Kentucky Center for Agriculture and Rural Development

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When Do You Need a Feasibility Study?

Brent Lackey

“I need a feasibility study.” Maybe.  When we hear these words at KCARD, we are going to want to know a lot more about your business and what you want to do with it.   

A feasibility study can be valuable to start-ups or businesses who are looking into an expansion.  Feasibility studies can help answer questions related to marketing opportunities, customer demands and requirements, facility and equipment requirements, financial feasibility, and key success factors.  However, not every new business or business enterprise needs a feasibility study.  They can be costly and take time to complete so they are not recommended for every business. 

So, when do you need to go forward with a feasibility study?   

Feasibility studies are necessary when the following criteria are met: 

  1. The Business Venture Has a Relatively High Level of Investment: If the start-up costs for the new business or expansion are significant, then a feasibility study is a good idea due to the risks involved.  Feasibility studies typically cost $25,000 and more, but if you are looking at having to invest $2.5 million in a project, you are spending just 1% of the investment to get important answers to questions and protect your investment. 

  2. You Are Bringing in External Funding: Not all loan or grant programs require a feasibility study, but some programs, such as USDA’s Value-Added Producer Grant for an emerging market application and USDA’s Business & Industry loan program do require one.  Additionally, feasibility studies can sometimes help strengthen a loan or grant application.  They help reinforce to an external funder that you have considered key questions and are basing your business decisions on the research. 

  3. The Business Has Multiple Investors Involved:  If the new business venture includes several investors or owners, such as businesses structured as cooperatives, then it is important for the organizers or directors to make sure the idea is likely to succeed and will be a good use of their investor's resources.   

If you would like to talk with KCARD about feasibility studies and whether or not your business needs one completed, please contact us at (859) 550-3972 or kcard@kcard.info.  KCARD conducts feasibility studies on a fee basis depending on the project.