How to Do a Feasibility Study:

A feasibility study can be one of your most valuable marketing tools when you
are searching for investors to fund your business' start up. This is why you should
know how to conduct a feasibility study

 1
Determine if you actually need to conduct a feasibility study. If a company is already doing
the same thing that you plan to do and they are making a profit, your business idea is
feasible and you don't need a study to prove it. However, if you have a novel idea or a new
take on a current business, a feasibility study is warranted.

 2
Create an outline for your feasibility study. You may want to use an example of another
company's feasibility report to help you in this stage. In general you want to include a cover
sheet, executive summary, table of contents, descriptions of your product or service,
definition of the technology used, business model, marketing strategies, critical risk factors,
financial projections and a conclusion.

 3
Describe your products and/or services. Include a physical description of the product, how it
will be used by customers, how it will be tested for safety and effectiveness, and how it will
be upgraded in the future.

 4
Describe the technology that will be used by your company. This may be technology used to
produce a product, to allow a product to function or to manage the regular operation of the
company. Also include information about your research and development plans and needs to
keep your company on the cutting edge of the industry.

 5
Describe your market environment. This will need to include a description of your target
market, how the customers will benefit from your products or services, what niche or need
your products or services will fulfill, estimate of market size, targeted geographical area and
factors that will impact the sales volume of your products or services. This might include how
frequently shoppers buy items like yours, psychographic factors, and demographic factors.

 6
Describe your competition. Make sure that this section identifies both direct and indirect
competition. Also identify key competitors and outline their market share, business strengths,
assets, goals, strategies, etc. This section will also need to include barriers that your
company will need to overcome to enter the market. Then you will want to list your
company's potential advantages, including the uniqueness of your product, your company's
assets, etc.

 7
Define your industry. To do this, state what your industry is, what products or services are
contained within the industry, how large it is, how fast it is growing, the outlook for the
industry, the industry's demands, the industry's current supply factors and any other factors
that may influence the health of the stated industry.
 8
Draft your business model. To do this, you will need to identify how your company will
generate revenue, what recurring revenue you expect, and include enough detail to support
your financial projections (included in a later section).

 9
Describe your marketing and sales strategy. Include information about anticipated marketing
partnerships, how you will gain market access, what your basic marketing and sales
strategies are, how you plan to distribute your merchandise or services, how you plan to
price your products or services, set out an amount you plan on budgeting for the first year's
marketing, and identify any other factors that may influence the productivity of your proposed
marketing campaign.

 10
Describe both your production requirements and your operating requirements. Include how
items will be manufactured, where they will be manufactured, how items will be transported,
how much space you will need to manufacture your goods, how much space you will need to
contain the operational staff, disclose whether you plan to rent or buy your warehouse facility
and headquarters, how much money you plan to use for renovations and how complex it is
to manufacture your product. You will need to disclose any information about your suppliers,
a description of any pre-existing contracts you have in place, how services will be designed,
how services will be delivered to customers, how services can be improved or modified and
whether there are any stakeholders already in place.

 11
Describe the management and personnel of your business. This section can be a list of
prospective key employee names, titles, respective duties and responsibilities and the costs
associated with employing these people. You will also want to outline support staff positions
and employment costs.

 12
Describe the intellectual property that your company will develop and utilize. This should
include all patents, copyrights and trademarks. Also include any licensing agreements that
you have secured for another company's intellectual material.
 13
Describe the regulations and environmental issues that your company will need to address.
This should include local, state, and federal laws that you will need to follow, as well as
environmental factors like waste disposal plans, international trade policies, etc. that you will
need to take into consideration when developing, producing or delivering merchandise or
services.

 14
Describe any critical risk factors, like economic stability and forecasts, investments, internal
organization of the company, etc.

 15
Outline your start-up schedule. Include important events and projected dates of completion
such as having financing in place, etc. Make sure that you also connect the milestone with a
specific business function such as financial requirements, personnel requirements, etc.
 16
Provide documentation for your financial projections. You will need to include the following
financial reports: balance sheet projection for three years with highlight inflows of capital,
cost benefit analysis, income projections for the first year, break-even analysis and income
projections for the first year.

 17
Describe your capital requirements and your strategy. This section will need to outline how
much capital you need to start up your business, what assets the company has in place to
secure financing, what types of funding the company is looking for, the anticipated debt to
equity ratio the company hopes to maintain and when investors will be paid a return on their
investment.

 18
Outline your final findings and recommendations. This section should analyze the findings
outlined in the feasibility study. You should examine the company's market viability, exit
strategy viability, technical viability, economic and financial viability, business model viability
and management model viability. Then make recommendations on how your start-up plan
can be improved, what areas need more research and development, etc.

 19
Draft your executive summary to reflect what will be included in the feasibility study. Keep
this section to a maximum of one page. This section is written last but it will need to be
positioned at the beginning of the study as an introduction to your report.

Tips & Warnings

• Don't cut corners on this report as it will be used to entice investors.
• Read through example feasibility reports to get a better idea of what is expected.
• Ask potential investors or grant-giving organizations what information they need
to make a decision and then include that in your feasibility study.
• Be realistic in your projections, as investors may be wary of an over-stated
financial projection.
• Do your homework. Don't just make up numbers as your investors will probably
do research on their own and if the numbers aren't close, they will question your
business management abilities.