AN EVALUATION OF FEASIBILITY STUDY AND ITS EFFECTS ON THE SUCCESS OF NEW BUSINESSES

ABSTRACT: This study was carried out to examine the effect of feasibility study on the success of new businesses using selected newly startup business in Kubwa Abuja  as case study. Specifically, the study Identified the significance of feasibility study on new businesses, how a feasibility study can ensure a business is on track, why most business owners don’t carryout feasibility study and the correlation between feasibility study and business success. The study employed the survey descriptive research design. Questionnaire was used for data collection which was raised against a four Likert scale of Strongly Agree(SA), Agree(A), Strongly Disagree(SD) and Disagree(D), and was analyzed using the Relative Importance Index (RII). A total of 41 respondents were purposively selected as sample size comprising the staff of the selected new businesses in Kubwa Abuja. Out of the 41 respondents, 29 responses were validated from the survey. From the responses obtained and analyzed, the findings revealed that the notable significance of feasibility study to new businesses as identified from the study includes: It is an excellent instrument for the prediction of the likelihood of success or failure of a new business venture; It can also be adopted in the case of incorporation of new products or ideas into the business mix; It aids in the preparation of logistical or tactical plan of how your business will produce, store, deliver & track its products or services and It helps in the determination of  the legal structure of the business. Feasibility study ensures a business is on track through: helping the firm in attaining a broad picture as well as a detailed analysis of the profitability of its future business; ensuring that all determinations are made prior to jumping into the business and learning about the shortcomings later; enhancing the success rate of the business through evaluating numerous parameters. Among the numerous reasons most business owners don’t carryout feasibility study includes: Because they don’t have a clear understanding of feasibility study; Because of the expenditure involved in carrying out feasibility study; Because they don’t have the knowledge on how feasibility is carried out; Because they don’t see the need to carryout feasibility study on their business. Furthermore, feasibility study when properly executed has a significant impact on the success of a new business. And also there is a significant relationship between feasibility study and the success of a new business. This is as the Pearson correlation test showed a positive significant relationship of (.821**). On the basis of these findings, it was therefore recommended that it is essential that prospective business ambitious individuals must recognize the reasons of the business feasibility, to avoid waste of capital and seek the advice of the processionals and experts in market analysis. The Government should make provision for periodical seminars/training to help prospective entrepreneurs in the Nation understand the need to engage in feasibility studies before and during their business to enhance expansions. Papers presented in such seminars should be made available at all level through government machineries in form of monthly bulletins. In a case where the prospective entrepreneurs are not learned enough or interested in acquiring the skills needed for the execution of feasibility study, hence it’s advised that  the services of professionals should be engaged to draw up a comprehensive or detailed plan for the entrepreneur since they have a vast knowledge in this field rather than the entrepreneurs doing it themselves. And Feasibility study consultants should avoid as much as possible subjective judgments in the preparation of feasibility study and make concerted effort to access up-to-date official data/ information so as to avoid the pitfall of using unreliable information/data for projections.