The Advantages of Conducting a Project Feasibility Study
Feasibility studies are useful tools for testing ideas on paper before deciding whether to implement them. If a small business is considering a significant change in its operation -- such as marketing a new product, acquiring another business or installing a new telecommunications system -- the owner or management team can evaluate the idea before committing time and money to it. Conducting a feasibility study is a rigorous process that can yield valuable information about an organization and its future. If a feasibility study indicates that an idea has good potential, the company can proceed with the business planning of how and when to develop and implement the idea.
The first step in a feasibility study is to conduct a thorough evaluation of the current situation at the company. For example, if the idea concerns moving to a larger, more modern manufacturing facility, management should understand the strengths and weaknesses of the current location. The move might not be justified in terms of increased efficiency and productivity. This early stage is also the time to determine how many in the management team are in favor of the idea.
Feasibility studies force a serious analysis of the idea and perhaps a first look at aspects of it that might be troubling to the company. For example, manufacturing a certain product might require devoting a great deal of time and resources to regulatory compliance -- something that could lessen the profitability of the new product. This might raise the question of whether the new product would be worth the trouble.
During the process of deciding whether to commit to a new business idea, it's natural for a company to consider how a change would affect its competitive situation. If a retail store has outgrown its current space, the owner should be seeking a larger space that is the same or better in terms of convenience for customers, availability of parking and general desirability. The outcome shouldn't be more space but fewer customers. If acceptable new space isn't available, the owner could direct his attention to the feasibility of gaining space by renovating the current location.
The management team should give serious consideration to the possible impact of the idea on various parts of the company. For example, if the company is considering acquiring another business or part of another company, there would be multiple disruptions to current operations. Areas to be evaluated would include banking and finance, human resources, operations and management. The current management should also consider other plans that might be in place and the impact of the new idea on them.