Key steps for a financial feasibility study

Key steps for a financial feasibility study

A financial feasibility study in UAE is a method that you can use to introduce outsiders to your business plan or idea. The research outlines the amount of money required to fund your project, as well as where that money will come from and how it will be used once it has been obtained. This analysis of projected cash flow can often disclose previously unknown flaws in your business plan and point you in the right direction for overcoming them.

Key steps of a feasibility study

1. Evaluate your business concept’s viability

Evaluate the market to see if funding your business makes sense before you start your financial feasibility analysis. Two things to consider are the audience and the competition. If the potential customer demand for what you’re trying to sell isn’t strong enough to keep your business afloat, now is the time to modify or remove your business plan. Similarly, you must evaluate your competition – learn about the items that customers may choose over yours and see what you can do to ensure that yours is superior.

2. Conducting and Writing a proper feasibility report

The format of most financial feasibility studies is similar. This is how they’re organized:

• Introduction – To make the paper easier to read, include a table of contents.

• Product/service – Include prototypes if there are any. Utilize this section to discuss how customers will use the product and plans for future product enhancements.

• Technology – Explain complicated technology procedures in language that a typical businessperson can grasp.

• Economical situation – Describe who your company will serve. Mention intended consumers, including both customers who buy the product in stores and end-users, who are the product’s ultimate owners.

• Competition – Include a list of significant competitors in this area. Include both direct and indirect competitors, or companies who offer a product that fills a similar need for customers.

• Industry – For already-existing industry, look at the current trends. Examine demand and supply over time and identify the elements that influence them.

• Business model – Explain how you intend to make money. Give enough information so that your potential investor feels comfortable discussing financial estimates later in the document.

• Sales and marketing strategy – Mention how much money you want to spend on marketing, ideally laying out a three-year sales strategy. Describe your marketing strategy in detail, as well as the rates you’ve set for your products.

• Requirements for production and operation – Once you’ve found a physical location for your business, make a note of its specifications (size, age, and condition), as well as the rental and equipment prices.

• Management and personnel requirements – Make a list of all the employees you plan to hire, as well as their qualifications. You should also consider the future, stating how many people you expect to hire and what they will be doing.

• Intellectual property – List every intellectual property that your company holds or is in the process of acquiring, including patents, copyrights, and trademarks.

• Critical risk factors: List all of the things that are keeping you from launching this business. Be open and honest about any barriers to access, economic forecasts, or rules that limit your production since your investors have a right to know how much money they’re risking by investing in you.

• Budget forecasts – Include information on start-up capital, finance, prospective returns, and payment to investors. Continue reading for helpful hints on how to make this section stand out.

• Conclusion – Present your final results and investor suggestions.

3. Financial projections guidelines.

• Request enough start-up cash to get the company up and running for the first two years.

• Put your personal money into your company, and make a big deal out of it in your feasibility study.

• Discuss factors that could affect an investor’s profit. 

ex: Set up several potential situations for investors to comprehend the risk they are taking.

• Don’t make any financial promises to investors that are precise and binding.

Reason: If you promise them a precise financial amount or a specified payment date, you run the danger of not being able to keep your word and losing a valuable partner in the process. Instead, tell them that they will receive a particular proportion of their investment at the end of each profitable business quarter, because that promise will benefit you both.

4. Make an executive summary

This single-paged document that should be the final item you write because it will act as a summary of the main points of your proposal. Because your executive summary will be the first thing your potential investors or partners view, it must be brief and interesting. It should emphasize the fascinating job you intend to undertake and how you intend to attain your objectives.

Startups have a hard time competing in new markets, and small businesses have a hard time attracting investors who believe in their visions. 

Investors who prefer to know exactly where their money is going will be impressed by your business skills and will be much more inclined to grant you the funds you need to fund your aspirations if you finish a financial feasibility study successfully.

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