Why is it important to have a feasibility analysis?

We know that entrepreneurs usually do not like to look at numbers.

They don’t like the fact that they have to deal with such dull things as estimating revenues, figuring costs, what is going to have to be invested, where is money coming from. Their product or service is going to be just awesome and there is still plenty to be done until it can be launched. Ohh… and of course: they just got some great feedback from their friends and family and in that presentation they made a couple of weeks ago, quite a few people complimented the idea.

But there are several reasons for an entrepreneur to use some of hers or his time on the feasibility analysis.

Ponder about what you will sell

When you start estimating numbers one of the first questions that needs to be answered is how much will it sell?

That simple question will force you to think of what your target audience is, how many individuals (or companies in B2B) can be accounted for and are for how much are they willing to buy. By doing so, you most likely will start to realize the there are some changes that must be done to your initial idea.

Learn the risks

You will have to combine revenues, costs, investment and financing. While considering the best estimates for each input you will also become aware of the risks that are inherent to each item and how mitigate them. That means you will be more prepared for the future.

Is it worth it?

Without a feasibility analysis you will never have the capacity to understand if your project is viable. People do not like to lose money and if that is your case, it is better to have a proper understanding of how the project may fair in the end.

The check of the business plan

The feasibility analysis is the reflex of everything else on a business plan. There are plenty business plan models, templates and processes. But there is one thing that must be common to every business plan: it has to make sense. The feasibility analysis is how you can assess if the considerations of the business plan are adequate. Simple example: If the strategy for a new cloth store is to set establishment in hip zone, the rent costs will be higher than in less busier zones. Hence the feasibility analysis must reflect that.

Stakeholders

If you are looking for investors, banks or partnerships then you better have a strong case about what your project is going to be. And while initially you may not get some sharp questions about the financials of your project, inevitably those questions will come. And when they do come, you should be able to answer them well otherwise your chances will be significantly lower.

 

So let’s do it!

Even if it is not the most interesting thing that you will have to do for your project, even if you feel unease with financials or accounting, go ahead and carry out a feasibility analysis of your project. It will help have a better understanding of the future.

By the way, doing it does not have be that difficult… CASFLO APP makes it much easier to do feasibility analysis and whenever you feel unsure about something you can always check the learning center for help!