Feasibility Study Course Lesson 3 – How to Write a Technical Feasibility Study
Lahle A. Wolfe, a single mom of four, is an entrepreneur, author, speaker, web programmer and application developer. She is founder and CEO of LA Wolfe Marketing and its two subsidiaries. Wolfe has extensive experience in both the nonprofit and for-profit business world. Read more
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What is a Technical Feasibility Study?
The Technical Feasibility Study assesses the details of how you will deliver a product or service (i.e. materials, labor, transportation, where your business will be located, technology needed, etc.).
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Think of the technical feasibility study as the logistical or tactical plan of how your business will produce, store, deliver, and track its products or services.
A technical feasibility study is an excellent tool for trouble-shooting and long-term planning. In some regards it serves as a flow chart of how your products and services evolve and move through your business to physically reach your market.
The Technical Feasibility Study Must Support Your Financial Information
Do not make the mistake of trying to entice investors with your staggering growth projections and potential returns on their investment that only includes income (revenue) to the business.
With any increase in revenue there is always an increase in expenses. Expenses for technical requirements (i.e. materials and labor) should be noted in the technical feasibility study.
You should also not strictly rely on feasibility study conclusions to impress an investor. An experienced investor or lending institution will read your entire report and come to their own conclusions. Therefore, it is critical that the technical and financial data in your study reconcile. If other parts of your feasibility study shows growth, you will also have to project labor and other costs and the technical ability to
support that growth.
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The technical component serves as the written explanation of financial data because if offers you a place to include detailed information about why an expense has been projected high or low, or why it is even necessary. It demonstrates to potential investors and lenders (and in some cases, potential clients) that you have thought about the long-term needs your business will have as it grows.
Preparing an Outline for Writing Your Technical Feasibility Study
The order that you present technical information is not as important as making sure you have all the components to show how you can run your business.
You do not have to include specific financial information in the technical portion of your feasibility study, but all information in this component must support your financial data represented elsewhere. Basic things that most businesses need to include in their technical feasibility study include:
- Transportation or Shipping
- Physical Location
Calculating Material Requirements
In this section you list the materials you need to produce a product or service, and where you will get those materials. Include information such as if volume discounts will be available as your business grows, or if you ever plan to manufacture your own parts at some point in time.
Things to include in your list of materials:
- Parts needed to produce a product,
- Supplies (glue, nails, etc.), and
- Other materials that are involved in producing or manufacturing your product.
You do not need to include actual financial data in this portion of the study but financial data supporting your narrative assessment should be included in a separate spreadsheet as an attachment.
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