1. A feasibility study will help you to determine the profitability of the business venture. Before starting a business, seasoned entrepreneurs and investors would want to know if the business would be worth their time, effort and resources. It is worthwhile to know that many entrepreneurs have abandoned solid business ideas because the profitability could not be ascertained on conducting a feasibility study on the business idea.
2. A feasibility study will help prove to the entrepreneur, venture capitalists, lenders and investors the existence of the market, the liquidity of the business venture and the expected return on investment.
3. A feasibility study will help you identify the flaws, business challenges, strengths, weaknesses, opportunities, threats and unforeseen circumstances that might affect the success and sustainability of the business venture. Just like the case of my dad’s business, the business failure and loss of money would have been avoided if we had carried out a feasibility study. We simply jumped in based on someone’s recommendations because we were flushed with cash and we paid dearly for it.
4. Before starting a business, a feasibility study will enable you estimate the financial, human and technological resources that will be needed to ensure the successful launching of the business. Feasibility study helps to reveal the number and level of skill or unskilled workers to be employed and their salary scale.
5. Feasibility study will help you to determine the amount of capital required to start the business. It will also help you in establishing the budget plan, working capital and cash flow projections of the business.
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