How To Prepare A Feasibility Study For Your Store
🕒 August 26, 2022 by Reham Omar - 7 min read
A feasibility study is an essential step for any retail business. While a retail store is more likely to succeed as compared to businesses offering services, there are many pitfalls that you need to avoid. Investing in such a study will help you discover those hazards before you take the first irreversible step toward establishing your new business.
But before starting, you’ll have to understand why a feasibility study is essential and what kind of information it would provide. If you’ve read through many articles and aren’t sure how to proceed with a feasibility study for your new store, keep reading this blog for insights that could help you conduct your study smoothly.
What Is A Feasibility Study?
A business feasibility study is a preliminary analysis that evaluates a retail idea and helps you determine on a realistic basis if the concept has a reasonable chance of succeeding.
To conduct a feasibility study, you first must understand whether the model has a real chance of succeeding. For this, you’ll need to analyze the marketplace and identify any significant barriers to entry.
If these barriers are substantial and your business model is in too restricted a niche to succeed, then it’s unlikely that you’ll get off the ground. When conducting your market analysis, you should look for signs of future growth potential. It will give you a reasonably good understanding of the demand level in the marketplace and help you determine how much of the market your business model might capture.
Why Is A Feasibility Study Needed?
Before opening a store, you must first assess the idea’s viability. If you have a business idea for a new store but don’t know whether people will be interested in your concept, then there is little certainty of success.
A feasibility study will enable you to determine the demand for your product in the market. It will also help you identify potential customers and understand why they might buy your product. You will also be able to determine the market demand, which will help you estimate the viability of your business model.
If a feasibility study shows that you have a high chance of succeeding, you’ll be able to move on to securing financing and a building to open your store.
How To Conduct A Feasibility Study
How a feasibility study is conducted depends on several factors. These include your business model, the marketplace, the product you want to sell, and the industry in which you operate. However, there are some general steps that you should follow.
First, you need to identify the target customers for your product. It will help you to determine the demand in the marketplace. Next, you should conduct market research to understand your potential customers. You should also identify potential competitors in the industry that could pose a challenge to your proposed business. It will help if you look into your area’s related laws and regulations to ensure that you fully understand the nitty-gritty of what you’re getting into before you open your store.
Feasibility Study For A New Online Store
If you plan to start an online store, you will need to conduct a feasibility study to determine if it is financially viable. It will help you decide whether you can afford to open an online store or not. You will also learn how much profit can be generated. Once you know the answers to these financial questions, you can start business management accordingly. Nonetheless, a feasibility study for an online store is slightly different from one that you would conduct for a brick-and-mortar store, though many components of the survey will remain the same in both cases.
For example, in the case of a brick-and-mortar store, you will have to check who your competitors are and if you have a realistic chance of competing with them to get a market share. For this, you’ll have to see if a segment of the market is currently underserved or one that the existing players are not paying attention to. However, unlike for brick-and-mortar stores, apart from finding this information, you will have to check the cost of creating IT infrastructure for your store instead of leasing a physical shop. While one is mostly a one-time investment, the other is a recurring expenditure.
Tips For A Good Feasibility Study
A good business feasibility study is a combination of multiple parameters.
Studying the market you want to target can give you value for success. For example, it can help you identify which segments are saturated and, in the process, enable you to discover which ones you can focus on instead.
The ultimate aim of every business venture is to generate profits. However, a business is only worth investing in if it generates significant profits. You don’t want to run a business that barely breaks even, do you?
While this has been traditionally ignored, case studies can add much value to a feasibility study. You can gather actionable insights by looking at how investments by other players in the market that you are targeting have fared. They also give you clues about business management and the best practices in the industry.
If you don’t want to spend all your profit in dealing with legal troubles, you’d have to check if the regulatory framework allows you to do what you want in your store.
Poor Feasibility Studies Can Prove Disastrous
In addition to evaluating the viability of a business idea, a business feasibility study can also help to identify potential obstacles that could impact the project’s success.
For example, a feasibility study may reveal that there is little demand for a new product at the time. If this information is not considered when designing an effective marketing strategy, it could result in significant financial losses. In such cases, businesses should consider postponing their projects until conditions improve.
Another solution could be to look at innovative pitches to sell products. However, for these to be useful, the quality of the feasibility study should be top-notch. This is why most new business managements seek support from professional feasibility study services.
A feasibility study is an analysis that puts your business idea to test on various parameters like market, demand, cost and profits. It is done to determine how likely the idea is to succeed in a real-world setup. Conducting it is an essential first step toward establishing a successful business. Apart from helping you gauge the viability of your business idea, such a study will also enable you to identify potential pitfalls and discover market dynamics unknown to you before.
As part of the business feasibility study for your new store, you should look for signs of growth possibility. It will give you an idea of the demand level in the marketplace and help you determine how much of the market your business model might capture. A feasibility study is highly recommended for any new business management hoping to open a brick-and-mortar store or an e-commerce website because it can help you to determine if there is a market for your product and identify potential customers.