What are the 5 feasibility Studies?

It can be exciting to start your dream venture, but it’s a high-stake gamble where 90% of startups fail, which shows that your chances of success might not be in your favor. Many times, it’s the wrong business model, the wrong team, wrong market analysis or even a wrong overall business structure which leads to many startups failing at newly launched businesses. Feasibility studies in that case come as a great help because this analysis makes the owner understand what possibility brings them success or failure. It’s a deep analysis into every minor critical aspect that your business plan is running on like market demand, competition, financial strength, resource needs and strategic fit. It is not just to detect the market potential but to underline the gaps, risks, and deal breakers before they end up costing you your time, money, or even your reputation.

A strong feasibility study shows your dedication to starting a successful business, which also helps in gaining the trust of shareholders. In this guide we will further explore the key 5 feasibility studies in detail that every startup in KSA must consider before founding a business that survives and thrives.

1.    Technical Feasibility

Technical Feasibility helps the organization in finding out whether the business has enough technological resources, infrastructure, tools, software, and expertise required to achieve the proposed project. Technology is a modern-day necessity, if these demands are not met accurately there are huge chances of business failure no matter if it’s financially promising and legally sound. Technology is highly demanding specifically in countries like KSA with growing adoption in smart cities, digital infrastructure, smart cities, and high-tech industries. Projects like NEOM, Red Sea Projects also opens the doors of possibilities for technological businesses, but initiating a high-tech business needs careful examination of local infrastructure, internet access, cyber security concerns and software/hardware availability. The key components of Technical Feasibility include:

• Software and Hardware requirements
• Compatibility and deployment of system
• Maintenance and support need
• Cloud storage and security methods
• Scalability and flexibility option

It is better to collaborate with IT partners to conduct a thorough analysis and plan for the best tech upgrades for long-term stability.

2.    Economic Feasibility

Economic Feasibility estimates the financial strength of the venture; it finds out whether the business is ideal to provide fruitful returns and sustain profitability in the long run. This helps business owners find out the total cost of funding operations, forecasting revenues, and return on investment (ROI). Since, KSA has gone through some of the major economic shifts, with the latest changes in taxation system such as VAT, implementing Saudization policies and boosting their support for SMEs. This has provided various opportunities for startups and foreign investors through banks, private equity, public investment funds (PIF) and Saudi Industrial development fund (SIDF) which has made it an attractive location for investments with high chances of success if done rightly. The key components of Economic Feasibility include:

• Startup cost and ongoing operational expenses
• Revenues expected and profit margins
• Finding financial rations like IRR, NPV, ROI
• Complete risk and sensitivity analysis
• Planning for recoveries and exit strategies

For the best results, it is essential to develop multi-scenario financial projections, find regulatory costs, foreign exchange impacts, and cost of import or export. Businesses can utilize the professional valuation models or hire local experts or accounting firms in Saudi Arabia.

3.    Legal Feasibility

Legal Feasibility emphasizes on legal framework of Saudi Arabia that impacts the business initiative directly. This is to make sure that the project complies with all legal regional, or national laws. Non-compliance may lead to hefty fines and penalties that are not just damaging to reputation, business operations and finances but also leads to even failure or shutdown of business. To avoid any legal obstacles, legal feasibility must not be ignored. KSA is aiming towards easing the business regulations and encouraging the foreign investments yet the legal landscape of KSA is dynamic business must prioritize the legal laws including labor laws, company registration requirements, sector specific licenses and foreign ownership legislations. The main components of legal feasibility are:

• Legal Business structuring and incorporation
• Registration, Licensing and permission for legal steps
• Compliance with Labor laws and Saudization Policies
• Focusing on environmental, social and governance (ESG) factors
• Protection of intellectual property
• Compliance with commercial and contract laws

Startups must consult with legal advisors and firms; they help to stay updated with the legal regulations and offer sector-specific guidance. Businesses must also regularly review their contracts with international suppliers and conduct routine internal audits for complete compliance.

4.    Operational Feasibility

For operational feasibility, businesses analyze whether the provided business proposal can be implemented without any regular operational struggle. Many businesses go through operational problems which cause poor execution no matter how financially or legally strong they are. Operational feasibility focuses on business capabilities to run operations, resources used in it, skilled staffing and customer service. In KSA, a unique culture under the influence of religion is followed where businesses can face several challenges, similarly factors like Saudization, availability of skilled labor and customers’ expectations plays an important role in operational success of any business. The components of operational feasibility include:

• Capabilities of Human Resource System
• Structural efficiency of organization
• Available facilities, equipment and logistics
• Customer service frameworks
• Compliance with daily operational regulations (GOSI, MOL etc.)

It is best to build a strong human resource strategy. Always test the market with pilot projects and use customer feedback to find out the shortcomings.

5.    Schedule Feasibility

Schedule Feasibility is to know the time that could be taken to complete a project and find out whether it will fulfil the given timelines. Each project must be achievable in a specific period as the delay would give rise to missed market options and damage to reputation. Timely delivery ensures the expected results, specifically in seasonal industries where the one who does it on time wins. In KSA, national holidays like EID, Hajj or Ramadan may impact the project approvals from governments and affect the expected schedules. Likewise, delays in importing equipment, the right resource availability, and hiring staff may also take longer than expected, hence schedule feasibility assists in calculating the time by focusing on all the factors impacting the schedule. Its Components include:

• Project timelines and critical paths
• Estimating Resource availability
• Time taken in regulatory requirements
• Leading time of suppliers

Using the right software for management like Primavera, MS project, and more can help you with schedule analysis. Businesses can also hire suppliers and contractors that have previous expertise in their demanded operation for on-scheduled delivery of projects.

Integrated Feasibility Strategy in the Saudi Market

Feasibility study is an in-depth process that thoroughly determines all five areas and keeps them in line with the companies’ goals and long-term vision. the main steps for feasibility studies include,

• Finding out the scope of project like what the business is looking to accomplish
• Building a team which includes financial, operational, legal and technology experts
• Gathering the data from market by utilizing reports from GASTAT, MISA and international market intelligent firms
• Using professional templates to prepare for a consolidated report
• Making the necessary changes as per feasibility studies before launching

Feasibility studies do not just increase the chances of your business success but also attract investors as they may require a feasibility study before putting money into your venture.  Feasibility study is not an idea but a strategic plan that leads to fruitful outcomes.

Role of SS&CO in Feasibility Studies

SS&CO is one of the most trusted accounting firms in Saudi Arabia, that helps businesses of all scales from startups to multinational companies. We understand the need of comprehensive feasibility studies therefore our expert offers:

• A complete technical analysis to identify the best suited technological tools and conducting infrastructure audits.
• Custom made financial models, offers funding support and provide transparent documentation for investors
• Guidance regarding company formation, licensing procedures, compliance with Saudization, and sector specific regulations.
• Building strategies for HR framework, process optimization and logistics planning
• Management of projects like timeline planning, Gannt Chart Development and regulatory coordination.

SSCOKSA has a proven track record with startups in building a successful business through smart feasibility planning. With deep understanding of Saudi regulatory requirements and access to networks and investors SS&CO helps businesses stay safe from costly mistakes, attract investors, and ensure sustainable growth.