4+ SAMPLE Financial Feasibility Report

What Is a Financial Feasibility Report?

A financial feasibility report evaluates the financial elements of a proposed project, investment, or other endeavors. It considers various factors, including capital, expenses, revenues, investment income, and expenditures, to generate a more thorough report. Financial feasibility studies answer the question, “Will the project or firm has sufficient funds to complete the project and create a profit?” Every firm must know if it can maintain itself, pay its staff, and still produce enough money to turn a profit. This type of feasibility study is created for a corporation or business that wishes to assess its financial capabilities and determine if it has the capital required to assure the success of its project. Statistics indicate that the project success rate has increased with time. In 2016, 62% of initiatives reached their initial commercial objectives, while only 50% were completed under budget. In 2018, the respective percentages rose to 70% and 60%.

Elements of a Feasibility Report

A feasibility study compiles crucial company data and encourages investors, company leaders, and other company personnel to support a project. Consider including the following components of a feasibility report on your own:

Title page: The title page is the initial section of the feasibility study that the reader encounters. You should select a title that is concise and informative about your project. Your title page should also contain the names and work titles of the project manager and team members. You may want to have the project’s anticipated start and finish date to provide further context for the reader’s understanding of your time frame.Table of contents: The table of contents aims to facilitate the reader’s access to any portion of the report. After completing the information, complete the table of contents to ensure that the page numbers correspond with the section headings. Typically, your word processor includes a table of contents feature that makes creating this component quick and easy.Executive summary: Your feasibility study should begin with the executive summary as its primary component. This section should contain an introduction to the project, its objective, the targeted solutions, and an overview of the sources used to establish the report’s credibility.Market feasibility: The market feasibility section of your study contains valuable information regarding company data, market research, and the firm’s future perspective. Start with an overview of your company’s industry. Discuss the industry’s history, current practices, trends, and future estimates. Then, you might refine your focus to highlight your company’s position inside the industry. List your key competitors, your primary revenue sources, your sales numbers, and any prospective niche markets you could pursue to increase your customer base. The market feasibility section gives the reader a deeper insight into your organization, its offerings, and how the feasibility project could contribute to its growth.Technical feasibility: The section on technological feasibility describes various operational elements that impact your firm’s success. Discuss the location of your company, the materials required to make the items or services you offer, the production process, quality assurance facilities, and the transportation needed to convey your products to retailers. The technical feasibility part provides the reader with a thorough understanding of the aspects that sustain your firm so that you can continue to supply your customers with superior products and services. This area also contributes to the credibility of your financial feasibility section.Organizational feasibility: The organizational feasibility part demonstrates your organization’s legal and ethical policies to the reader. This section should overview your company’s organizational structure, including branch locations and departments. You may wish to retain a brief biography of your company’s founders or board members. You can also profit from emphasizing your company’s HR procedures to preserve ethical and legal responsibilities for its employees and the motivational techniques you implement to increase workplace efficiency. The organizational feasibility section assists the reader in determining if your organization’s current practices complement or support the planned endeavor.Conclusion: Before your appendix and reference pages, the conclusion is the last part of your report that you write. Each of the previous sections is summed up in this section. At the end of the conclusion, you should bring up one or more suggestions to get people to take action on the topic. If you need to explain these suggestions in more than a few sentences, you can put them in a separate section.Appendix and reference pages: An appendix is an optional section typically valuable to the report’s audience. This part contains any material that the reader may find beneficial but is not immediately related to the other issues mentioned in the report. You should provide references regardless of whether you include an appendix section. A reference section may span one or more pages depending on the number of sources utilized to compile the information. You may utilize company records, scholarly articles about your industry, and other materials you authored throughout the project’s execution. Use citations that comply with the style manual you are employing.

Types of Feasibility Reports

The most successful businesses have lofty objectives. Expansion needs testing and risk, whether you are introducing a new product or entering a new industry. It occasionally necessitates undertaking projects or initiatives without knowing precisely how they will manifest or whether they will ultimately benefit the organization. Consequently, there are five types of feasibility studies, each of which provides a unique lens through which you can analyze the viability of your company idea or project:

Economic feasibility: Evaluating if the investment will be worthwhile when budgets are at stake is crucial. Will your project be profitable, to put it simply? To ascertain how much value the project will add to the company, conduct a cost-benefit analysis as part of an economic feasibility study.Technical feasibility: This broad notion applies to various projects, including software development and construction. Validate the technical resources and skills required to transform the concepts into a functioning project or system.Operational feasibility: Even the most intelligent and well-intentioned projects might fail if they are too difficult to implement or do not immediately address or resolve the issue. An operational study provides insight into how effectively the planned initiative would address the issue.Schedule feasibility: This form of feasibility analysis, also known as time visibility, can assist you in determining how reasonable the project’s timeframe is compared to existing projects and available resources. A proper appraisal at this stage might also help you prevent unexpected or additional expenses.Legal feasibility: A legal feasibility study lets you determine whether your suggested plan complies with legal and ethical standards. This may involve zoning laws, data protection acts, or privacy laws.

Tips to Evaluate a Company Project

Evaluation of projects is a method for determining the success and impact of projects, initiatives, and policies. It needs the evaluator to collect pertinent data to examine the process and results of a particular project. Project evaluation inspires improvements in the internal circle, identifies patterns among the project’s intended audience, informs future project planning, and communicates the value of completed projects to external stakeholders. Evaluation of a project includes preparation and implementation. Listed below are the steps necessary to evaluate your project:

1. Develop an evaluation strategy

As you construct your project, create goals and objectives to provide structure and a clear direction for your team. These objectives and goals also help you select the type of project evaluation you wish to do. Your evaluation plan contains as many tools and methods as you feel are essential for your chosen evaluation type. For instance, if one objective is to boost staff productivity, monitoring task completion metrics is an evaluation technique that demonstrates productivity rate increases.

2. Determine the evaluation source and organize

After deciding on an evaluation strategy, identify the information sources. If you have opted to conduct interviews, choose the individuals you wish to question. Acquiring the necessary resources for each approach, such as interview questions and a location to track and store responses, is essential. To further prepare for the implementation of your evaluation plan, delegate tasks or create a comprehensive schedule.

3. Examine the data

After you have collected all the data you need for your evaluation, look for trends, strengths, and weaknesses and how well the project met the goals and objectives. Use a tracking system to organize and store the information you’ve collected, depending on what it is. Then, use your team’s goals and objectives to determine what the information you’ve gathered means.

4. Make a report for your group

Along with figuring out what the data mean, you should write a report that sums up the evaluation results. Structure this report based on what your team and other essential people need. This is a good idea because the report can show what needs to be fixed, the project’s intended and unintended effects, and how well your team met the goals and objectives.

5. Discuss the next steps

Your report is prepared to be shared with team members and stakeholders once it is finished. Sharing the project evaluation findings improves communication, sparks creative team improvement ideas, fosters closer ties with stakeholders, and offers guidance for future project improvement. A conversation about how to proceed based on the project’s outcomes and impact is sparked by transmitting the project evaluation findings.

How to Complete a Feasibility Report

Before making a big strategic decision, businesses generally do feasibility studies to guarantee that the action can be executed efficiently, effectively, and with low risks. You can do a feasibility study by following these five steps:

Step 1: Perform preliminary investigation

Beginning a feasibility study with a preliminary analysis is optimal. This step will consider the action’s feasibility and what it includes. A thorough feasibility analysis requires time and resources. A preliminary examination is conducted to assess whether a comprehensive feasibility study is worthwhile. If you believe that the action you wish to take merits additional investigation, you can next perform a comprehensive feasibility study.

Step 2: Create a study outline

Then, you can define each part of your feasibility study using an outline. The objective is to summarize the key aspects of your research to have a framework for future reference. Develop an exhaustive framework that addresses each of these questions. Then, describe how you will answer each question and the type of response you will need to decide whether your activity is possible.

Step 3: Conduct market research

Analyzing your competition and the market is an effective method for determining the viability of your suggested action. If another organization has made a similar move, you can learn that your movement is viable and what steps will assist you in reaching your goal. Market research should assist you in providing more specific responses to the questions posed in the previous stage. By holding focus groups and distributing surveys, they discover that buyers have a strong interest in their suggested new toy. By investigating their competitors’ websites, they also find that their most significant competitors do not yet provide identical products, leaving the market free.

Step 4: Conduct organizational research

If you conclude that there is a market for your action plan, the following stage is to assess whether or not your company is capable of executing it. Examining the financial component of the planned activity is essential. During this step, you should calculate the initial payment amount, the type of long-term investments required, and any additional costs incurred by your firm. Consider purchases of supplies or equipment, real estate investments, and staff adjustments. Consider whether your current team can carry out the intended activity effectively. For instance, they may require further training or additional personnel to assist. Determine if you have the proper equipment. For example, your operation may necessitate specific equipment or technology. It would help if you consider the expense of this equipment and whether or not your team can properly utilize it. After this phase, you should have a thorough grasp of whether or not you possess the necessary resources to carry out your action. This stage will also disclose any essential modifications before you can continue with the action.

Step 5: Analyze your results

After collecting the data, you need to look at the results to see if your organization can handle the action. By carefully reviewing each part of the report and ensuring you did it right, you can ensure that your findings are accurate, reliable, and suitable for the project. In this step, you’ll determine if the action plan is possible and what risks are involved. If the results show that your proposed action is possible, you can now use what you’ve learned to plan your next steps, like making an outline of your product or starting the hiring process.

FAQs

Why is financial feasibility an essential financial planning step?

It enables the organization to evaluate the risk and return of a specific initiative. It ensures sufficient cash flow for operations by guaranteeing that the company does not pay more taxes than required.

What is the financial planning process?

Financial planning is analyzing your financial condition and developing a precise plan to achieve your objectives. As a result, financial planning frequently encompasses various aspects of money, such as investments, taxes, savings, retirement, your estate, insurance, and more.

How can a business improve its financial skills?

Establishing personal financial objectives, creating and managing a budget, supervising investments, handling credit cards and debt responsibly, and maintaining a balance sheet are all beneficial practices for being a financially knowledgeable business leader. Personal financial management develops problem-solving abilities as well.

In the earliest stages of the project, a financial feasibility analysis should be conducted to determine the economic sustainability of the endeavor. It is essential before beginning preparations, as you do not want to meet financial troubles amid development. It is preferable to be prepared than to rush into a venture only to discover that you lack the funds to continue or that the enterprise generates little to no revenue.