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, thenThe 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 with emptyhands. 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 with the necessary funds. And in this connection 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 the direction of analysis that is connecteddirectly with financial aspects, is the feasibility study of investments. Here, there are no fundamental differences from the basic methodology.

Suppose that N is long overduethe need to modernize the production process: 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 (a variant with industrial espionage is not considered).

Therefore, the feasibility studyown investment project will need to be done 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 made.

However, one should not think that the aboveactions 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 being 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.

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