Suppose you want to start an audio and video production company in Dubai, United Arab Emirates. Which of these must you do first?
- Rent your office space at Dubai Media City or any other suitable location.
- Apply for a business license.
- Choose and register your trade name.
- Select your economic activity or activities from available options.
It’s none of the above. Before starting a business, contact a feasibility study UAE advisory company.
What Is a Feasibility Study?
A feasibility study is a systematic analysis or investigation that answers this question: Is the idea, project, or plan possible, realistic, and practical?
Before starting a business, you naturally want to know if your idea can be rolled out conveniently and easily and if it is likely to succeed. A professionally done feasibility study will give you the answer.
A feasibility study is not only for starting a business. It is also a good idea to conduct a feasibility study before an existing business starts a project, particularly one that will take a lot of the company’s resources. For instance, a feasibility study is an excellent preliminary step before an enterprise expands into the East Asian markets or creates a new product line.
Why Do You Need a Feasibility Study?
Feasibility studies have two main benefits: They save you time and money and reveal better opportunities.
Save Time and Money
Suppose you’re planning to open an e-cigarette manufacturing plant on your friend’s land. Before putting your plans in motion, you commissioned a feasibility study.
During their investigation, your business consultants found that the local government where the land is located had a prohibition against cigarette and e-cigarette manufacturing companies. The land’s ownership, moreover, was being contested in court.
After the feasibility study brought these vital pieces of information to light, you decided to use a different plot of land for your project.
Now imagine what would have happened if you didn’t conduct a feasibility study first. You would have ended with a piece of land that was not only fraught with legal problems but also one you would not be able to use as originally intended.
A feasibility study, therefore, can save you time and money. A feasibility study will reveal insurmountable (or practically unconquerable) roadblocks that have the potential to halt your plans. Thus, you can abandon or adjust your strategy to avoid such roadblocks before spending more resources on it.
Without a feasibility study, you can end up pouring your resources into a project that will never see the light of day.
Uncover Important Business Insights
Market research is one of the most crucial parts of a feasibility study. If you are planning to sell air purifiers in the UAE, your business advisory consultants will conduct a market survey to understand the UAE air purifier market.
During this process, they may uncover valuable insights you can use to improve your plan. What if the market research reveals your target market does not believe price is an important consideration when choosing an air purifier? That’s an important insight, especially if you plan to use your product’s low price as your main differentiator.
What if the study also reveals your target market thinks the higher the price, the better the air purifier is? In response, you can change your product lineup to include high-ticket items that will have greater acceptance in your market.
Your feasibility study can reveal opportunities you may not even have considered. Perhaps you are planning to sell your air purifiers mainly to residential users. However, your consultants’ market research indicates that the commercial and industrial segments comprise 70% of the market. In this case, you can realign your plan and target commercial and industrial buyers instead.
The Core Elements of a Feasibility Study
A feasibility study has six core elements.
1. Technical
A technical feasibility analysis is particularly useful when launching a product or service. Are you planning to sell a steam press? Your technical feasibility study should entail creating a working model of this steam press.
Creating this working model will help you confirm that the product can be made and will work as intended and expected. In other words, your technical feasibility analysis is concerned with proving that your concept (product or service, in particular) is technically possible.
2. Financial
In the financial feasibility component, your business advisory consultants will help determine if you will profit from your business idea.
In this step, your consultants will assess your project cost, identify your funding sources, and uncover potential financial constraints. The economic feasibility component will also help you calculate your return on investment and payback period.
3. Legal
This part of a feasibility study will inform you about any potential issues in your intended legal structure and guide you about the form that will help you avoid problems. It will also help you understand the tax laws governing your operations.
The legal component of a feasibility study checks for all potential legal issues. This will ensure compliance. More importantly, this will help you avoid legal blocks.
4. Operational – Product/ service mix, sourcing, resource requirements, etc.
The operational feasibility analysis will look at your product or service mix, sourcing processes, and resource requirements, among others. It will assess the practicality, reasonableness, and effectiveness of your planned operational processes.
5. Market
The market study component will help you assess the size of the market, the market’s compound annual growth rate, your competitors, their market shares, and your potential market share.
This part of the process will give you a detailed picture of the market, its structure, price points, and how products like yours are distributed. This should help you identify unmet needs or gaps into which you can insinuate yourself to gain market share.
For instance, if a market study reveals losing weight is a major concern for women in a particular market, a vitamin company can highlight in its marketing how its probiotics supplements can help in weight and belly fat loss.
6. Planning
This component of a feasibility study assesses your project timelines, key stages, and project milestones. This will tell you if your timelines are realistic and help you identify potential time constraints.
Start With a Feasibility Study
A feasibility study analyzes an idea or a project to determine if it is possible, practical, and attainable, thereby helping you save your resources and adjust and refine your plans. Thus, it makes sense to begin with a feasibility study before starting any business or project.
