businesses assess the feasibility of a project, they often perform many of the studies mentioned above.
