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Feasibility Studies

So, you are considering building or buying an airline?

In every country of the world, there is nothing that we know of that is so over-regulated and complex as an operating airline. What is the first thing you will need? For most of our clients it’s an initial requirement for delivering a well written professional business plan to potential lessors and lenders.

 

Feasibility Studies & Business Plans

Be sure you know what you want and what to expect when pursuing a new venture. A lot of time, resources and hard money can be saved in knowing what to do, what not to do and the order in which to do it. A good rule of thumb is to never commission a business plan until a feasibility study has been written.

A feasibility study is normally less than 40% of the cost of a formal business plan and although a feasibility study will not be anywhere close to the in-depth “nuts and bolts” view of a business plan, it will do exactly what the name implies. It will show if a project is feasible before other steps are taken or indeed paid for.

 

The differences between a feasibility study and a business plan.

A feasibility study is designed to discover if a business or project is “feasible” or  not: (In short, does the business or project warrant further investment of time, money and further study or is it a non-starter?) A feasibility study is a relatively inexpensive way to safeguard against the wastage of further investment.

If a project is seen to be feasible from the results of the study, the next logical step is to commission a full business plan. 

Will the investment made in the feasibility study itself then be wasted? No, because the research and information uncovered in the study will be of good use in the business planning stage and will reduce research time and therefore the cost of the business plan.

A business plan is designed to “plan” in advance how a business or project will be started, implemented and managed: (In short, a working “blue print” for the entire operation of the business or project). Business plans are commissioned for one of three reasons: Reorganization, investment / funding or a management blueprint for new operation. 

Man never plans to fail, he only fails to plan!

FEASIBILITY STUDIES

Feasibility studies demonstrate to a prospective project owner or investor that a given concept is financially viable and whether further study and / or a business plan is warranted. For a feasibility study, basic data is obtained from the client through a series of queries, questions and meetings, wherein the client provides some of the research and other data and facts need to be gained from a variety of sources.

The typical feasibility study contains, among other items, notes on financial projections, a general description of the business, general details describing how the company / project will be formed, managed and marketed, statements concerning the competition and a cash-flow projections based on estimates and industry averages.  Further notes can be included as to general details of the project and revelations found during the research stage. The study will normally be completed quickly and in a very general format compared to that of a business plan. A feasibility study should answer five questions.

1.     Will it work or not? 

2.     Is it profitable or not? 

3.     What will it basically cost to fund or start? 

4.     Is it worth doing? 

5.     Is it worth commissioning a business plan?

 

 
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