The illusion of the spreadsheet
Most feasibility studies that fail do not fail because the math was wrong. They fail because the math was answering the wrong question. A spreadsheet that grows revenue at 18 percent a year, holds gross margin at 42 percent, and assumes working capital cycles compress as volume scales is not a feasibility study. It is a wish, formatted in columns.
The decision a sponsor actually needs to make is whether the business, as it would have to be operated, can hit those numbers under the conditions of the market it intends to enter. That requires assumptions to be tied to operating reality, not to a target IRR worked backwards into the model.
A feasibility study is not a forecasting exercise. It is a stress test of whether a business can be operated on the terms its sponsors imagine.
Three places assumptions break
First, demand. Top-line assumptions are typically anchored to addressable market size and a captured share. Neither survives contact with a sales cycle. A more honest demand assumption starts from the unit economics of a single customer, the cost to acquire that customer, and the realistic conversion rate from a defined channel.
Second, cost structure. Operating costs in early-stage models are almost always under-stated because they are built bottom-up from a target margin rather than from a real operating model. The check is simple: can you describe, role by role, the team that delivers year-three revenue, and does its cost match the line in your P and L?
Third, capital. Working capital is the silent killer. A study that does not model receivables, inventory, and payables against the actual rhythm of the business will misstate funding need by a factor that breaks the deal.
What a defensible study looks like
A defensible feasibility study reads like an operating plan with a financial layer attached, not a financial model with an operating narrative attached. Every revenue line ties to a channel, a price, and a conversion. Every cost line ties to a person, a contract, or a unit. Every capital line ties to a payment term.
When a study is built that way, the sponsor can be told something useful: under these specific operating conditions, the business is feasible; if any of these conditions move, here is the threshold at which it is not.
