Introduction to Feasibility Study Dubai
If you have a great idea to start a new business or intend to develop an idea within an existing business, thorough research is essential. You need to find out if:
- There is a market for your idea.
- Your idea is financially viable.
A Feasibility Study tests the viability of an idea or a new business opportunity. By assessing the market for your concept, market competition, estimating financial viability, and identifying potential risks, you can make an informed choice about the applicability of your new business.
To effectively execute the business plan, the entrepreneur must have some initial and basic knowledge before beginning a detailed feasibility study. Many consultants are providing feasibility study services in Dubai for new businesses.
Phases of Feasibility Study
- Market Feasibility
- Financial/Economic Feasibility
- Technical Feasibility
The elements to include in a feasibility study UAE vary according to the type of business and the kind of market opportunities identified. The steps explained below are the main phases of any feasibility study process for the initial phase.
Market Feasibility
- The first step in the feasibility study is to study the factors affecting supply and demand. The market feasibility study is an important step as it will identify your place in the market.
- It is necessary to identify the market in which the product will be sold and check the competitors.
- Understand whether the product will add value for an existing product, or it is being produced for the first time.
- It is also necessary to identify the consumer for the product offered and the income group, target consumer age group, gender, and other consumer characteristics. This will help you calculate the demand.
Technical Feasibility
- In this phase a group of engineers or technical experts study the project’s technical aspects. They assess the technology, machinery and technical equipment required to start the business.
- An important element in the technical feasibility study is to determine the production capacity to meet the estimated demand. The number of employees varies from one business to another depending on the nature of the business.
- Based on this analysis a decision on whether the technical resources are available to execute the business plan.
Financial/Economic Feasibility
- The final phase of the feasibility study is to prepare cash inflow and outflow based on all the evaluated market and technical details. The financial aspects will assess the cost of the project, sales & profits, return on investment, investment payback period, etc.
- Financial feasibility is a key factor for investors to participate in a new business venture.
- The precision and reliability of the study of financial feasibility depends on the accuracy of the data used.
- Calculations of financial feasibility need to be performed with transparency and the complexity of assumptions depends on the number of different variables to be considered relating to revenue, operating & capital costs, structure of financing, etc.
- Once the financial aspects are accurately estimated, it makes it easier to conduct sensitivity analysis on key parameters. It then makes it possible for investors to look for different scenarios and mitigate risk associated with it.
Conclusion
The decision whether to execute a plan or not is one of the most important things to consider in a new business. Once you have decided to pursue a business idea, then a feasibility study helps you make the decision. The findings of the feasibility study will outline the different situations that will allow you to analyze the financial results and challenges. This is the reason why a transparent developed feasibility study is important in business decision making.
How can ebs Chartered Accountants help?
As a top accounting and finance company, ebs Chartered Accountants offers feasibility study services Dubai. Financial feasibility studies are one of the many services that our team of highly skilled specialists offers. Because of ebs vast experience, we can create customized and thorough feasibility studies, which facilitate clients in making the best decisions for their businesses. We are renowned for our punctual work delivery, trustworthy reputation, and professional attitude. It is simple to provide our clients all the information they need and to make modifications if something does not sit well with them when we are in constant communication with them. The primary goal is to ensure that clients are satisfied. Contact us and get started with your feasibility study today.
FAQs
Why is a feasibility study important?
A feasibility study in making informed decisions about the project considering its important findings. It provides information regarding the project’s financial viability, risks, and potential returns. It covers all the important aspects of a project for its sustainability.
What is the difference between feasibility study and business plan?
A business feasibility study is a detailed analysis of the viability of an idea or concept for a business venture. Once feasibility has been determined, a business plan documents the operational and financial objectives of the venture and the detailed plans to achieve them.
Why is market analysis an integral part of a feasibility study?
Market analysis is an integral part of a feasibility study as it provides details into market demand, competition, trends, and opportunities. It helps in estimating sales potential, strategies for prices, and revenues generated.