Economic Feasibility Studies , If you want to start establishing your own business,
whether commercial or industrial, and you’re looking for a reliable economic and financial consultation,
subjected to scientific research.
Or if you want to expand your existing business or economic activity,
our company provides solutions to these matters through an economic feasibility study
that includes all practical aspects to ensure that the correct decision is made about your project.
Economic Feasibility Studies
Why does an investor who has a project idea need to do a feasibility study before starting the project?
Or if the investor wants to know if he has sufficient capital to cover the requirements of the project?
Or if the investor wants to know the risks of the project and plan ahead well to reduce these risks and know the challenges that the project may face.
So why do we conduct a feasibility study for project?
From the above comes the importance of preparing the feasibility study
due to the desire of any investor to prevent losses in his project and knowing the future risks
and challenges that may face him regarding his project and taking
the necessary precautions to reduce these risks, and not be surprised of any challenges
that occur during the establishment of the project.
Hence, the investor begins to search for companies that specialize in feasibility studies
and business consultation services to conduct the study and determine the project feasibility
and the approximate data for the market size and the expected gap on the products
that he wants to present to the market and determining the competition to find out whether
the competition is fierce or not in order to prepare well for the market conditions.
And also determining the project’s feasibility or not by preparing all data and financial statements
related to the expected profits or losses in order to make
the appropriate investment decision whether to go ahead with the project or not.
Let’s start with explaining what is a feasibility study?
A feasibility study is the beginning of any project, it is the first step you must take.
It is a study carried out by the owner of the project idea to be able to implement the project and ensure its success.
The feasibility study shows the required investments, and the expected returns.
The development of a plan is one of the most important pillars before starting any business or project.
Because often we see many examples of businesses or projects
that have started without doing a previous study and planning well before starting the project,
which led to failure and losses for the business,
hence the importance of planning and doing a feasibility study for any type of business.
What are the components of the feasibility study
the study consists of five main sections and they are : –
1) Market study
2) Technical study
3) Legal study
4) Environmental study
5) Financial study
First : – Market Study
Economic Feasibility Studies , In the preliminary study before the market study,
we study the project idea and its concept in detail and what is the product
or service provided by the project and its characteristics.
Then the target market is analyzed in terms of the market’s desire for the product
or service provided through the project and the extent of customers’ demand for it.
Market statistics such as imports and exports of the product are studied for the past five years,
as well as market supply and demand statistics.
Then we study the market competition in which competitors are studied in detail
and the intensity of the competition and their products
that they offer in terms of quality and prices and what distinguishes the competitors from each other.
One important analysis in the feasibility studies that we must carry it out is the SWOT analysis,
which is a compilation of the strengths, weaknesses, opportunities and threats of the project, as the main objective of this analysis is to help organizations develop full awareness of all the factors involved in commercial decision-making, as this analysis is done before committing to any kind of project actions, and also take advantage of the strengths and opportunities to overcome weaknesses and threats that face the project.
Another important analysis is an analysis called (the five competitive forces analysis of Michael Porter) which is an analysis or tool designed by “Michael Porter” from Harvard University (Business Administration) and this framework is based on the idea that there are five basic competitive forces that make up each industry which determine the intensity of competition and market attractiveness, in addition to identifying the strengths in the business, which helps to understand the strength of the company’s current competitive position, and the strength of the position you are looking to reach.
Second: – Technical study of the project
Among the importance of the technical study of feasibility is that it determines many important factors in the study such as determining the size of the project and choosing the appropriate location for the project and determining the costs of establishing the project and the costs of equipment, machinery or production lines and raw materials required for the project. Also determining the method of production and appropriate technological means to use for the business. Also, defining the timetable for the implementation of the project, determining the quantities of required production factors, determining the required labor and management personnel.
Third: – Legal study of the project , Economic Feasibility Studies
In the legal study, the legal entity of the project is studied and the extent of the project’s compatibility with the applicable laws and regulations. This legal aspect receives less attention from the owners of projects, to the point that its omission may lead to the failure of the project. So the purpose of the legal study is so that the project is determined in terms of its legal aspects and then appropriate measures that are taken for it.
Among the elements of legal study are: –
1) The documents necessary for the procedures for obtaining licenses for the project (company, factory), and the registration procedures for the competent authorities.
2) Investment and tax laws
3) Knowing the incentives provided by the state for the project, if any, from (tax exemptions … or preventing double taxation … exemption from customs procedures, whether import or export).
4) Defining the supervisory authorities imposed on the project during the project life cycle.
Fourth: – Environmental study of the project
Economic Feasibility Studies , The main objective of this study is to assess the environmental impact caused by the project that include determining the environmental damage and benefits expected from the project.
Also, acknowledgment and approval for the project from the environmental authorities to grant the required licenses to establish the project (for example if the project is a factory, so we must acquire the appropriate licenses).
The project location is also studied in environmental terms and context to ensure if the location is suitable for the project or not. Is the environment surrounding the project suitable for the nature of this project or not, especially industrial projects.
Fifth: – Financial study of the project , Economic Feasibility Studies
Economic Feasibility Studies , The financial study includes the complete financial management process for the project and the preparation of financial statements, in which we place the results of the market study and technical study in tables to determine the expected financial revenues as well as the costs incurred to obtain these revenues.
The financial statements help us determine whether the project has financial viability or not, where we subtract the costs from the revenues to reach the net cash flow, which may result in a negative figures (the project loses) or positive figures (the project succeeds) and obtain these results through an analysis of all cash inflows and outflows of the project.
After completing the financial analyzes, we can reach through this that the project is financially feasible or not, and we can come to a conclusion whether the project is financially successful or not, and we can make the right investment decision for the project.
All you have to do is contact us and we are more than happy to provide our services to you.
see more: Feasibility study for the establishment of a primary school