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Feasibility Study

A feasibility study looks at the viability of an idea with an emphasis on identifying potential problems and attempts to answer one main question: Will the idea work and should you proceed with it?

Before you begin writing your business plan you need to identify how, where, and to whom you intend to sell a service or product. You also need to assess your competition and figure out how much money you need to start your business and keep it running until it is established.

Feasibility studies address things like where and how the business will operate. They provide in-depth details about the business to determine if and how it can succeed, and serve as a valuable tool for developing a winning business plan.

Why Are Feasibility Studies so Important?

The information we gather and present in your feasibility study will help you:

  • List in detail all the things you need to make the business work;
  • Identify logistical and other business-related problems and solutions;
  • Develop marketing strategies to convince a bank or investor that your business is worth considering as an investment; and
  • Serve as a solid foundation for developing your business plan.

Even if you have a great business idea you still have to find a cost-effective way to market and sell your products and services.

The Components of a Feasibility Study

  • Market Feasibility: Includes a description of the industry, current market, anticipated future market potential, competition, sales projections, potential buyers, etc.
  • Technical Feasibility: Details how you will deliver a product or service (i.e., materials, labor, transportation, where your business will be located, technology needed, etc.).
  • Financial Feasibility: Projects how much start-up capital is needed, sources of capital, returns on investment, etc.
  • Organisational Feasibility: Defines the legal and corporate structure of the business (may also include professional background information about the founders and what skills they can contribute to the business).

Summary: Feasibility studies contain comprehensive, detailed information about your business structure, your products and services, the market, logistics of how you will actually deliver a product or service, the resources you need to make the business run efficiently, as well as other information about the business.

Our feasibility studies and business cases can help you answer crucial questions such as:

  • Have the alternatives been carefully, thoroughly and objectively examined?
  • What are the consequences of each choice on all relevant areas?
  • What are the results of any cost/benefit studies?
  • What are the costs and consequences of no action?
  • What are the impacts on the various interest groups?
  • What are the timelines for decisions?
  • Are the consequences displayed to make comparisons easier?

AASC Methodology

Market Sizing & Trends

The first step in conducting a feasibility study is to understand the market size and trends that are affecting the market.

To start, AASC Chartered Accountants identifies all markets in which the client competes or plans to compete. Next, we determine the relevant size of these markets. The relevant market size equals a company’s sales if it were to capture 100% of its specific niche of the market. We determine this size using both a top-down (what percent of the market can we reasonably expect to penetrate) and bottom-up (e.g., how many units can we expect to sell at what price) methodology.

As many assumptions are required when sizing a new or emerging market, we rely heavily on case studies of thousands of other companies and clients who have penetrated new markets.

In assessing markets AASC Chartered Accountants looks at the current market size and what the market size might be in the short, mid and long-term. Specifically, we answer key questions such as the following:

  • How has the relevant market size changed over the past one to five years?
  • What is the projected growth of the relevant market?
  • What factors will affect this growth? General economic factors? Changing regulatory conditions? Changing consumer needs? Etc

Customer Needs Assessment

In order to successfully serve customers, businesses must have an acute understanding of customers’ needs. Through primary and/or secondary research, we uncover the precise needs of customers, how these needs are currently being fulfilled, and what is required to better satisfy these customers.

We begin by defining exactly which customers the company is serving. This requires specificity. For instance, rather than saying that a company serves small businesses, it may be more appropriate to identify and assess its more precise market, perhaps, small businesses with 5-25 employees in large metropolitan areas.

AASC Chartered Accountants then details the demographic profiles of and assesses the needs of these customers. We answer questions such as:

  • What is the average revenues/income of these customers?
  • Where these customers are geographically based?
  • What products or services are these customers currently purchasing to fulfill their needs?
  • What factors drive the decision-making of these customers (e.g., price, service, reliability)?
  • How do these customers make buying decisions (e.g., multiple decision makers, multiple bids)?

By truly understanding customers, we are able to assess the feasibility of an idea, modify it as needed, and create action plans that maximize the probability of market success.

Competitive Analysis

In today’s global marketplace, conducting detailed competitive intelligence is critical. By uncovering the strategies of large, small and emerging competitors, critical lessons are learned. Armed with this knowledge, we are able to develop strategies for clients that avoid potential dangers and capitalize on emerging opportunities.

The first step of competitive analysis is for AASC Chartered Accountants to distinctly define our client’s competitors as any service, product or company that a customer can use to fulfill the same need(s) as the client fulfills.

This definition includes firms that offer similar products, substitute products and other customer options (such as performing the service or building the product themselves). While using this broad definition results in more competitors to analyze, it results in improved strategies and decreased chances of being blindsided by competitive actions in the future.

Once the competitors are defined, we provide detailed analyses of them, including:

  • What products and services they offer and what products and services are in their pipelines
  • The infrastructure and operational processes used by these firms and how this impacts their ability to succeed in the future
  • Their pricing structures
  • What proprietary technology (patents held or filed) the firms maintain
  • Where we can expect these competitors to be in the short, mid and long-term

The result of this assessment is a comprehensive list of competitors that also includes each competitor’s strengths and weaknesses and prospects for the future. We then use this information to identify opportunities and create strategies that will result in sustainable competitive advantage.

Idea Assessment & Development

The process of conducting in-depth market sizing and trend analysis, customer needs research, and competitive intelligence results in vast amounts of data and information.

AASC Chartered Accountants works with our clients to expertly assess this information. Specifically, we answer questions such as:

  • Based on this market research, how sound are the current business ideas?
  • What refinements can make these ideas even stronger?
  • What new ideas does the research suggest?

To answer these questions, we perform a comprehensive SWOT analysis (assessing Company Strengths, Company Weaknesses, Market Opportunities and Market Threats). Of critical importance in conducting SWOT analysis, we not only rely on our market research methodologies to ensure that we are working with the best data, but we leverage our extensive knowledge of past business successes and failures.

Specifically, AASC Chartered Accountants has a vast working knowledge of firms in multiple industries who have tried and succeeded and/or failed with specific business ideas and strategies. We apply this knowledge to our clients so they repeat successes and avoid strategies that have proven to be flawed

Action Planning

Once the best ideas rise to the top, AASC Chartered Accountants works with clients to create action plans for executing upon them.

From developing realistic operational timelines to detailed human resource plans, we create a comprehensive roadmap for clients to follow in order to be successful.

In developing action plans, we often prepare comprehensive financial models so that clients understand the exact capital requirements needed to succeed. Likewise, we create realistic assumptions regarding product/service sales and costs so that results can be more accurately projected.

The financial model and action plan that we develop not only positions clients for success from the start, but they provide an ongoing checkpoint against which the company can gauge its progress.

As needed, we provide ongoing support to modify our clients’ action plans as market conditions change and/or if existing strategies need to be optimized.

 

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