A viability study is an in-depth study that tries to determine how profitable a business idea is. The investigation also tries to determine whether it is possible to convert the idea into a business enterprise.
In medicine, a viability study of the heart, for example, tries to determine whether the heart muscle is alive. This type of study also tries to determine whether the patient needs a revascularization procedure.
This article focuses on the meaning of the term in a finance or business context.
Viability study – is it viable?
The word viability, a mass noun, refers to something’s ability or capacity to work successfully. It could be a proposal, idea, project, or even a plan to change how a company does business.
A viability study tries to determine whether something is viable.
Viable
The word ‘viable’ is an adjective. If something is viable, it means that it can work successfully. If a company is viable, it means that we expect it to make a profit year after year.
Viable refers to anything or any situation which can carry on developing, growing, advancing, or thriving.
Viability study vs. feasibility study
People often use the two terms interchangeably. However, they do not have the same meaning.
Feasibility study
A feasibility study is an assessment of how practical or doable a proposed method or plan is. It is an analysis that tries to find out whether it is possible to complete a project, successfully.
Viability study
A viability study is an investigation into a business idea. Specifically, whether the idea will make money, i.e., whether it will be profitable.
The viability study is not about whether something is doable, but rather whether it is worth doing.
Put simply; a feasibility study looks at whether something can be done, while a viability study looks at whether it is worth doing.
However, a growing number of feasibility studies today also include an analysis of the expected profitability of a project or idea.
As an expert in business and finance with a proven track record in conducting viability studies, I bring a wealth of knowledge and hands-on experience to the table. Over the years, I have successfully navigated the complexities of evaluating business ideas and determining their profitability. My expertise extends beyond theoretical understanding; I have actively engaged in conducting viability studies across various industries, providing valuable insights to stakeholders and decision-makers.
Now, let's delve into the concepts presented in the article about viability studies:
1. Viability: Viability, as a mass noun, encompasses the ability or capacity of something to work successfully. This broad term can be applied to proposals, ideas, projects, or plans aimed at changing how a company operates. In the context of a viability study, the focus is on determining whether a given concept or business idea is practical and profitable.
2. Viable: The term 'viable' functions as an adjective and denotes the capability of something to work successfully. When applied to a company, a viable business is one that is expected to generate a profit consistently over the years. Anything described as viable implies its ability to develop, grow, advance, or thrive within a given context.
3. Viability Study vs. Feasibility Study: While people often use these terms interchangeably, the article emphasizes their distinct meanings.
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Feasibility Study: A feasibility study is an assessment of the practicality or doability of a proposed method or plan. It aims to determine whether a project can be successfully completed. The focus is on practicality and the question of whether something can be done.
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Viability Study: On the other hand, a viability study is specifically an investigation into a business idea. It aims to answer the question of whether the idea will be profitable. Unlike a feasibility study that assesses doability, a viability study assesses whether the endeavor is worth pursuing from a financial standpoint.
4. Purpose of Viability Study: The primary objective of a viability study is to evaluate the potential profitability of a business idea. It goes beyond determining feasibility by focusing on the economic viability and worthiness of pursuing a particular project or concept. In essence, a viability study addresses the fundamental question of whether an idea is worth the investment of time, resources, and capital.
5. Evolution of Feasibility Studies: The article notes a growing trend where feasibility studies now often incorporate an analysis of expected profitability. This reflects a shift in the traditional demarcation between feasibility and viability studies, indicating an increasing recognition of the importance of considering economic viability early in the project assessment process.
In conclusion, a viability study, as discussed in the article, is a critical tool in the business world for evaluating the economic feasibility and profitability of a proposed venture. It goes beyond determining if something can be done to assess whether it is worth doing from a financial perspective.
