Feasibility Study

No. 1 Best Feasibility Study Consultant in Dubai, UAE

While a great business idea is a key to a successful business, it is not enough. Various other factors can affect a project’s success. Therefore, before jumping in, it is important to first test the waters by conducting a feasibility study. This article consists of all that you need to know about the feasibility study.

What is Feasibility Study?

A feasibility study is a process of evaluating the practical possibility of a proposed project. A feasibility study includes the analysis of economic, technical, legal, and various other factors to determine if a project can be completed within the given time frame. 

Generally, a feasibility study is conducted to ascertain if the project is financially feasible. In other words, if the project will be able to generate enough profits. But, this is not the only factor, there are various other factors that affect the feasibility of a project. It can vary depending on the project type and its objective. 

It is conducted by the project manager at the planning stage of the project before any arrangements are made for its execution. The project manager assesses the technical, economic, financial, legal, operational, and environmental aspects of the project before investing resources like time and money into it. 

Does the company have enough funds to complete the project? Does the company have enough technical and legal expertise to successfully complete the project? Does the project have the potential to generate enough revenues? A feasibility study aims to answer such questions and save businesses from investing precious resources like time and money into a project that is destined to fail. You can select no. 1 feasibility study consultant in Dubai, UAE for helping you with feasibility study. 

Feasibility Study - Feasibility Study

What is the purpose of a Feasibility Study?

A feasibility study is the first step in starting a new project or business. It evaluates if the project is viable and if it has the potential to be successful or not. It gathers data and information that helps business owners and project managers make important decisions regarding the project. 

The main purpose of conducting a feasibility study is to analyze and evaluate the feasibility of a new venture based on various factors. Let us understand the purpose and aim of a feasibility study –

What is the purpose of a Feasibility Study - Feasibility Study
  • Estimated project cost – It evaluates the total cost of the project or venture. Knowing the cost helps us determine if the project will be able to generate enough revenue to cover the costs.
  • When can we expect the business to give returns – Businesses do not start giving results at the beginning. Every business goes through a phase where it is still in the gestation period and does not generate enough revenue. Knowing this gestation period helps businesses arrange the required amount of working capital. 
  • Is there a good market for the proposed project – Before starting a venture, it is important to determine if there is a good and stable market for the product and services that the project aims to provide. 
  • Are there enough potential consumers of the product – A feasibility study also involves determining if there are enough potential customers for the products and the market size. 
  • Likely competitors of the project – The feasibility study also aims at identifying the major competitors who offer similar products and services as the proposed plan. 
  • The amount that customers would pay for the product – It also helps you determine the amount that the customers would be willing to pay for the products and services. 
  • What are the potential risks in the business – The feasibility study involves identifying the potential risks of taking up the project, and the threats and opportunities associated with it.
  • What are the expected profits – One of the major reasons for conducting a feasibility study is to ascertain the potential profits that the project will earn.

Understanding Feasibility Study

A feasibility study tests the practical viability of a proposed project. It aims to determine whether the project has the potential to succeed. In addition to the likelihood of success, it also identifies the potential problems and issues in pursuing the project.

The project managers determine whether they have all the required resources like manpower, funds, and the right technology to take up the proposed project. It also measures the estimated return on investment and profits. If it is a non-profit project, it determines the benefit it will provide to society. 

Any organization planning to expand its business should first undertake a feasibility study to determine the potential market for the product or service offered by the business. For example, before entering into a new venture of manufacturing luxury cars, the company should first determine its target market and are there enough potential customers for these cars. Also, it should determine if it has all the financial and technical resources required to undertake the project. 

A feasibility study is not just concerned with new projects and ventures, but it also helps determine the feasibility of any change in the way a business operates. For example, a feasibility study can be conducted to evaluate if it is viable to enter into a merger or acquisition deal.

Why is it important to conduct a Feasibility Study?

The importance of a feasibility study can be defined by the fact that it can help businesses make it right before committing valuable resources like time and money into the project. A feasibility study could result in uncovering new ideas and information that can change the scope of the project. It not just helps the project managers but also provides a clear picture to the stakeholders. Rather than jumping into a new project and finding out that it is destined to fail, it is better to test its feasibility beforehand. Given below are some of the benefits of conducting a feasibility test –

  • Improves Focus – It helps improve the focus of the team members by providing crucial information about it and making it easier for them to work.
  • Helps Identify new opportunities – The feasibility study helps identify the opportunities and threats to the project. 
  • Provides valuable information for decision making – It helps provide valuable information that can be analyzed thoroughly and used to make informed decisions.
  • Estimates the costs and revenues in advance – It also helps the project managers ascertain the costs that will be incurred in the project and the potential revenues. 
  • Help determine the market size – It helps estimate the market size in advance and focus only on the target customer segment.
  • Helps identify competition – It is a great way to identify the major competitors in the market and how they can affect the sustainability of the proposed project.
Why is it important to conduct a Feasibility Study - Feasibility Study

What to include in a feasibility study report?

From the above discussion, you must have understood the importance of conducting a feasibility study and how it can help you make better decisions. The feasibility study evaluates various aspects like the potential market for the product or service, and the availability of financial and technological resources. The results of this study are summarised in a feasibility study report. Let us look at the components of the report –

What to include in a feasibility study report - Feasibility Study
  • Executive Summary – An executive summary is a short paragraph that presents the findings and the results of the feasibility study. It also states the recommendations based on the research. This summary aims to help readers get an overview of the study without having to go through the details.
  • Specifications of the product or service – This part presents detailed information about the product or service being offered by the proposed project or venture. It states the features and unique selling points of the product or service. 
  • Technological Considerations – This part presents the evaluation of the existing technology that the company has against the technological requirements for the new project. It states whether the product can be manufactured with the existing technology or requires new technology. 
  • Existing market for the product – The next section presents the nature of the existing market for the product and the major players already successful in the segment. It presents the customer segment that should be targeted and evaluates if the product has a potential market. 
  • Marketing Strategy that you are planning to follow – It also states the marketing strategy that would be suitable for promoting the product. 
  • Staffing requirements – Next, it presents the analysis of the manpower requirement for taking up the project. How many more people would the company need to process the production and the cost involved in it. 
  • Timeline for Completion – It also states the estimated time in which the project is likely to complete successfully.
  • Financial requirements of the project – Financial analysis is one of the most important components of a feasibility study. This section presents a detailed cost analysis. It also presents the analysis of the estimated revenue and profits. 
  • Recommendations – Lastly, the report consists of recommendations based on the findings of the study. After evaluating all the aspects, it recommends whether the project is feasible or not. 

Aviaan Accounting is the no. 1 feasibility study consultant in Dubai, UAE that can help you create a feasibility study report.

Types of feasibility studies

A feasibility study evaluates various aspects of the proposed project. Based on the area of research, the following are the major types of feasibility studies –

  • Technical Feasibility – A technical feasibility study evaluates the technical resources that are available to the organization. It evaluates whether the company has the capacity required for the production and whether the existing technology can be used in the new project. It also evaluates the feasibility and suitability of the existing hardware and software systems. 
  • Economic Feasibility – The assessment of economic feasibility focuses on the financial aspects of the project. It conducts a cost-benefit analysis of the proposed plan. It estimates the costs and the potential revenue from the project. It acts as the base for the top management to make better decisions. If the estimated benefit from the project is more than the estimated cost, it is viable, and vice versa. 
  • Legal Feasibility – Every type of business has different legal requirements and one should have a thorough knowledge of all the legal considerations before jumping into any project, only to land in trouble later. A legal feasibility study investigates if there are any conflicting laws or regulations associated with the project. It aims to answer whether it is possible to undertake the project given the legal conditions and restrictions. 
  • Operational Feasibility – Operational feasibility study aims to analyze the existing operating capacity of the company against the operational requirements of the proposed plan. It also evaluates, if the completion of the project will help the company and how. It evaluates whether it is feasible to undertake the project, given the existing operational capacity, and is it possible to complete it successfully. 
  • Scheduling Feasibility – Any project needs to get completed within the given time frame in order to be successful. The scheduling feasibility study assesses the possibility of completing the proposed venture within the estimated time frame. If it is not completed within the given time, it might lose its credibility and lead to huge losses. Therefore, it is important to conduct a scheduling feasibility study. 

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How to conduct a feasibility study?

Now that you are aware of the importance, benefits, and types of feasibility studies, the question that remains is how to conduct it. Given below are the steps to be followed while conducting a feasibility study –

  • Conduct a preliminary analysis – This is the first step involved in the preliminary analysis. You must start by making a project plan. The project plan must focus on meeting the needs of the target customers. It should have a unique selling point and a competitive advantage over others. It should also determine the market size for the product and does it fit the requirements. 
  • Prepare a projected profit and loss statement – The next step is to prepare a projected statement of income and expenditure. You have to work backward and determine how much you can earn by providing the product or service. For this, you need to take into account the cost of the project. 
  • Conduct extensive market research – The next step is to conduct comprehensive market research. Conducting thorough market research is of utmost importance for your business. It will help you get a clear picture of the expected revenues, geographic influence on the market, competitors, and the market size. 
  • Organize your business and operations – Once you have made the plan, the next step is to organize your business resources. It should include all the costs involved in the project like equipment, real estate, personnel, and raw material availability. 
  • Prepare an opening day balance sheet – Once you have organized the resources, you should prepare an opening day balance sheet. This balance sheet should consist of an estimate of the assets and liabilities that will be required for the successful completion of the project.
  • Analyze all the data collected – After conducting the entire analysis, it is time to review it for the last time and analyze all the data collected. Make the necessary changes if required in the project. See if everything is in place. Check your income statement with expenses and liabilities to see if it is realistic.
  • Make a decision – The last step is to gather all the findings and analysis together to arrive at a decision. Decide whether committing to this new project is worth all the time, money, and effort. Then, make a go or no-go decision.

No. 1 feasibility study consultants in Dubai, UAE, follow all the steps meticulously to provide you with the best results.

How to conduct a feasibility study - Feasibility Study

Wrapping up

A feasibility study is an important first step for any business. It helps the management save itself from jumping into a project that is destined to fail. Conducting a feasibility test for any project is one of the best ways to avoid failure. It not just helps in better decision-making, but also helps identify the strengths and weaknesses associated with the project. Therefore, make sure you go for a feasibility analysis before jumping into muddy waters and taking up a project that is not feasible. 

Conducting a feasibility study can seem like too much work for someone inexperienced and might also require you to hire more staff. Aviaan accounting is no. 1 feasibility study consultant in Dubai, UAE that can help meet your needs. 

 

What Aviaan Accounting offers?

We at Aviaan accounting have a team of highly experienced professionals who are always on their toes to provide you with the most accurate analysis. We are the No. 1 feasibility study consultant in Dubai, UAE. We have assisted many organisations and industries in determining the financial feasibility of their projects. Our extensive experience and understanding help us develop comprehensive financial feasibility study reports that help our clients make well-informed decisions about the feasibility of their projects. Moreover, we are always on time with our deliveries. 

So don’t wait any further and visit us at Aviaan Accounting, which is the No. 1 feasibility study consultant in Dubai, UAE. Get your feasibility study service now!

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References

  1. Accountants & Auditors Association – https://www.uaeaaa.ae/
  2. International Financial Reporting Standards – https://www.ifrs.org/

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