In Kuwait’s entrepreneurial environment, every month we hear of “promising” project ideas, yet a large proportion of them falter or close within the first three years. In most cases the real reason is not a weak idea or a shortage of capital, but an investment decision taken without a comprehensive and professional feasibility study.
A feasibility study is not merely a document required by banks or financing bodies; it is the investment compass that protects capital, exposes risks early and markedly raises the chances of success and sustainability.
The Bitter Reality
Global studies indicate that 70-90% of start-ups fail within their first years, and the main reason is most often:
- The absence of a genuine market need
- Poor cash flow management
The Kuwaiti market is no exception, particularly with intensifying competition and changing consumer behaviour under the umbrella of Kuwait Vision 2035.
The Most Common Reasons Projects Falter in the Kuwaiti Market:
- Focusing on expected profits while neglecting cash flow
- Unrealistic estimates of operating costs and working capital
- Disregarding the particularities of the local market (fierce competition, seasonality, cultural preferences and regulatory procedures)
- Failing to benchmark against similar projects
- Taking the decision on the basis of emotion or “overconfidence” rather than data and analysis
- The absence of risk analysis, alternative scenarios and a safe exit plan
Modern Feasibility Study Tools (No Smart Investor Can Do Without Them)
- Analysis of the market, competitors and demand
- SWOT analysis
- Sensitivity analysis and scenario analysis (best – middle – worst)
- Break-even point (break-even analysis)
- Projected cash flows
- Net present value (NPV)
- Internal rate of return (IRR)
- Capital recovery period (payback period)
Conclusion
A successful project does not begin with signing the lease or buying the equipment; it begins with a considered investment decision built on accurate data and objective analysis. A golden rule: if the cost of a feasibility study seems high to you, remember that the cost of a project’s failure is usually ten times higher, or more.