Feasibility Study

Our team at Prospectus assists companies with writing feasibility studies. While our business is often focused around the writing of prospectuses, our staff has been involved in feasibility study writing, business plan development and research literally from the inception of our business 25 years ago. Often times a prospectus and feasibility study go hand in hand. Prior to a prospectus or offering document that a company creates to give investors to raise capital, the team will often write a business plan or feasibility study to ensure the project is viable or sustainable. We write and edit feasibility reports for market studies, real estate and a host of other projects worldwide on a daily basis, and we include professional financial projections for those that require a more comprehensive feasibility study report. Here we will analyze various features of the feasibility study market and industry.

Why Write a Feasibility Study?
What is a Feasibility Study?
Objectives and Goals When Writing a Feasibility Study Prior to Launch
Benefits of Writing a Feasibility Study
10 Septs to Writing a Feasibility Study
Types of Feasibility Studies
Additional Feasibility Studies We at Prospectus Assist With

Why Write a Feasibility Study?

A feasibility study is written before a company launches its business plans. Writing a feasibility study is prudent in that one will educate themselves on the market, the risks and overall opportunity of a given project, thus avoiding lost time and capital. There are numerous instances where one will, unfortunately, find out that the overall project – say a real estate development for example – may not be feasible to undertake. Thus, the creation and development of a solid feasibility study should give the entrepreneur needed guidance whether to pursue or scrap a particular project. In addition to learning the pitfalls and the overall market benefits of a feasibility study, the report will be needed to raise capital from investors or banks.

What Is a Feasibility Study?

While there are many definitions of a feasibility study, the most simple explanation is that a feasibility study is a well researched, educated report that will essentially let one know if a project or business is prudent to undertake. Thus, a feasibility study is roadmap to guide one’s decision whether to launch the business or move on from the idea. Disclosed within a feasibility study itself would be the market opportunity, statistics such as size and growth, as well as risk factors, key elements of the business, management team experience, and often financial projection in the form of proformas, balance sheets, cash flow models, cap rates for real estate projects and more.

In summary a feasibility is not only about “what is” but also about “how to”; how is the management team going to make a project successful? Having a thorough understanding of the market conditions, the budgets and finances needed to create or expand a project is fundamental for any company to undertake before launching a business or raising capital.

Objectives and Goals When Writing a Feasibility Study Prior to Launch

The importance of developing a solid feasibility study before a company undertakes any given project, whether start up or expansion, is vital for the success of the business. Writing a feasibility should give the company the necessary tools to make an educated decision whether to continue with the project or shut it down, alter it, or expand the plans. Without a comprehensive feasibility study the entrepreneur(s) will mostly be operating in the dark in regard to the business’ overall market and finances needed to successfully start and complete a project.

Below is a short list of some of the most important aspects of a feasibility study that should be elucidated in the report:

- - Understand the company’s objectives, implement the goals, and do so with an attitude of success.
  - Internalize the company’s SWOT analysis: Strengths, Weaknesses, Opportunities, and Threats. Know each one inside and out.
  - Have a keen understanding of the market conditions. Know the most minute details of your target market, and the general market environment.
  - Detail the risk factors of the business, including the most obvious risks and those that may not be so clear.
  - Create professional projections and financial spreadsheets. Have a thorough understanding of the use of proceeds, proformas and all financial details related to your feasibility study business plans.

Prospectus.com’s team is known for paying attention to detail with the above noted requirements of a feasibility study. Our staff will work individually and with one’s team to guarantee that each business we assist is specifically adapted to the company’s requirements.

Benefits of Writing a Feasibility Study

Since the main value in writing a feasibility study is understanding one’s business and the general environment that one will be operating in, it is safe to assume that the study’s end result will be whether to continue or discontinue the project at hand. Feasibility studies benefit the entrepreneurs in many ways, most significantly in the fact that it should give the founders the necessary knowledge if the project is ‘feasible’ or if the project is impractical. By writing a feasibility study one will gain key insights into the specific and general aspects of the business and its market. This is essential for making an educated choice and not blindly diving into a project without the needed tools for success.

10 Steps to Writing a Feasibility Study

Here are 10 essential stages on how to research and develop a feasibility study report.

Strategy, Planning and Execution – think, delineate, and implement
Market Analysis – both general and target markets
Compliance and Legal and Regulatory matters
Financials – use of proceeds, budgets proforma, projections
Use of Proceeds and Capital Structure
Risk Factors – general risks and specific risks and unforeseen risks
Growth – scaling the business
Profit & Loss – financials, forward looking statements
Management – biographies and team leaders, members, experience
Exit Strategy – sell, partnership

Lets now look at each category above in more detail.

Strategy, Planning and Execution: Develop your strategy by making plans to implement your feasibility study. Execute the business plans by implementing your strategy as well.
Market analysis: develop and explain your market. Include the target market you are pursuing, as well as the overall general market, its health and resources. Having a solid marketing plan within the feasibility study will help with the first category as well, the strategy, planning and execution of your business plans.
Compliance and Legal and Regulatory matters: the company’s team and its legal advisors should assist with any law requirements with your project. It is always recommended to have a licensed professional on hand for both large and small projects. Regarding real estate development projects, having industry experts for environmental studies, permits and licensing is prudent to have on retainer as well.
Financials: for one to consider a feasibility study professional, it is required to have solid financial projections. In addition, the team presenting the financials should be well versed in the minutia of the numbers. This includes profit and loss, proformas, cash flow and more.
Use of Proceeds and Capital Structure: a use of proceeds is needed to specifically delineate where the funds of the company are going to be allocated. While many create use of proceeds that are general and not specific, it is best to always make a detailed list highlighting the major costs and business allocation needs.
Risk Factors: a comprehensive risk factor section is always needed in a feasibility study. The risks help the company determine if the project is feasible, while investor, if any, need to see the risks to make an educated decision.
Growth: all companies like to show they can grow in a feasibility study or business plan and it is often essential to include one’s growth vision and plans.
Profit and Loss. A profit and loss statement and general financials highlighting the company’s numbers is always a good idea to include in a feasibility study. A P&L can help keep expenses in check, and create new leads and produce sales.
Management: Emphasizing the management teams skills and experience can boost the credibility of a project and of the feasibility study itself. Underline the founder’s experience, and the overall team’s experience in relation to the product or service being offered.
Exit strategy. Strong feasibility studies contain a segment on the potential exit strategy. Exit strategies vary from industry to industry, but some of the most popular types of exits comprise of a merger, or being bought out (acquisition). Some companies also pursue initial public offerings to payback/payout shareholders.

The above, while not exhaustive, will hopefully give one an idea of the various steps involved in writing a feasibility study.

Types of Feasibility Studies

Feasibility studies are written for various industries and most studies will vary from report to study. Depending on the factors of the business, the industry and market, a feasibility study will be conducted and written differently for, as an example, a real estate development versus an oil or gas exploration project. Listed here are the four most common broad terms of what feasibility types exists, and within each category there is an abundance of strategies and document preparation needs. Some studies could be 20 pages while others closer to 500 pages.

Most Common Feasibility Studies

- - Real Estate Feasibility Studies – Real estate feasibility is the most common research study that our team encounters. This may not be obvious at first, but due to population increase, and migration, people always need a place to live. Thus, creating real estate study in order to ascertain if a project is feasible is the most common feasibility report we encounter. Within a real estate study would be such topics as land surveys, zoning rights and laws, permits to develop land, the project’s impact on the neighbors or surrounding natural resources, how a project might impact traffic, natural resources, wildlife and many other issues. There is always a nuanced, if not outright difference within real estate feasibility studies when comparing a single-family home development, a hotel creation, sports arena and even skyscrapers in a downtown city.

- - Comprehensive Feasibility Study – A comprehensive feasibility study is an broad report that takes into consideration some of the most logical business assessments before undertaking a project. A comprehensive feasibility will highlight needed statistics on land acquisitions and real estate related needs, the economic and often cultural influence on the corresponding neighborhoods and land and other features.

- - Financial Feasibility Study and Economic Feasibility Study – A financial or economic feasibility report is needed to ascertain how much capital a company requires to successfully start and complete a project or product. The amount of capital that is need will of course vary form project to project, but a well written and detailed economic feasibility study will detail the financial soundness of the business plan and whether the project is monetarily feasible to pursue. Lastly, as can be ascertained from the title financial economic feasibility study, such a report will be a thorough examination of the companies financial projects and spreadsheets.

- - Market Feasibility Study – A market feasibility study will detail the company’s target market, overall market, its impact on the community, if offering a product then a testing mechanism for that as well, and much more. Market studies are quite popular and often needed for a company to make an educated decision whether to pursue the business or not.

Additional Feasibility Studies We at Prospectus Assist With

Our team has developed, written and been involved with thousands of businesses. Below are some the feasibility studies that our clients have needed – some well known, others not so much – that we have been honored to be part of.

- - Real Estate – we have assisted companies from building one house to developing major hotels. There is not an aspect of the real estate industry that we have not been a part of, and we bring years of experience writing real estate studies. Click here to read more about our Real Estate Feasibility Study services.
  - Technical Feasibility – a technical study will determine if a company and its team really have the knowledge and experience to achieve market penetration and more.
  - Schedule Feasibility -a schedule study will show if a company has the time and necessary resources to finish its project on time and often within the budget.
  - Cultural Feasibility – cultural studies will examine the impact on the overall neighbor and greater society. Museum or sports related developments often fall under cultural feasibility, as well as within the real estate feasibility study side as well.
  - Legal and Ethical Feasibility – ethical or legal feasibility studies research such implications of any given project.
  - Resource Feasibility – resource studies will examine whether the project has enough resources to undertake and finish a project effectively.
  - Operational Feasibility – an operational study will assess if a company can solve obstacles and increase potential opportunities during the development.

Whatever your feasibility study requirements you need, our team at Prospectus.com can assist. Please call or email us anytime for a free consulation.