A market feasibility study plays two crucial roles in the EB-5 process. First, it is an essential component of a proper and thorough due diligence assessment, as it determines the project’s feasibility for EB-5 approval by USCIS and its potential marketability to prospective investors (if applicable). Second, it can be used as part of an EB-5 compliant business plan to justify the approval of an I-526 petition. In this article, we will discuss the components of the market feasibility study and explain its role in the due diligence and EB-5 approval processes.
Determining the Viability and Marketability of the New Commercial Enterprise (NCE)
The primary job of a market feasibility study is to substantiate the viability of a new business, given current market conditions and trends. The study can determine whether there is an existing demand or “target market” for the product or service in question. It can also ascertain if the NCE has a unique product offering that is not yet available on the market. Additionally, a proper analysis highlights any challenges the business may face, as well as any weakness when compared to its competitors.
Specifically, the analysis uses several research tools to determine feasibility, including but not limited to the following:
Demographic Analysis and Target Market–This piece analyzes current population data and demographic trends that are occurring in a particular market area (local, regional, national, and/or international). It considers demographic indicators such as age, population density, educational attainment levels, and income levels. Using these data, the analyst can substantiate whether or not a market demand exists for the new business.
Industry Analysis–This piece of the analysis examines current industry trends, including industry growth, the number of key players in the industry, and how demographic trends intersect with these factors. Such industry dynamics can impact the success of the new business.
Economic and Policy Context—The analysis considers economic trends in the target (and broader) markets and considers how such conditions might impact the marketability and overall success of the business. In addition, the study considers any government policies and regulations (on the local, regional, state, or national levels) that may limit or promote the success of the industry in question.
All of these analytical components should be based on top-quality and reliable data from sources that include the U.S. Census Bureau, government documents and reports, academic studies, and research conducted by industry and trade associations.
By substantiating the viability of the business against current market, economic, and political conditions, the feasibility study increases the likelihood that the NCE will attract investors. It also minimizes the possibility that USCIS will issue an RFE (Request for Evidence) on I-526 and I-829 applications, which has become increasingly common. For these reasons, conducting a market feasibility study at the outset of the complex and arduous EB-5 process is now considered a best practice in the EB-5 industry.
An Essential Component of a Matter of Ho Business Plan
In addition to determining the feasibility of an EB-5 project, the market study is an essential, mandated component of the “credible” business plan that must be submitted to USCIS with any EB-5 case.[1] According to Matter of Ho,[2] the business plan should include a market study that consists of a competitive analysis comparing the NCE with competitors, including their product offerings and pricing structures, as well as a description of the target market (i.e. prospective customers) of the business.[3] These items are already included in the market feasibility study, as per the above list.
Additionally, though the market feasibility study does not project the number of jobs that will be created by the NCE (this is typically done in an economic impact report conducted by an economist), it lays the foundation for job creation estimates by substantiating the NCE’s viability and potential success.
How to Prepare an Effective Market Feasibility Study and EB-5 Business Plan
There is no doubt that preparing an effective market feasibility study is not only a worthwhile use of resources, but will also play a significant role in the pathway to EB-5 approval.
The best way to ensure that the market study and business plan are prepared in accordance with USCIS’s mandate is to engage the services of a professional EB-5 business plan writing company, such as e-Council Inc. e-Council Inc.’s market studies provide a comprehensive picture of the project (the scope of which is determined by the breadth of the selected market study option) that is easily understandable by USCIS. Our experts analyze the quantitative and qualitative aspects of a project, and incorporate the social, economic, political, business, and cultural conditions that can impact the project’s viability. Our high-quality analyses seek to integrate both macroeconomic and microeconomic perspectives, and capture local, national, and international trends in the relevant industry.
Additionally, e-Council Inc.’s experienced legal experts and market analysts are skilled at producing EB-5 compliant business plans according to the terms set forth by “Matter of Ho, We thoroughly understand USCIS’s requirements and know how to demonstrate that the mandated requirements are likely to be fulfilled by the EB-5 petitioner. In using e-Council Inc.’s services, the EB-5 investor or developer can have confidence that the business plan has the best possible chance of passing USCIS scrutiny.
To determine which of our market study options is best for your project or investment, or to choose from a wide range of complementary EB-5 offerings, such as our best-in-class Matter of Ho-compliant business plans, market feasibility studies, and turnkey concierge services, please contact us at info@ecouncilinc.com.
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[1] http://www.eb5investors.com/eb5-basics/eb-5-service-provider
[2] Matter of Ho is a 1998 precedent decision issued by the Administrative Appeals Office that set forth the requirements for an EB-5 compliant business plan.
[3] http://www.eb5insights.com/2012/08/17/elements-of-an-eb-5-compliant-business-plan/