Feasibility Studies, Business Valuations & Financial Projections
It is a fact that many new businesses fail within the first twelve months while others last longer often until they run out of cash or don’t realize the sales, they needed to be sustainable.
The optimism of creating a new business can sour quickly if the projections made at the outset are incorrect, poorly researched, or too optimistic. No one wants to be a glass half full person, but sometimes a realistic level of skepticism at the start of a project would modify your expectations and encourage more of a ‘what if’ analysis before you start.
A feasibility study is essential as it will highlight possible issues before they become real problems. It is money well invested.
No one likes to be negative; however, with a new venture, it’s essential to examine the project as in-depth as possible, including a thorough assessment of the product or service you plan to sell.
Is there a viable market out there for what you plan to offer? That is precisely why a feasibility study will provide you with a detailed analysis of your offerings’ potential market.
A feasibility study will:
- Show you are serious about succeeding.
- Identify problem areas and provide solutions.
- Analyze the potential market and your marketing plans.
- Assess initial staffing and as you expand.
- Produce detailed financial projections based on professional analysis of available data, including:
- Initial investments
- Start-up costs
- Operating costs
- Market plans
- Contract services
- Insurance and legal fees
- 5 Years’ projections based on complex calculations based on known and projected data.
One of Push Digit’s core services has been neutral feasibility studies, business plans, and financial forecasts, which remove the emotional involvement of entrepreneurs – Push Digit’s feasibility plans and reviews are entirely objective.
Your feasibility study will have an Executive Summary, a high-level overview of the findings, customarily written after completing the full report.
The study will also consider:
- The organizational structure of the business.
- Key personnel.
- Chain of command.
The final section deals with conclusions and proposals and will deliver a final decision on whether the proposal should progress or goes no further. This section may suggest changes to the proposed business model to improve it or provide evidence as to why the business is likely to fail.
A positive result following a proper feasibility study is a detailed business plan in a format that presents the business as an attractive proposition for lenders or investors.
An effective business plan is a logical progression from a positive feasibility study.
Company Valuations & How to Determine What a Company Is Worth
Calculation of a business’ value can be required for several reasons, including retirement, personal health, or family issues, raising cash. It is a way to assess its commercial worth.
A valuation may also be required to secure funding because of cash flow issues where banks or possible investors want to confirm that the company has appropriate value before investing in it.
A share value will need also need set if you are adding shareholders, for example.
Whatever the reason is, a professional valuation will allow you to determine and set an accurate price for the business.
Three Company Valuation Techniques
There are three commonly used methods of calculating a business’ value:
- Earning value
- Market value
These calculations are complicated and will involve the input of specialist accountants to arrive at an accurate valuation. Remember, the final price for a business is what someone is prepared to pay for it, which is out with everyone’s control.
A Professional Valuation is Essential
It’s not advisable for business owners to attempt to carry out their valuation; they will never be suitably objective, which is essential.
Push Digits have the expertise and skills to value your business because they are professionals with the skills and necessary experience to achieve the best possible price for your business, every time.
Often non-competitive contracts are included with business sales, especially where goodwill is a substantial part of the final valuation. To enforce any restrictions placed in a non-competitive clause, they must be listed and be ‘realistic.’
Non-competitive clauses must always be reviewed by both legal representatives and agreed in advance of the completion of the sale.
Push Digits has decades of valuable experience in producing feasibility studies and financial projections for new ventures and are rightly very proud of their successes in this sector.
Feasibility studies and financial projections are critical if you want your business idea to have the best possible chances of success. They remove the subjective view of the entrepreneur and take a dispassionate, in-depth look at the facts and figures which tell the real story. It’s best to know the truth in advance to avoid issues later on.Remember, “If you don’t know where you’re going, any road will get you there.” Lewis Carol was correct so, a formal plan of action is a necessity. It helps you stay focused, to know where the money is coming from, how much you will need to keep it going until it’s profitable, and myriad other small details.
Push Digits will assist you with your plans by assessing them, highlighting their strengths and weaknesses, and critically questioning your assumptions. They will help you to decide if your potential business idea is viable if it needs amendments to make it better, or in the worst case, does not proceed, and you have to go back to the drawing board. It’s better to know sooner than later.
Push Digits will produce financial projections for your project showing timescales for growth when you can expect to make a profit, and how many months you will have to be prepared to operate and fund the business while making losses.
All brand-new businesses involve an element of risk, but ultimately turning it into a profitable success is what makes the whole process meaningful and worthwhile.
Push Digits has a broad perspective gained from working globally with a diverse range of businesses across many different industry niches. As finance professionals, they work with leading entrepreneurs globally, and they gain useful insights into their motivations, which means they are sensitive to trends others may overlook.
It takes skill and expertise to predict the possible outcome for a new business idea, so it makes sense to start by engaging Push Digits to assess your fledgling project, they know what works and what doesn’t, and you need that intelligence from the start.
When your feasibility study and financial projections are complete, you can move on to the production of a detailed Business Plan and start making your new business vision a reality.
Call Push Digits Team today to discuss your requirements, we are always here, and ready to help you.