Feasibility analysis

From Cultivate.Coop

A feasibility study is a powerful tool used to assess the potential of a business idea, whether it is a start-up cooperative or the expansion of an existing business. Given a set of assumptions, how likely is it that the co-op will succeed? Ideally, feasibility studies are performed early on in the planning process, before a full-blown business plan, to evaluate an idea before significant investment is made.

Purposes and Benefits of Feasibility Studies [1]

  • to help entrepreneurs and business owners decide whether to proceed with an idea for a business
  • to avoid devoting too many resources to a business venture that is unlikely to succeed
  • for grants and loans, as evidence that the proposed project has been thought through and taken seriously

Feasibility Analysis Considerations

Depending on the purposes and circumstances, the exact content and considerations of a feasibility analysis may vary.

For example, the Kentucky Center for Agriculture and Rural Development centers on three general areas: marketing feasibility (likely price of product or service, space in market for product or service), management feasibility (skills, experience, and knowledge base), and production or technical feasibility (buildings, equipment, etc).[2]

Another type of feasibility analysis seeks to answer two basic questions: Is there sufficient demand for the product or service? Can the product or service be provided on a profitable basis?

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This article originally inspired with permission by the Kentucky Center for Agriculture and Rural Development: