Feasibility Study service in India: An Overview
Feasibility study service or feasibility analysis is undertaken by the investors, business owners and other key stakeholders of the business with a view to test the economic, legal and operational viability of their product/ business idea/ service idea or project in India. The feasibility studies are generally undertaken before designing a formal business plan for their product.
A feasibility study can be defined as thorough market research undertaken, taking into account all the vital aspects of the proposed product, to know about the likelihood of the success of the product in the Indian market. This exercise weighs in the risks and rewards associated with the launching of their proposed project in the Indian market and assists project managers in taking an informed decision. This, in turn, saves a lot of time and resources for the company.
Need for Conducting a Feasibility Study in India
Following are the instances when a business needs to conduct a feasibility study before making an entry into the Indian market:
Offering a new product:
Every time a business wants to introduce a new company or business in the Indian market, it should undertake a feasibility study.
Adding a new product to the existing business:
Again, every time an existing business is expanding its existing services by introducing a new product in the market, it should undertake a feasibility study.
Assessing the potential of the new product:
The essential reason for conducting a feasibility study is to find out the potential of consumer acceptability, ultimately determining the success of the product in the Indian market.
Assessing the viability of the product:
A corollary to finding out the potential of the potential success of the product is to assess the viability of the product in the market according to the needs and requirements of the Indian consumers.
To understand the risks and rewards associated with a project:
feasibility study highlights the risks and rewards associated with a project which decides whether the management will go ahead with the product launch or not.
Considering changes in the market entry strategy:
The risks and rewards highlighted during the feasibility study, in turn, allow the business to make changes or tweak its market entry strategy according to the Indian conditions.
For acquiring a rival:
Market feasibility study specifically points out the rivals and the existing competition in the market, which gives you a chance to make rival acquisitions to enter the Indian market with a blue ocean strategy.
Objectives of a Feasibility Study
A feasibility study is undertaken to meet the following objectives:
Determine the viability of the business:
A feasibility study determines the viability of the proposed product in the Indian market and ensures that the product is legally, operationally and economically feasible.
Evaluates the success of the product:
A feasibility study evaluates the probability of the success of the proposed product in a pragmatic manner.
Determines the worth of the project:
A feasibility study determines whether the proposed project is worth investment or not.
An independent and unbiased view:
Promoters get to know an independent and unbiased assessment of all the aspects of the business, such as the legal, technical, financial, operational and economic considerations.
Creates realistic plan and budget:
The business is able to design a realistic business plan and budget based on the report of the feasibility study.
Providing crucial information on important factors:
The report generated gives deep insights into important factors such as how the company will operate, challenges it will face, the funding required and sources of arrangement of funding.
For seeking a loan:
It helps in reassuring banks and credit institutions about the feasibility of the project and helps secure a loan for the project.
Benefits of Feasibility study in India
Following are a number of benefits of a feasibility study and analysis that businesses should undertake before embarking on every new project launch:
- Helps businesses make decisions on new projects
- Helps in analysing alternatives
- Assist in making practical assumptions
- Help in the preparation investor presentations
- Bring new ideas
- Helps to detect the possible pitfalls
- Gives the investors clarity about the project
- Lists out reasons to proceed with the project
- Evaluation of the project
A feasibility Study allows businesses to take decisions on launching their new product in the Indian market and help them save time and resources.
Feasibility studies also allow businesses to analyse various alternatives that prop up after the results and help them choose one of the alternatives and further streamline the future path for their business.
The results from the study assist businesses in making practical assumptions and making better permutations and combinations about the launch of their product.
These studies also provide promoters with data to make compelling presentations to investors for raising investments.
The results of the study can also bring new ideas to the forefront, which could offer the promoters new ideas or new alternatives distinct from the proposed product, having the potential to change the course of their business.
The study detects the possible pitfalls that the proposed project may fall into. This prepares the investors in advance instead of falling into them later in their journey.
The report gives a clear picture of the project to the investors before they make an investment in the project.
The analysis lists down the ‘go to’ and ‘non-go to’ reasons to go ahead with the project before preparing a formal business plan for the project.
The analysis evaluates the proposed project on a number of parameters to determine the probability of success of the project.
Areas of Assessment of a Feasibility Study Analysis
Generally, every feasibility study is conducted to make an assessment of the following areas:
One of the primary areas of assessment for a feasibility study is to make a risk assessment of the project and find out whether the possible rewards of the business can outweigh the risks involved in the business.
Technical expertise available
A feasibility study also assesses whether the business is equipped with the technical expertise and other resources to meet the requirements of the project.
Budgetary and financial capability
The feasibility analysis also unravels the required finances and budgetary requirements for successfully conducting business in the Indian market.
Time feasibility and meeting deadlines
The feasibility report also gives an estimate of the time required for the execution of the project and also determines whether the business can deliver the project within the given deadline.
The report analyses how well the proposed project synergises with the organisation’s resources, planning, business objectives and strategic goals. It discovers whether the project solves the problems of the business or takes advantage of the discovered opportunities available in the market.
Legality of the project
The study evaluates the legal validity of the project and whether the project can meet the necessary compliances for legally conducting business in India.
Steps involved in conducting a Feasibility Study in India
Generally, the following steps are followed by Enterslice while conducting a feasibility study analysis in India:
The first step of conducting a feasibility study is conducting a preliminary analysis wherein Enterslice prepares a brief outline verifying whether the proposed project is worth implementing or not. In the preliminary analysis, Enterslice evaluates the following:
How important the idea is for the project. Whether the business idea is driven by market forces, i.e., the demand is market generated or driven or by the personal passion of the entrepreneur.
The existing and available solutions in the concerned market and whether similar or alternative products are available in the market.
Whether the business has already tried the idea before and whether the competition has tried the idea before.
How can the business deliver the product or service differently
What are the prima facie risks associated with the business.
In the next step, Enterslice conducts a market study taking the help of different tools such as market surveys, focus groups, polls etc. Usually, Enterslice does not stick to one tool only. We conduct the market study with the help of a number of exercises depending on the scope of the study. This study discloses the know-how about customer behaviour, market segments, consumer profiles, size of the market, competition etc.
Enterslice also makes an analysis of whether the proposed project/ investment/ business justifies the cost or not. This is determined by analysing the total investment of the project, operational expenses and other costs involved and comparing them with the projected return on investment.
Legal and Operational Feasibility
Enterslice also gives due consideration to other aspects of the feasibility study, i.e. the need to evaluate the proposed project from the viewpoint of sustainability. Additionally, it will be determined whether the proposed product is capable enough to solve the business problem and how sustainable will be the business operations in the future. Further, the business is also evaluated from the legal and regulatory aspects, where the legal viability of the product is taken into consideration.
After making an analysis of all the above factors, Enterslice prepares a financial model which is based on the investment required to start and operate the business, the projected profits and the cash flow estimation of the proposed product.
Preparation and Presentation of reports
The final step of the report is the preparation and presentation of detailed reports that sum up all the above-mentioned factors, insights, essential findings and data derived from the feasibility analysis.