The process to correctly evaluate investments:
“FEASIBILITY STUDY AND MORE”
marking out instruments to minimize enterprising risks.

 

With our market becoming more and more competitive, the necessity for the entrepreneur to correctly evaluate the risks related to new investents is becoming more and more critical. For this reason surveys, marketing analysis, feasibility studies are becoming essential instruments for a correct decision-making process of management. The entrepreneur, investing a limited cost in surveys, may be able to substantially reduce the risks of financial loss in a project that, if realized without checking its economical and financial feasibility, could be a complete failure. Marking out the trends by studies and researches in a specific market fields allows the entrepreneur to foresee the future developments of that market, as well as to recognize new opportunities or threats, and allows to target the investment with a minimum risk. Market research defines also a correct timing for the investment. In fact, an investment can turn out to be wrong or inadeguate even if the “business idea” that had inspired it was good, just because the timing was wrong. For example, maybe it was not meeting the actual market demand, or the economic trend in that moment was unfavourable. In this case, to postpone the investment could prevent an uneconomic use of finances and human resources. The same investment can therefore offer different results if applied in different timing. A pratical example: enterpraising an hotel requires in primis the correct choice of the location and therefore the realizazion of a structure with the target to occupy annually all the rooms and the services available, to ensure the feedback of the investment. Without a research about local demand and competition it would be risky to foresee if the market will be able to absorb the rooms offered and will be able to fulfill the profitability expectations. Only with a correct analysis and consequent correct data interpretation regarding that market and that activity, in that specific economic situation, it will be possible to define the feasible location and the investment strategy. In the case of unfavourable ecomonic trend or scarce market demand, the investment would be better postponed or differently targeted. Globalization suggests/imposes to enterprieses of all dimensions and kinds to continuously monitor market demands. To be constantly aware about lifestyles evolution and changes about cultural, social, demographical and psicological factors, allows to succesfully approach new markets and maintain the existing ones. For public bodies, as well as for private corporations, market researches represent the ideal instrument that helps to carefully examine community needs, provides important information about local/national realities and measures the results of the political strategies applied. Market researches often aim to realize feasibility studies, and can be compared to real business-games to simulate the development strategies of a business plan before investing. From the results of a feasibility study we can obtain the operative strategies that will prevent tying up and losses of finances and human resources. Feasibility studies can be carried out for any project: company start-up, demand growth (?), companies reorganization, corporate image renewal, launching of new products/services, etc. Only after the feasibility study has been presented to the company management it will be suitable to proceed with a business plan, which is the operative/strategic instrument that will finalize the information included in the market research. The business plan will be essential to present in an organic and effective way the entrepreneurial idea and the possible results of its realization; a business plan is also the instrument to describe and assess both human and financial resources necessary to develop the enterprise. Along with market research and feasibility study, it is advisable to proceed also with a marketing analysis that will detect the strong or weak point of the entrepreneurial idea, and will provide the strategic and operative information to select the most suitable choices to undertake.