Four-Step Feasibility Study Method
Feasibility studies can take on different forms, depending on their contexts. In large enterprises, schools, and government agencies, a feasibility study could take months or even years of work in conjunction with outside consultants. On the other hand, a small business with the right connections and resources can perform an ad hoc feasibility study over the course of a few days. Regardless of the timeframe involved, the project manager in charge of the feasibility study must remain impartial as he or she handles four critical tasks:
Examine the Market
The first step to an effective feasibility study method involves a critical analysis of the competitive landscape for a product or service. Many first-time entrepreneurs make the mistake of assuming that their product has no competition. In reality, any other way in which a customer allocates money, time, or attention can be viewed as competition. The feasibility study should paint a realistic picture of the likelihood that enough customers will be satisfied to result in a sustainable offering.
Review Technical Requirements
Understanding the needs of the marketplace does not always guarantee the ability to meet customers’ expectations. Including this analysis in the feasibility study method puts the overall requirements for a successful project into the proper context. In many cases, a study can help determine whether the project sponsor will require more resources internally or whether an outside vendor or partnership can handle the tasks more effectively.
Explore the Business Model
Having assessed the current market need and a team’s ability to execute, a feasibility study can look at the long-term viability of the overall business model. This feasibility study method relies heavily on tools like scenario planning to ensure long-term success. Project managers can discover whether the business model actually offers enough profit potential to make the initiative worthwhile. Likewise, study administrators can examine whether the new product or service under consideration requires such a significant change as to make it untenable within a business.
Look for an Escape Route
“Forever” is a dirty word among many venture capital firms. Investors like to know that they’ll make a profit, and they want to have a strong idea about when they can cash the check. Common feasibility study methods include an analysis of potential exit strategies, especially for investors and other stakeholders that may want to move on. Study leaders can investigate how a project will evolve over multiple iterations, and whether it relies too heavily on key personnel.