Understanding Business Feasibility Analysis
Tags: Analysis, Process, Management, Business, Feasibility Study

Hey there! TallyDekho will highlight the need for business feasibility analysis in every business organization for effective business planning. In today’s article, we’ll learn what is a business feasibility analysis, its process, and why it’s important for running business operations successfully.

What is Business Feasibility Analysis?

In business, there are several issues and opportunities, various organizational objectives, and several alternatives for fixing any business problem. Thus, the process that analyses all such business elements and supports the overall decision making based on done cost-benefit analysis of the business or a particular project is known as business feasibility analysis.

Also, it is only after business feasibility analysis is done that a business plan is laid down and formulated thereafter.

Objectives of Business Feasibility Analysis

To review the business strengths and weaknesses

To segregate the best project alternative

To formulate the business plan in the best possible way

To review if the decided plan will bring the desired outcome or not

To analyze the market position and gather other necessary information

To execute the general ideas into measurable goals

To give the shape to the business within the existing budget

Process of Business Feasibility Analysis

Well, conducting business feasibility analysis requires a very experienced person who possesses years of expertise and knowledge in the industry. The process consists of a sequence of steps that are followed to frame a final business plan.

Define Business goals

First of all, the first step is to define the respective business goals that the business wants to accomplish. The reason behind doing this is to clarify the actual business objectives and desired business prospects.

Select profitable ventures

The next step is to prepare a list of all the profitable ventures that the business should choose. In this step, you don’t have to consider the positive or negative factors, instead, you just need to select the profitable ventures thereof.

Segregate and choose the best alternative

After selecting the profitable proposals, the next step is to evaluate the positive and negative factors that the business has to foresee if it selects that particular proposal. Thus, the business has to choose the alternative that possesses the capability of giving maximum output with minimum input.

Conduct feasibility analysis

Once the business is done with proposal selection, the next step is to conduct a feasibility test to check the viability of the business plan. This feasibility analysis consists of:

Technical Analysis

Economical Analysis

Operational Analysis

Legal Analysis

Environmental Analysis

Frame a final business plan

The last step is to frame a final business plan after considering all the internal and external factors that can affect the business proposal in a positive as well as negative way. Also, once the final plan is ready, a corner for change must be maintained as the market is always dynamic, so it shouldn’t create a problem if any change has to be done later on.

Significance of Business Feasibility Analysis

No doubt, conducting a prior business feasibility analysis helps in making better business decisions. Apart from this, there are several other important points as well that makes this tool very useful in selecting the most desirable alternative.

Helps the business to withstand at the economic and operational levels

Conducting business feasibility analysis helps the business to withstand at the economic and operational levels. When a business conducts a feasibility test, it helps the business to evaluate the required change at all the business levels and therefore, formulate the same in the best possible way.

Guides in selecting the most profitable business proposal

The main motive behind conducting business feasibility analysis is to select the best and most profitable business proposal without incurring unnecessary planning expenditure.

Helps in cutting organizational costs

The best thing about business feasibility analysis is that it helps in evaluating all the possible outcomes of a business proposal and thereby, helps in reducing the organizational costs.

Helps the business to evaluate the viability of the present business venture

With the help of the feasibility test, a business can evaluate if the present business venture is bringing the desired results or not. If not, then where is the business lacking and what control measures are required to make it work in the way it was planned.

Assists the company to review its strengths and weaknesses

It is through effective business feasibility analysis that a company can easily review its strengths and weaknesses, thereby, try to weed out the elements that are the reason for such issues.

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