Feasibility Study

Feasibility Study

Our feasibility team at Prospectus is recognized as an industry leader in feasibility study preparation. A feasibility study is conducted prior to a project’s undertaking such as a real estate development or prior to a product launch. Directors, owners and investors in a proposed business or project prefer to determine if the venture is actually “feasible” and preparing a feasibility analysis or report is often required to this end. Writing a feasibility study can help determine the course of the project, the financing necessary to begin and finish the venture, determine the risk factors of the business and much more. This will all be needed for those companies that must raise investment capital for the project to commence and sustain itself. A feasibility study includes such vital information and data for investors to consider, such as the funding needs, the market opportunity, government regulations, risk factors, strengths and weaknesses, the management team and the financials of the company. While a feasibility study somewhat sounds like a business plan, such reports tend to be many times longer with more details on the market and financials.

What Is a Feasibility Study?

The question of ‘what is a feasibility study’ is often asked and from project to project such reports certainly vary. While there is a generic definition of ‘feasibility study’ – an analysis of the development, product or venture’s chances of being successful – there are broader definitions as well. While a hotel or real estate development feasibility versus a technology invention may each have their own feasibility study, the two documents broadly differ. However, the underlying theme remains constant: a full analysis of the financials and economics of the project, legal and regulatory examination, technical and methodologic breakdown, strategies, risks, opportunities and others. Company founders – and certainly potential investors and banks – use feasibility studies to make an educated decision, the former whether to proceed at all with the construction, development or implementation of the project or product, and the latter whether to invest money and capital.

Thus, to create a more distinct definition of a feasibility study it may be safe to interpret the report as follows: a feasibility study provides the company with pertinent information about the business and industry that is vital to its success.

Conducting a Feasibility Study

Prior to putting a shovel in the ground or launching a product the most basic document a company can create is a feasibility study or a business plan. Conducting a feasibility analysis will give you needed insights into the viability of the project before excessive time and capital are utilized. A feasibility study is the exact opposite of an educated guess. Educated guesses make assumptions based on intuition and not hard data, which the feasibility study is all about. Here are some objectives of a feasibility study:

      • Know your plan of action and how you will achieve success. Plan with an eye towards victory.
      • Know your SWOT analysis: Strengths, Weaknesses, Opportunities, and Threats.
      • Know your market. Educate yourself on market statistics and opportunities.
      • Know your risk factors.
      • Know your financials. Memorize the budgetary needs, your proforma, and general financing projections.

Our team at Prospectus is respected for its keen insights into any given market, and our straightforward assessment regarding a project’s viability. We work one-on-one with our clients to ensure that each project is specifically tailored to the company’s needs.

The Value of Writing a Feasibility Study Report

As noted, the main value in creating a feasibility report is to have a clear picture if the project is even viable to commence. The importance of the feasibility study should not be underestimated. Without such an analysis of the market, the financials and other related business factors, a business can be destined for failure before a project even begins. In some cases, the value of the study will be in the final assessment of the business: that is, the business or project is actually not feasible, and therefore one should not move forward with the project. This happens often and it is imperative to be honest when creating a feasibility study or business plan. In addition, a feasibility study can be an important tool for raising capital from banks, investors and lenders.

Step by Step Process to Writing a Feasibility Study

Here are 10 steps on how to write a feasibility study report.

  1. Strategy and Plan
  2. Market Analysis
  3. Legal and Regulatory Issues
  4. Budgets and Financial Projections
  5. Capital Proceeds
  6. Risk Factors
  7. Scale and Growth
  8. Profit & Loss
  9. Management and Team
  10. Exit Strategy
      1. Your strategy: clearly know your business and market. Understanding the environment that you wish to operate in is paramount. Be able to illustrate your business model and plan of action and how you will execute the strategy.

      1. Market analysis: elucidate your market statistics. Show a keen understanding of the demographics, potential size and limitations of the general and broader market for your products or services. Market data is key to knowing whether the field you want to operate in has a market for your business and if that market can sustain or generate profit for your company.

      1. Legal and regulatory issues: ensure that you are up to date on the legal ramifications and regulatory responsibilities of the project. If legal counsel is needed be sure to employ a licensed and seasoned professional in your industry. For real estate developments, for example, know which permits and zoning rules apply to your project.

      1. Budgets and financial projections: all feasibility studies should have a comprehensive section detailing the financial needs of the company as well as forward looking statements relating to profit and loss, income, cash flows and more.

      1. Capital proceeds: ensure that you have a solid use of proceeds that will indicate where funds will be allocated. A use of proceeds is somewhat like a budget and is often employed for a specific project. Knowing where the capital or funds will be spent is important for any business.

      1. Risk factors. Feasibility reports contain a section on the risks of the business. Risk factors should be incorporated into any study and the owners of the business should be honest in listing the relevant threats to the operation. This will also help with an educated decision about pursing the business or shutting the venture down before operations commence.

      1. Scale and growth: feasibility studies are first and foremost a document that portrays whether a project will be feasible in the current market or industry. But it is also a marketing document. Like any business plan document, showing the scalability of a company is important and a feasibility study is no different. This section deals with the potential growth levels of the business.

      1. Profit &loss. While this area is also encompassed in the financial area already listed, emphasizing the profit and loss of the business is always a good thing. If the company’s numbers come out to show good results, i.e. profit, its not a bad idea to emphasize this in a separate section. In either case, whether the profit & loss section is standalone or put with the financials, the numbers should be honest and thorough.

      1. Management and team: all feasibility studies should showcase the management team, including identifying key individuals who bring strong credentials to the business. The management section is important as this will show potential investors, or potential hires, the professionalism of the directors and other team members.

      1. Exit strategy. A feasibility study should include a section on the potential exit strategies of the company. An exit might include a potential merger with or an acquisition to another company, buying out investors, IPO of the company or other methods of cashing out shareholders.

There are many other factors and variations of the noted information above. Feel free to CONTACT US for additional information or a free consultation.

Various Types of Feasibility Study Reports

There is a plethora of feasibility studies that a company would write depending on the type of project or product. Below are the four major types of feasibility reports that are drafted. It is important to keep in mind that within each of the main heading below are an abundance of sub-categories and indeed each feasibility study should be tailored to the industry, product and project of each company.

Main Types of Feasibility Studies

      • Real Estate Feasibility for Real Estate – Real estate feasibilities are the most popular study that we at Prospectus conduct. Real estate reports include details of the land (surveys), development and building permits, zoning laws, impact on the surrounding environment and natural habits, traffic issues and general impact on businesses in the area as well as the overall market opportunity. Housing developments such as condos, single family homes and apartments, or larger projects such as hotels or buildings or skyscrapers often mandate the creation of a real estate feasibility study before land acquisition and development.
      • Comprehensive Feasibility– A comprehensive feasibility study is an all-inclusive report that takes into consideration some of the most rational business practices one should implement before undertaking any project. The comprehensive feasibility includes data on land acquisitions and real estate issues, economic and cultural impact on the greater surrounding areas, and more. Such comprehensive studies can be found in our business plan features (if a client wants a very long and detailed analysis). The comprehensive feasibility study is also referenced in the real estate feasibility study (see above) and together with the real estate report is the most popular feasibility study we offer.
      • Financial Economic Feasibility– An economic feasibility study is conducted when a company wants to know if the proposed amount of capital and financing is sufficient to complete a project successfully. While a business plan may have a section called the “CBA” or cost-benefit-analysis, in an economic feasibility study it will be greater in detail and have more statistics and numbers in the financials.
      • Marketing Feasibility– The marketing feasibility studies the market impact and penetration, such as the demographics, target market, product testing and more. Prior to launching a project into the market, whether in a local, regional, national or global environment, a viable study on the market is imperative.

 Additional Feasibility Studies

Prospectus’ team has developed the following feasibility reports, many of which are not as well known or utilized as they are more specific than real estate studies.

 Technical Feasibility– If a company has the technological know-how and resources to achieve its goals.

      • Schedule Feasibility-Is there enough time and resources to complete the project on time?
      • Cultural Feasibility-Local and greater cultural and societal impact.
      • Legal and Ethical Feasibility– Are there ethical and legal implications of a project and if so, what are they?
      • Resource Feasibility-What resources are needed and is that enough to complete the project successfully?
      • Operational Feasibility– can your firm solve difficulties and maximize potential opportunities during the development.

Real Estate Feasibility Studies

While a good portion of our feasibility work revolves around product development and launch, we are often tasked with real estate feasibility work that is both broad and specific. Due to the volume of studies we undertake, our team at Prospectus is a recognized firm in the real estate facility report space. We assist companies from single family homes, to large developments, spanning not just the US and Canada, but many countries as well. Here are some features we undertake in the real estate feasibility analysis.

      • Site Analysis and Land Survey
      • In order to determine if the property you are wanting to develop is suitable for your business, we will conduct a land survey and site analysis to determine some the following features:
      • Accessibility – how accessible is the location of the project for patrons or buyers
      • Zoning – can the land be zoned for your project’s needs
      • Traffic and Transportation – is there adequate roads, what is the traffic conditions in the general vicinity
      • Demographics – what is the median income of the area, labor force
      • Economic Impact – what, if any, will your project contribute to the general economy of the area
      • Supply and Demand – is there a demand for your services, and if so is there over supply
      • Tax Implication – what are the tax issues of the land

Once this feasibility information is gathered and analyzed, we can determine if the proposed location for development is suitable. If the property and area do not look promising, we can then look elsewhere for a parcel of land that will meet the needs of development and the business plan.

Numbers – Real Estate Feasibility Approaches

Since our firm has conducted feasibility studies for all types of real estate projects, from commercial buildings to residential houses and condos, as well as our networking with scores of construction companies, land developers and lenders, our insight into the feasibility study universe is unique. We can create precision financials based on facts on the ground. Here is a synopsis of more of our feasibility analysis services.

Residential Services

Prospectus.com assists with the research and writing of feasibility studies for the overall residential market. This includes such analyses as single-family homes, apartments, condominiums, and town houses. In addition to the most common types of developments, we also prepare such reports for university and college housing, assisting living, for seniors and others in need. Our team of consultants, lawyers and engineers work with government agencies across the spectrum, from both city and county officials. Further, a residential development also requires relationships with banks and lenders, such as mortgage companies, construction and development companies, and sometimes non-profit organization that work in the real estate space. Here is an abbreviated list of our residential real estate services:

      • Single-Family Homes
      • Condos
      • Apartments
      • Townhouses
      • Developments
      • Senior and Assisted Living
      • Multi-family, Student Housing
      • Mixed-Use Development
      • And More

Commercial Real Estate Services

Our team at Prospectus assists with commercial real estate projects of all sizes. Our services range from the ‘simple’ steps of the development of creating a business plan, all the way to the feasibility study, and the writing of a prospectus or private placement memorandum (offering memorandum) to raise capital for the real estate project. Our services as it directly relates to commercial real estate feasibility studies includes assisting with general construction and development of buildings, office parks, skyscrapers, hospitality such as a hotel or a resort or even a casino, restaurants, retail centers such as shopping malls, and more. A feasibility study is certainly mandated for such large projects as the analysis itself can save needed time and capital, long-term, and will allow the principals to determine if they should even move forward with a multi-million-dollar project.

Features of a commercial real estate feasibility study would incorporate such information as the landscape of the overall project, other properties in the area, comps, rent prices, leasing information, vacancy rates, demographics of the target market, population surveys, and more. Here is an abbreviated list of our real estate commercial real estate services:

      • Retail Space
      • Office Buildings and Parks
      • Skyscrapers
      • Industrial Projects, Refineries
      • Hospitality, Hotels, Resorts, Casinos
      • Museums, Conference Centers
      • Redevelopment
      • Mixed Use Development
      • And More

Read more here on our real estate feasibility reports.

Real Estate Consulting Services

Prospectus.com can assist with virtually any real estate feasibility study analysis or just assist with a general real estate project, no matter the location. We have teams and relationships in most states in the US and in a plethora of countries, allowing us to service our clients in more suitable and affordable method.

In addition to the commercial and residential services noted above, we also assist with general real estate consulting. Each aspect of the feasibility study – and there are many – can be broken into separate studies and sections, and act as a standalone guide for that particular need. Whether you require an entire feasibility study or just a portion, or need help with just one aspect, we can help. Here is an abbreviated list of our real estate consulting services.

      • Assistance with Development Location and Project Site Decision
      • Market Analysis of the Project’s Location
      • Competitive Analysis of Existing or Similar Developments
      • Site and Location Analysis
      • Neighborhood Survey, Traffic, Demographics, Income, etc.
      • Surveys of the Land
      • Project Concept Development
      • Financial Projections, Budgets,
      • Marketing Strategies Development

There are many variations as well for real estate feasibility studies and one size do not, in fact, fit all. CONTACT US for free consultation.

Prospectus’ Feasibility Team

Consisting of lifelong entrepreneurs, lawyers, consultants and business plan writers, our team is dedicated to the success of our clients. We have assisted hundreds of companies in writing their feasibility studies and preparing vital reports for a business’s initial launch, whether this is for a product or a real estate development. Thus, from real estate to high tech to economic development to oil, gas and other refineries of all kinds, there is not an aspect of the feasibility study process that our staff is not intimately knowledgeable about.

There is not an aspect of the real estate market that our team has not been involved with, giving our clients the ability to work with a company that knows the intricate details of development. This translates into time and money saved. If you are considering a real estate development and need a feasibility study to this end, whether for residential or commercial real estate, or you just need one aspect of the analysis to be undertaken, feel free to contact us any time for a free consultation, or setup an appointment at one of our office.

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Feasibility Study