In the business world, you are often presented with numerous opportunities for growth, expansion, changes to productivity or operations and more. It may be your job to analyze each of the options thoroughly and to determine the best course of action for your company to take. In many cases, there are multiple options to consider. So you must find the best overall solution for growth and profitability. This is when the feasibility report comes in handy.
After all, even if one option will produce increased profitability for the company, there may be an even better one available to consider. The development of a feasibility report can help you to more easily analyze the options and make an educated decision about how to proceed.
What Is a Feasibility Report?
If you have never written a feasibility report before, you may not be certain what this type of report entails or how to prepare it. Essentially, it includes:
- Background description about the problem or challenge;
- Description of the criteria or factors at play
- Examination of the outcome that is most likely;
Each section of the feasibility report should be well-researched and carefully written with accuracy, detail and clarity in mind. Remember that you may have multiple feasibility reports to review each possible scenario or solution to address a problem. Therefore, you may have to compare the information in various reports against each other to decide how to proceed with the company.
Who Needs to Use a Feasibility Report?
Managers or executives in a company usually ask for a feasibility report. They are used by key decision makers to help them for choices. So those capable of skilled research and analysis related to the problem or event prepare them.
In many cases, several key decision makers will meet to review various feasibility reports. This is to vote on the best course of action to take based on the information in the reports.
How Much Is Usually Spent on a Feasibility Report?
Most feasibility reports are prepared internally by the company’s own researchers or analysts who are familiar with the company’s operations. Therefore, the only cost associated with these reports usually relates to the amount of time the individual or team takes to create the report.
However, in some cases, special third party reports may be ordered to substantiate the feasibility report. For example, an environmental report or an appraisal may be ordered if the company is running a feasibility study on the opportunity to purchase real estate for business activities in the future. If this is the case, the cost of external reports and studies should be factored into the total cost to produce the feasibility report.
5 Ways in Which a Feasibility Report Can Help Your Business
When you are not familiar with a feasibility report, you may not be certain exactly how this type of report can assist you in your decision-making process. After all, you may be able to conduct your own research about the possible outcomes and solutions. There are actually five important ways that a feasibility report can benefit your business. These are key reasons why you should be using feasibility reports in your business activities today.
1. Improved Understanding of the Project’s Impact on Cash Flow
Many projects will impact the cash flow of your business in different ways. A good feasibility study will thoroughly and closely estimate how much money the project will take to complete.
The impact of the completion of the project on the company can determine if this is the most profitable avenue for the company to pursue. If additional funding is necessary, you can review and analyze funding sources in the report as well.
2. Enhanced Analysis of How the Project Will Affect the Supply Chain
Some projects that your company is analyzing will impact the supply chain or overall management of various departments. You need to understand the impact this project will have on your company as a whole as well as on specific workers.
If the impact is too significant, you can consider an alternative plan. You can also hire additional workers to carry out the project.
3. Reviewing the Impact of the Project on Labor and HR
Some projects require specialized skills and training that your team may not have. You should determine the skills and education necessary to complete certain projects. Also, identify individuals in your company that may assist with the project.
Otherwise, you should plan to hire new workers who have the specialized skills to fill a necessary position in your company. This may be an employee or a contractor.
4. Estimating the Best Time to Complete the Project
Many companies have seasonal changes in productivity and cash flow. Implementing some types of projects during a slow period may be ideal from a labor standpoint. But it may not be ideal from a cash flow standpoint.
The feasibility report will analyze the best times to complete the project. This includes labor, cash flow and other important factors.
5. Analyzing the Risk vs. Reward for This Project vs. Alternatives
All projects have risks for the company as well as potential rewards. The feasibility report should thoroughly detail and analyze the risks and rewards for this project. This also includes as for alternative choices that may have a better overall outcome.
Wrapping It Up
The decision to request a feasibility report for a major or minor project that you are thinking about is an important one to make. Remember that the feasibility report’s quality will rely on the individual effort put into developing it. When selecting a team to prepare the feasibility report, ensure that they are loyal to the company. They also need to be knowledgeable in this area and understand the importance of the report that they are going to create for you.
If you have knowledge or expertise regarding feasibility reports, share your comments with others in the space below.