A feasibility study is usually presented to investors to finance investment projects, based on the schedule and resources required, as well as by examining the income and return on investment conditions, to convince the investor that he is participating in a profitable project. The feasibility study of each investment project is carried out in three parts: market studies, technical studies, and financial studies. Usually, such studies address issues such as market conditions, product specifications, production capacity, necessary machinery, investment amount, and project profitability. The activities of the institute in this area include:
- (Opportunity Study)
- (Pre-Feasibility Study)
- (Feasibility Study)
- (Technical Study)
A feasibility study has the following sections and headings:
- Part One: Introduction to the project and the company
- Part Two: Economic analysis (market studies)
- Part Three: Technical studies and estimation of the project’s infrastructure facilities
- Part Four: Project investment estimation
- Part Five: Estimation of production costs and annual sales value of the project
- Part Six: Financial forecast and method of financing the project
- Part Seven: Determination of the project’s financial and economic indicators
Before any investment, project implementation or any other economic activity, it is necessary to conduct a feasibility study (FS). FS analyzes the feasibility of an idea and answers the important question “Should we implement the proposed project or not?” All activities carried out in the context of FS are aimed at answering this question. Feasibility studies can be used for various reasons, but the main reason is to examine the feasibility of the proposed business plan. Investors who have business ideas or any other ideas they have in mind for investment should start conducting proper feasibility studies of that plan before taking any action on implementing that idea. This will definitely save time and money.
An economic business is justified and approved when it generates sufficient cash flow and profit (depending on the capital and the investor himself) and copes with the risks it faces. In addition to these features, the sustainability of the plan is also of great importance. The feasibility of a business plan must also be maintained in the long term. Of course, it should not be overlooked that some plans, in addition to these features, must also meet other goals of investors (other than profitability and sustainability), such as job creation. A business plan may be a new and emerging business or the development of an existing business or even the creation of a new organization for an existing business. Evaluating options A feasibility study can only begin when investors present their business ideas (scenarios) for investment. Of course, it should also be noted that in some cases, investors use their ideas by trusting the experiences of companies and feasibility consultants. After these ideas are presented, the feasibility study helps investors to give these ideas, which are sometimes scattered, a systematic format and shape. Then, using a series of studies, they reach a deep understanding of their ideas. Usually, the number of business ideas decreases rapidly depending on the existing conditions.
In the feasibility study process, you may explore different ways to set up your business and find a market for your product. In simple terms, it is quite similar to a voyage of discovery, and in voyages of discovery, you may try different paths before reaching your desired destination. Just because the initial studies have given negative results, it cannot be concluded that the idea is not suitable. However, sometimes the drawbacks and limitations that are attributed to that idea can be true.