A financial feasibility study is the assessment of the business plan to determine its viability. A feasibility study is an objective analysis based on actual and credible statistics. The feasibility study is the first step to a successful business to determine whether the business plan will bring in the necessary cash flow, thus contributing to the stability of the business.
As a leading business advisory firm in Dubai UAE, the areas we focus on while doing a financial feasibility study area are:
1. Market Health: The internal and external market conditions are studied in this phase. The prevailing and future market conditions are analyzed, the dominant players are identified, and their strength and weakness are identified to bridge the gap. The product or the service being introduced is compared to the existing products or service, distinguishing features that creates an edge over the existing product is understood and whether it solves any ‘need’ of the market is analyzed. The representatives of the target customers is studied, delivery channels are identified and value propositions to the customers are determined in this initial phase.
Some activities performed during this phase are outlined below:
a. Field Research: This includes,
b. Desk Research Internal Sources: This includes;
c. Online Research: This includes;
d. Printed Research
e. Other Market Analysis
2. Financial Aspects: The start-up cost, operating cost, financing methods, and profitability are analyzed in this step. The legal cost, capital acquiring cost, and fixed and variable cost are calculate in this stage. The mode of raising funds, through loans, from investors, or other ways are determined, by understanding the implications and cost related to the financing options. The projected income and expected return on investment are also ascertained. The customer and suppliers’ terms of payment are also determined, to ensure healthy cash flow. The general contents of every financial feasibility study report contain the following;
3. Technical Aspects: The resources necessary for the businesses are analyzed in this step. The hardware/software requirements, source and availability of capital Assets, and whether an expansion or change in line can be accommodated with the capital being invested are some of the aspects to be determined regarding facilities and equipment. Manpower requirements, the technical knowledge they should possess, training that should be provided, the competency and experience of managers are the expects to be considered regarding labor and management. Following aspects should be considered;
4. Schedule: The time frame to set up the business is decided in this stage. Though market analysis takes time, a viable business plan must be executed within a set time frame as the market is very dynamic. The business plan should be turned into reality within the stipulated time to ensure that the company’s goals and objective are met.
5. Operational Strategy: We uses the PIECES framework which helps in identifying the problems to be solved and their urgency:
P: PERFORMANCE – Whether the mode of operation provides adequate throughput and response time?
I: INFORMATION – Whether the end users and managers with timely, pertinent, accurate, and usefully formatted information?
E: ECONOMY – Whether the mode of operation provides cost-effective information services to the business? Could there be a reduction in costs and/or an increase in benefits?
C: CONTROL – Whether the mode of operation offers effective controls to protect against fraud and to guarantee the accuracy and security of data and information?
E: EFFICIENCY – Whether the mode of operation makes maximum use of available resources, including people, time, the flow of forms?
S: SERVICES – Whether the mode of operation provides reliable services? Is it flexible and expandable?
6. Feasibility Study benefits the following;
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