Feasibility Study For A Project in The UAE [ All details ]
Do you have a project idea in the UAE and want to know if it can lead to a successful business? Then you will need to know how to complete a feasibility study for a project in the UAE in the right way. (You may be interested in: 25 successful small business ideas in the UAE)
As the name suggests, a feasibility study is used to determine the feasibility of an idea, such as ensuring that the project is legally and technically feasible as well as investment-justifiable. It tells us whether a project is worth the investment – in some cases, the project may not be doable. There can be many reasons for this, including requiring too many resources, which not only prevents those resources from performing other tasks, but may also cost more than the project gains by taking an unprofitable idea.
Feasibility study of a project in the UAE
The feasibility study will answer three basic questions:
* Is there a market for your product?
* How can profit be made?
* How much competition will you have?
Is there a market for your product?
The success of your business is determined by whether people want to buy what you sell. You will have a hard time selling fleece jackets in the summer, but you may be successful selling workout clothes to fitness centers year-round. For there to be a market share for the product, it must meet an unmet or unsatisfied need for potential customers.
Another point to consider is whether your product or service has something to entice a customer to come back. There is an old marketing adage that states, “It costs 10 times as much to get a new customer as it does to keep an existing customer.” It’s a great idea to find ways to encourage existing customers to come back for service updates, refills, and the latest products.
How do you make money?
Business success also depends on whether people are able and willing to pay for the product or service. There may be many people who want what you offer, however, your business idea will not succeed unless they can pay the price. For example, many families would like to have a housekeeper, but many cannot afford it.
Once you determine that there is a paying market, you will need to see if you can actually turn a profit. To get started, calculate the cost of providing the product or service (such as supplies and overhead) as well as your time, effort, and desired profit to determine the price. Next, find out if customers are willing to pay that price.
You may find that, at first, the numbers don’t work in your favor, however, if you can identify the issues and make the necessary changes, you can often discover a business model that works.
How much competition will you have?
The competition is not bad. In fact, it is good because it indicates that there is a buying market and money to be made. But, if there is a lot of competition, you will have to go into competition. In essence, you will have to know how to attract loyal customers to another company so that they will prefer to buy your products and services.
To attract customers and customers in a crowded market, you will need to define your competitive advantage, i.e. how you differentiate your business from the competition. This involves conducting market research to understand what people want or need and then identifying your unique selling proposition (USP) and possibly a specific market segment to target.
There are a variety of ways you can set your products or services apart from the competition. You can offer a better price, higher level of service, faster service, or more options. For example, most people need cars, but features and prices set a Honda apart from a Porsche. Both can get people from place A to place B, but each offers unique advantages and disadvantages. Honda is affordable and reliable. While a Porsche can be affordable, fun, and a status symbol, it is much more expensive.
1. Elements of the feasibility study
A feasibility study is not a big block of procedures. Instead, there are 6 core components, and each component takes care of one thing at a time:
1. Job description. This describes the product or services that will be offered.
2. Market feasibility. This includes a description of the industry, current market, expected future market potential, competition, sales projections, and potential buyers.
3. Technical feasibility. This outlines how you will deliver your product or service, including issues of materials, labor, transportation, where your business will be located, and the technology required.
4. financial capabilities. You need to estimate the amount of startup capital needed and study potential sources of capital and investment returns.
5. organizational feasibility. This examines the legal and corporate structure of the company. You can also include professional background information about the business founders and the skills they can contribute.
6. conclusions. You should discuss how you envision the success of the business. You must be honest in your assessment because investors will not look at your conclusions and take them as evidence. They should also look at the data and question your conclusions if they are unrealistic.
6 steps to complete a feasibility study for a project in the UAE
Now that we have examined the various basic elements of a feasibility study, we can look at the six major steps that must be taken to conduct a feasibility study for any small business. which is next:
The first step: choose a commodity or service that you sell. Here, it is necessary to survey, think and discuss the appropriate project idea, which seems feasible through analysis and confirmation of it, and then we decide which project must be studied and its economic feasibility.
The second step: I know whether people will buy the commodity or not, which is the second step on the path to verifying the validity and feasibility of the proposed project idea. to sell it to the potential market.
The third step: Decide how your small project will operate, as it is necessary to make an informed decision about how the project will be operated and to study the nature of the situation around the project and the method of its operation.
Step Four: Calculate the costs of the project. The types of costs must be known, calculated, and taken into account when preparing and conducting the feasibility study. Costs are divided into two types:
1. Fixed costs: such as (salaries, shop rent, worker insurance, and depreciation).
2. Variable costs: such as (raw materials, wages, maintenance, transportation, electricity and water expenses.)
Step Five: Estimating the project’s income from sales and estimating the quantity that can be sold through the project during a certain period of time and its selling price.
Sixth Step: Decide whether the project idea is good, and here it is necessary to make a decision about the project idea. Therefore, we must ask ourselves the following:
* The size of our profits from the project.
* How can we calculate our profits and cash flow?
* What are the other important benefits?
* Then we decide whether the project idea is a good one or not.
If the idea is good, we start preparing and making an action plan, and if it is not good, we throw the first idea. We are looking for a more feasible and successful project idea. Why do you have to prepare a feasibility study to ensure the success of the project and to obtain a loan to finance your project or from a financial financing institution? Therefore, you have to show them that the project is feasible, that you have the required financial resources, and that you have sufficient skills and experience.
Location, location, location
Even if you have a great business idea, you will have to find a cost effective way to market and sell your products or services. This is especially important for storefront retail businesses where the location you choose can break your business. The right store in the wrong place is doomed to failure. Most commercial space rents have corporate restrictions that can have a significant impact on income. The lease may limit hours, days, or parking spaces. It may restrict what products or services you can offer.
In some cases, it can limit the number of clients a company can receive each day.
Also, you’ll need to ask yourself if you should be renting space in a commercial park, industrial park, or retail location—because the different types of commercial real estate all have their pros and cons.
2. Sample feasibility study for a project in the UAE (fish farming)
Fish farming, also known as aquaculture, is a big business with investment opportunities in the UAE as well. There is an increasing demand for fish as a food source due to its healthy nature. It is fairly easy to start a small fish farm as you do not have a lot of requirements and also you do not need a large investment.
The feasibility study will look at the feasibility of the farm; how much will setup cost; And also how profitable it will be. The feasibility report should contain some ideal business items.
Introduction to the report: A summary of the entire project. You can begin by discussing the general importance of small-scale fish farming. You can talk about how fish farming will benefit you individually, as well as how it can benefit the UAE community as a whole. Also, talk about how you will implement the project.
Report Description: This section is similar to expanding on the introduction, but with a deeper look at some key details. You can talk about the specific location where you will implement the project, as well as the amount of money needed to implement and operate it; As well as how you expect to raise that money. At this point, you can talk about the mission of the project, as well as its vision. You can also write about the history and background of the project and your motivations behind wanting to start this project in the UAE.
UAE Market Description: This is all about how you will sell your fish. Start by defining the industry in which you will work and the right place for you in that industry. For example, will you sell wholesale fish? or retail? You should also have a clear description of your target market and how you plan to reach that market, as well as the marketing strategies you will use.
Description of Products: Talk about the types of fish you will have on your farm. How do you price it? What prompted you to choose those particular species? What is your competitive advantage with your species mix?
Organizational Plan: What will be the legal structure for your business? Will it be a sole proprietorship? partnership? What licenses and permits will you need to run a business in the UAE? What about the staff? What special skills will they need? How will you organize them?
Marketing Plan: You may have described the marketing strategies you intend to use, but you should now have a solid plan for those strategies. Market research needs to be planned in detail. You need to know the different market segments available to you and how they differ from each other in terms of income, lifestyle and spending. You need to define the strategies that you will use to market to each of these segments, in order to be able to solve their problems and set you apart from your competitors.
Financial Management: Where will the fish farm capital come from? How will you use this capital? What profits do you expect and how will you reinvest them in the business? How will you prevent losses from occurring – or at least minimize losses when they do occur? You can hire a professional accountant to help you with this part.
Conclusion of the report: After writing the feasibility report. The project manager should review it to determine the pros and cons of the project and whether it makes sense to make any investment in it or whether it should be put on hold or modified.