Should you do a feasibility study to start a new business?
To answer that question, but before we find an answer, let’s understand the background of what does business mean and what a feasibility study is. It’s not only one of the top American dream to own a business, but the phenomenon is seen everywhere in the world. Until past couple of decades, an individual rarely like ventured into business even when the environment is conducive. In recent years, where globalization has reached every nook and corner of the world, the potential of businesses is also unleashed and younger generation is bullish about businesses.
A business, by definition, is a system in which desired goods or services are sold for profit. Each key word – system, desired goods or services, sold, profit – are important because without them a business can’t survive long term. The first keyword, “System” is set of process and operations through which the goods or services is made available. The “desired goods or services” points to the fact that there should be an existing market or a new market created for the produced goods or services. Next keyword, “selling” is not a simple process because here is the customer’s complex decision making process along with the choices provided by competition. Final keyword, “Profit” is the goal of running the business and this goal can’t be achieved unless all aspect of the business is well taken care of.
A new entrepreneur should understand the inherent complexity in starting and running any business. Especially for a first time entrepreneur the challenge is really overwhelming. They should think in a structured approach to the opportunity and resources in hand. Hence it is highly advisable to seek a professional help from a business consultant in the form of feasibility study.
The feasibility study is an exercise usually done by the team of business consultants, to analyse and empirically arrive at a conclusion if the subject business is viable or not. The duration of the study may range from few days to several months depending on the nature of the business and information that need to be collected to ascertain a decisive conclusion.
Can only a business consultant do the feasibility study? Not necessarily. In many cases, the aspiring entrepreneur himself/herself may be able to collect all the relevant information and structurally analyse it to arrive at a conclusion.
However, here we are talking about multiple skill sets like data gathering, market analysis, production capacity analysis, operational requirements, human resources required, and nevertheless all the complex financial calculations required to arrive at profit and loss. Another common question an entrepreneur has is if the feasibility study is positive, what are the chances that the business will be successful in reality? It has the same chances as that of making a nice dish from an excellent recipe prepared by a competent chef. The point to be noted here is, similar to the individual skills of person cooking the dish, the entrepreneur’s dynamic abilities has lot to do with the business success.
Ramesh Marimuthu,
Business Consultant,
NiMble Business Solutions
