One of the most frequently asked questions before starting any project or creating a company is what the chances of success are. The truth is that we don’t have a crystal ball to know for sure, but we can get an idea of the feasibility and profitability of our initiative. How? With a feasibility plan, a tool that serves as a roadmap to face the challenges of the entrepreneurial journey.
In this post, we’ll talk about the advantages of the feasibility plan and the steps to follow to create one. Keep reading and learn how to create your own!
What is a feasibility plan and who should create it?
The feasibility plan is a strategic document that analyzes whether a new project will be sustainable and profitable. Therefore, it is essential to implement it before starting any business idea. It is not limited to financial aspects only, but also outlines the state of the market, competition, potential risks, and economic projections. Ultimately, this plan allows you to make informed decisions, anticipate challenges, and design strategies to seize opportunities.
In this context, a professional specialized in financial analysis is responsible for preparing the feasibility plan. With their expertise, they can explain the financial aspects of the business in detail, make realistic projections, assess risks, and offer a strategic approach. This document is then included within the business plan.
Why create a feasibility plan?
As we have mentioned, having a feasibility study is essential both for people starting a company and for employees within an organization who are launching new projects. If you’re thinking of making an investment, you should also consider the advantages of creating a feasibility plan:
- It allows you to anticipate potential risks since you will have access to a strategic assessment to understand the project’s strengths and weaknesses, providing you with tools to reduce uncertainties and apply preventive actions.
- You can work with financial clarity, which translates into realistic projections of costs, income, and cash flows. This helps you make informed decisions while increasing investors’ confidence by providing data on potential returns and the project’s financial security.
- It serves as a tool for effective communication, as the entire team will be aligned toward common goals and have a clear understanding of the organizational structure, roles, and responsibilities, optimizing project execution.
- It’s not a static plan; it allows for adjustments and adaptations as market conditions change.
Steps to create your feasibility plan
Now, let’s go over the steps to create your feasibility plan and the key points that cannot be missed. Take note!
Define the objectives and scope of the project
- Clearly establish the project’s short-, medium-, and long-term objectives.
- Set the project’s scope — where you want to go and the expected results. Remember to be realistic with your goals and timelines to avoid losing motivation.
Conduct a market analysis
- Research the market, analyze trends, and identify growth opportunities.
- Identify your potential client, their needs, and how to reach them. In this regard, creating a buyer persona will help you tailor your strategy to the ideal customer profile for your project.
- Evaluate the competitive landscape and analyze both direct and indirect competitors. Also, review what might work for your business and what should be ruled out from the start.
Establish financial viability
- Include startup costs, expected income, and cash flow.
- Also analyze profit margins.
- If necessary, seek funding sources and assess the return on investment.
Design a detailed operational plan
- Make sure you have the human resources needed to bring your idea to life. Then, define the organizational structure and assign roles. Be clear from the beginning about each team member’s or employee’s responsibilities, and maintain effective communication with them.
- Detail the production or service delivery plan, including suppliers and key processes. Don’t forget the systems and technologies required to launch and sustain the project.
- Also, think about the marketing actions you’ll need to implement to make your business known in the market.
Assess and overcome risks
- Consider the potential obstacles that could arise during the project’s execution. How will you overcome them?
- Evaluate the project’s viability under different scenarios and market conditions.
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