What is a feasibility study?

What is a feasibility study? In its most general form, this concept implies an assessment of economic profitability, which is based on the calculation and analysis of a number of parameters. Obviously, the set of such characteristics will vary depending on the analyzed object.

If we are talking about business, then the feasibility study is interesting not only to the entrepreneur, but also to the investor, whose funds are planned to be attracted for the implementation of a particular project. All the attention of the first and the second is riveted:

• to the amount of costs that are associated with the implementation;
• to the payback period.

As you know, the investor does not go empty-handed. In order to persuade someone to part with the money, you need to provide all the necessary calculations that relate to the two above mentioned points. By the way, businessmen often come with the necessary business plan for the necessary means. And in this regard, very often the question arises about the difference between the feasibility study and the business plan. At once it is necessary to note that it is not possible to call such a statement a correct one: these two concepts are from one opera, as they say. Only a business plan is a broader concept. And with his help attract an investor easier. If you justify the rationale, it is part of the business plan. After all, it often does not concern the whole business, but only a certain part of it.

As a direction of analysis, which is directly related to financial aspects, is the feasibility study of investments. Here, there are no fundamental differences from the basic methodology.

Suppose that the need for modernization of the production process is long before N company: competitors using new developments and more modern equipment could reduce labor and energy costs, which enabled them to offer products of traditional quality, but at a lower cost.

It is clear that it is unlikely to obtain information on innovations (an option with industrial espionage is not considered). Therefore, the feasibility study of your own investment project will need to be carried out independently. Here is a solid "classic in black": a multifactor analysis of economic, as well as commercial efficiency, financial stability and environmental security. And only after its results an informed decision is taken.

However, one should not think that the actions described above are the exclusive prerogative of managers and specialized specialists of large industrial enterprises. Take at least a feasibility study of the loan. The scheme is similar: the collection of data, their study and analysis, making a decision on the appropriateness. It should be noted that different banks use their own justification for issuing loans. It is clear that the wider the list of factors considered, the more accurately a decision will be made about the appropriateness of providing funds. And it will be accepted more quickly. The latter circumstance is interesting not only to the borrower, but also to the lender.