16 Critical Points in Any Project Feasibility Study and How to Conduct the Study Yourself for Free

At the end of these points, I will introduce you to a free tool for performing the basics of feasibility studies and financial analysis.

A feasibility study is essentially a planning tool. Regardless of its cost, it is far cheaper than incurring losses in a project. It can be considered, before starting a project, as the art of incurring losses on paper. Moreover, it should be used as a tool for monitoring and controlling the project’s budgets.

There are two types of feasibility studies: preliminary and detailed. The preliminary study is quick and general, aimed at determining the overall feasibility of a project and reducing the costs of preparing a detailed study. On the other hand, a detailed study involves more extensive work, including precise market analysis and communication with companies and stakeholders related to the project to identify the costs of machinery, equipment, or even technical expenses for tech-related projects.

Feasibility studies are divided into several sections, with the most important being three: market (marketing), technical, and financial studies. They should be conducted sequentially. Why? Because each study relies on the preceding one.

The first step is conducting the market study, which primarily aims to answer the following questions:

• Is there a market for the project’s products or services?
• What is the size of the market?
• What portion of the demand can I capture? (Sometimes, the demand is tied to the project's production capacity.)

It’s surprising to see someone renting a space or purchasing a production line without knowing their expected sales. This highlights the dependency of the technical study on a crucial question: How can I meet the expected demand for the project?

In simple terms, if you expect to sell 1,000 units of a product monthly, you should look for a production line capable of producing, for example, 1,100 units, and hire a team suitable for this production capacity.

Thus, the technical study can be summarized as encompassing all the costs needed to achieve the target sales.

The financial study is the process of analyzing the following:

Sales data from the market study – Costs from the technical study = Profit.

One important point to note is that the study might end at the market study phase if it reveals that there isn’t a suitable or sufficient market for the idea.

In the financial study, the following will be clarified:

• The investment cost of the project
• Working capital
• Gross profit
• Net profit
• Return on investment
• Payback period for the project capital
• Various financial statements, such as income statements and cash flow analyses

Additionally, sensitivity analysis can be performed to assess the project's resilience to internal and external market fluctuations.

When setting a specific price for your project’s products or services, you must evaluate whether those prices are viable. This ensures you won’t face a situation where you have customers and sales but no profit or cash flow at the end of the year.

Break-even analysis is vital. It reveals the sales level you need to reach to cover all costs and begin generating profit. Gross profit and net profit are also critical for evaluating discounts, offers, and making sound managerial decisions.

My advice: never start a project without conducting a study. However, don’t overcomplicate the study, as the market offers an abundance of variables that may change later.

You can analyze and study your project for free through our website, net. The free plan provides you with details such as:

• Investment cost of the project
• Working capital
• Gross profit
• Net profit
• Return on investment
• Payback period for the project capital
• Various financial statements, including income statements and sensitivity analyses to gauge the project's adaptability to market changes.

Many people incur losses due to poor planning, insufficient study, and rushing to execute. Wishing you the best of luck!