Article by Pat Fiorenza, Research Analytics Manager – RMS
Are you thinking about strategies to grow your business? Expanding into a new market? Opening a new store? Offering a new degree program? Reimagining the way you do business? Feasibility studies are often an essential first step to getting you the data you need, particularly if you are applying for a business loan, grant, or justification from an accreditation board. Having an independent, credible, third-party partner like RMS is critical to getting clarity on your project and gives you and your creditors confidence in the investment.
RMS recognizes the importance of these studies, as they will ultimately dictate important business decisions, and takes special care to position your company for success. Before we share some methods to conduct a feasibility study, let’s examine why you may need to engage in a feasibility study. Here are six examples:
- You are looking to open a new store and need to assess the location as a requirement for a business loan.
- You want to start a nursing program and need to justify the demand to an accreditation board.
- You have a new product you want to test before a full launch.
- You have tremendous success with a particular product and want to scale, so you need to examine other markets to pursue.
- You are assessing the viability of merging with another company and want to examine the associated risks, costs, and benefits.
- You are expanding a social services program and want to assess the potential issues, challenges, or obstacles and intend to use the study to support grant funding and program design.
These examples are just the start. There are infinite reasons why you may decide to invest in a feasibility study. Ultimately, the end goal is the same: determining if the project is viable. To start your thinking on how to conduct a feasibility study best, we’ve tried to simplify feasibility studies into an easy-to-understand framework. For our market research feasibility studies, typically, we see three stages. You may be in all three stages, one, two, or none – whatever stage you are in, we can help guide you towards making a go or no-go decision, backed with authoritative data. Each step is discussed below, along with some suggested methodologies.
Stage 1: Initial Analysis to Examine the Viability of Your Project
The first step is to start small and do some initial analysis to understand the viability of your project. This means assessing demographic and target market data. We suggest conducting additional secondary research and referencing current studies related to your project. This is crucial to understanding if there is demand in your area and identifying any important demographic trends that impact your project. We also recommend gathering data about your competitors, helping you to hone your value proposition against your competition.
Demographics & Target Market Analysis
Demographic analysis is critical to understanding your market, size, capacity, and whether it can support your goals. Our analytics team quickly and efficiently analyze data from government sources and the latest available demographic data.
How it helps: Understand the market you are venturing into and if sufficient demand exists or who else to potentially target your services.
Before you commit to your project and the resources for doing primary research, you may want to consider conducting some secondary research. What information do you already know? Who has done this work? What kind of surveys, focus groups, and interviews, have already taken place? We can save you ample time and resources by conducting secondary research to do an initial assessment. You never know what you may find.
Conducting a Competitive Assessment
RMS has done many studies that look at the local competition or assess the market trends within an industry. We access several data sources and conduct thorough web searches to understand the competitive landscape of your service.
Stage 2: Optimize Your Project & Define Clear Scope
You primarily work to optimize and define your product/service during this stage. You now have a good sense of your offerings and are ready to test it in the market. During this stage, you may want to consider assessing the market potential and forecasting, looking at trends within your industry and expectations for the future. If you have a location (say opening a store), now is the time to dive deeply into the location to ensure it’s the right spot for your venture. Also, during this stage, you can confidently begin conducting primary research, like surveys, IDIs, and focus groups. You may also want to consider doing some mystery shopping. Finally, now is the time to examine your pricing model and ensure that it aligns with market demand and your consumer.
Assessing the Market Potential & Forecasting
Understanding your market size is critical, but it’s different from demographic analysis. We can assess if the market is saturated with your product/service and estimate the demand in the area.
Selecting the Best Location
If you’re considering brick-and-mortar, we can help assess your location. We can layer data to help identify the right spot, look at various variables and make data-based recommendations if your proposed site is feasible.
Integrating Primary Research: Surveys, In-Depth Interviews (IDIs), Focus Groups
Depending on the size of your budget, your need, and your goals – leveraging our capacity to do customized primary research is a powerful way to assess the feasibility of a project. Our ViewPoint Panel is a terrific resource and provides a representative sample of many types of consumers. Sometimes RMS will recommend incorporating surveys, IDIs, or focus groups into the tactics above. For example, our location analysis may include IDIs with prospective customers. Or we may test the features of a new service in a focus group setting.
Conducting Mystery Shopping
RMS has done several projects with mystery shopping. We can use mystery shopping techniques to gain important information about pricing, competition, and offerings, all designed to help you maximize the success of your product/service.
Examining a Suitable Pricing Model
RMS is well-positioned to assess the pricing of services. We can use several methodologies to model and predict what individuals are willing to pay for a service.
- Offer a recommendation
The final stage is where RMS can determine if the project is a go or no-go. If the data supports moving forward, you are ready for the next step. However, if the data suggests the project is not viable, that is not the end of the discussion or the study. After conducting the feasibility study, you are now given a roadmap for strengthening the viability and your chance to improve key areas before you are too far down the road. Think of a feasibility study as a way to help “future-proof” certain parts of your project. Integrating findings into your project at this stage is crucial, so the feasibility study is not a stand-alone document. Doing strategic planning to incorporate the results across your agency is a terrific step to ensure you maximize your findings.
If your project is a go, it’s essential to integrate the findings throughout your project. If your project needs more work to become viable, now is the chance to course correct. In either case, RMS can support your strategic planning efforts, ensuring that you maximize the findings of your feasibility study and fully leverage the data you have collected.
Feasibility studies are an essential step in starting any new venture. This quick framework gives you insights into designing a successful feasibility study and making well-substantiated decisions about your project. If you want to learn more about our feasibility study work, please get in touch with Sandy Baker, Vice President of Corporate Development, at firstname.lastname@example.org.
Leave a Reply