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Missouri Department of Agriculture

Ag Business Development

Feasibility

The following are some of the steps you need to take during the Feasibility Phase:

Conduct initial market research and analysis to narrow down your options for potential business ideas. You will need to make an initial determination based upon your market research whether your business idea has the potential to bring value back to your group of producers. The feasibility study step can be very costly, so your initial market research and analysis is critical in ultimately obtaining a high-quality, focused market feasibility study.

Prepare a market feasibility study, which is an analysis of the investment decision. The market feasibility study will determine whether your business idea is feasible from a technical, financial and organizational perspective. The market feasibility study is an analysis of the market demand for a specific product or service and answers key questions about your idea, including the level of production required for efficiently operating the processing or marketing business that you proposed. The feasibility study helps you understand existing and potential market demand for the good or service, the minimum efficient scale needed for production, potential marketing channels, current industry structure, and competitive environment in the industry. Lenders often desire an independent feasibility analysis from experienced consultants, so be sure to hire consultants who are familiar with the industry and have conducted prior market feasibility studies. The feasibility study will help you determine whether the project is financially feasible for the specific group of producers involved.

Make sure the feasibility study answers the questions you need in making the decision whether to continue to pursue the project or not. Once you receive the final feasibility study, you may want to ask the following questions when reviewing the completed feasibility analysis:

• What assumptions were made in preparing the feasibility study? Do you agree with those assumptions? How would the results of the study change if some of the assumptions changed?
• Does the market feasibility study anticipate best-case and worst-case scenarios?
  How did the consultants obtain their information?
• Does the study identify and address potential risk factors?

If your market research and feasibility study are positive, meaning you have a good business idea that will bring a positive return on investment back to producers, you are ready to move on to the planning phase.

The Ag Innovation Center staff is here to assist you in starting or expanding your agriculture-based business. Contact us today!