A successful, long-term business depends greatly on conducting various crucial activities during the project initiation phase.
One of these critical activities is conducting a feasibility study.
A feasibility study or analysis is done to find out the strengths and weaknesses of a proposed project objectively.
Conducting a feasibility study in the UAE if you want to start a business in Abu Dhabi, Dubai, or any emirate here can help you identify and evaluate the opportunities and threats present in your target area, the resources you need for the project, and the possibilities for the success of your venture.
When done correctly, a feasibility study can help you:
- Understand how your proposal can work on a long-term basis.
- Recognize the potential cash flow of your business idea.
- Know the potential financial risks of your venture and if it can endure them.
- Understand if your project has the potential to be profitable.
- Know if consumers will support your products or services.
- Identify key trends based on the present-day market, which you can use to anticipate the growth of your target business sector.
- Create a timeline for implementing your project.
A feasibility study can help you reduce the risk of failure and increase your chances of success regardless of the type and size of the business you want to start.
Maximizing the Benefits of a Feasibility Study
A feasibility study has to be conducted correctly so you can have recommendations you can use to make smart business decisions.
You can ensure you get accurate and objective results from your feasibility analysis by avoiding certain mistakes as you conduct this important activity.
Below are some of the common yet disastrous mistakes you have to avoid when conducting a feasibility study:
1. Taking the DIY approach.
The primary objective of a feasibility study is to give you unbiased, accurate findings that can help you get a clear picture of the practicality and profitability of your venture.
Getting impartial and precise results can be challenging if you and your team conduct this study. This is because your passion and attachment can cause you to consciously or subconsciously ignore and downplay issues that can affect the success of your project.
Moreover, conducting a feasibility analysis is not something you can do with a trial-and-error method. Learning how to go about the process, days before you do it won’t help you get objective and accurate results.
To get the most from a feasibility study, work with experienced consultants that provide this service. These professionals follow a thorough process in conducting a comprehensive, unbiased analysis that will help you make data-backed decisions regarding your venture.
2. Working with the wrong consultants.
Making the decision to hire external feasibility consultants is a good start. However, you have to work with the right team to get results you can use.
Inexperienced consultants are likely to produce unreliable and weak studies. They may follow incorrect analysis or incomplete assessment that can affect results and cause you to make the wrong decisions.
To avoid this, hire qualified feasibility study consultants. Moreover, ensure they have experience in conducting this process in your industry.
For instance, hiring consultants specializing in education or healthcare is not a good idea if you are planning to open a restaurant. These industries are different, which means they require certain approaches.
If you hire the wrong team, you’ll likely get inaccurate results because they collected data incorrectly or misinterpreted the information.
To avoid this mistake, choose your feasibility study consultants carefully and do not rush hiring them no matter how quickly you need the report.
3. Using the wrong market data.
Having the right data is crucial to understanding the different internal and external factors that can affect your project.
Examples of these critical pieces of information are the strengths of your target location, competitor trends, and market challenges.
The collected data can give you the signal you need to proceed with, postpone, or tweak your project plans.
When your study uses incorrect data, you’ll likely get a wrong signal that can cause you to make erroneous decisions regarding your venture.
This can happen if data for the study is gathered incorrectly and poorly. Using old and existing data can lead to this costly issue as well.
To avoid problems from the start, read about the different data collection methods used in feasibility studies. Understand the ones that work best for your industry and business type.
When hiring consultants, check if they’ve used the method suitable for your venture and get as many details about the processes they follow to ensure you get fresh, independent, and reliable data.
4. Inadequate project definition.
Feasibility studies are most useful when they can answer specific questions.
As such, one huge mistake you have to avoid is being too broad and vague with your questions and the goals you want to achieve from your feasibility analysis.
For instance, if you’re thinking of putting up a hotel, you can start by asking if your target area is large enough for the building. However, you have to be more specific to get the most from your feasibility study.
Provide details about the size and number of floors you want for your hotel. Specify the amenities you want to have as well.
Also, if you already have a target market in mind, write down their demographic information to find out if your project will appeal to them.
Your feasibility study should be able to answer the questions you have so you can decide whether to push through with your project or not.
5. Going through the process too quickly.
Lastly, a feasibility study can help you identify opportunities, problems, and threats that you may come across during the initial stages of your project and in the long run.
When you are aware of these factors, you can leverage opportunities and reduce risks.
You can only experience these benefits if the feasibility study is conducted correctly and thoroughly since it can give you deeper and more detailed research and analysis.
This can only be done when you give the team conducting the study enough time.
If the feasibility study is conducted too quickly, the risk of missing, underestimating, and overestimating the key factors become higher.
Because of this, try to avoid rushing your consultants to hasten the process. Also, wait until the study is complete and you have all the data before making any decision regarding your project.
Having access to unbiased, accurate data is crucial to the success of any business.
Ensure your new venture is off to a good start and sustain its success by using the data you get from a feasibility study.