Economic Feasibility Reports

Starting a new business, manufacturing a new product line, or expanding into a new market is risky in any economic situation. Carrying out an economic feasibility study, also known as an economic feasibility study or economic viability analysis, is an important step in assessing the costs, benefits, risks, and rewards of a new venture. Feasibility studies help businesses plan operations, determine opportunities and dangers and attract investors. A feasibility analysis is not necessarily difficult or expensive, but it must be in-depth factoring in all potential challenges and problems.

determine the target market

Identify and explain the target market for your intended venture or business activity. Describe how the planned customer base would benefit from your product or service. If your planned activity serves as a business customer base, identify the industry your targeted customers are in, and who the key players are. For a consumer base, explain the demographic characteristics and shopping behavior of your intended customers

look at your competition

Assess the competition in your target market. Identify the important competing firms, their products and services, and their respective shares of the market for your intended activity. Doing this lead you to consider how to distinguish your products or services from those of yourcompetitors.

determine fixed and variable costs

Estimate the costs of your business activity, considering fixed and variable costs. Fixed costs are those that remain constant within the time period for which you are projecting revenues. Examples include facilities (such as rental on the factory or office space), interest on capital items, and administrative expenses. Account for fixed costs as a single lump sum, as they are the same regardless of the level of sales or services provided. Variable costs are those that change in response to sales levels. Materials expenses, labor costs, marketing costs, and distribution are variable costs. Express these in terms of cost per unit.

make your revenue projections

Project the profits of your business activity, based on an assumed share of the target market. You can provide revenue projections for a period of one year or longer. Some analysts suggest providing revenue projections for a three-year period. As a new entrant into the market, you should keep your projections conservative, estimating only a small market share (usually about 5% to 10%). Using your estimated market share and sale price, estimate your total revenues, breaking them down by month, quarter and year.

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