Entrepreneurs face many challenges when creating a new venture. Although the business plan is one of the most well-known documents, the feasibility study may be just as important. Before the entrepreneur can seek funding, he or she must demonstrate that the idea is truly a good one.
Rochester.edu explained that a feasibility study, “can be defined as a controlled process for identifying problems and opportunities, determining objectives, describing situations, defining successful outcomes, and assessing the range of costs and benefits associated with several alternatives for solving a problem.”
In order to create a feasibility study, entrepreneurs need to define dimensions of business viability including: market viability, technical viability, business model viability, management model viability, economic and financial model viability, and exit strategy viability.
A good outline for a feasibility study includes:
- Product or Service
- Market Environment
- Business Model
- Market and Sales Strategy
- Production Operations Requirements
- Management and Personnel Requirements
- Regulations and Environmental Issues
- Critical Risk Factors
- Financial Predictions Including: Balance Sheet, Income Statement, Cash Flow Statement, Break Even Analysis, and Capital Requirements
A feasibility study is not the same thing as a business plan. The feasibility study would be completed prior to the business plan. The feasibility study helps determine whether an idea or business is a viable option. The business plan is developed after the business opportunity is created. StrategicBusinessTeam.com explained, “A feasibility study is carried out with the aim of finding out the workability and profitability of a business venture. Before anything is invested in a new business venture, a feasibility study is carried out to know if the business venture is worth the time, effort and resources. A feasibility study is filled with calculations, analysis and estimated projections while a business plan is made up of mostly tactics and strategies to be implemented in other to grow the business.”
While it may seem the feasibility study is similar in many ways to the business plan, it is important to keep in mind that the feasibility study is developed prior to the venture. StrategicBusinessStream pointed out that “a feasibility study can readily be converted to a business plan.” It’s important to think of the business plan in terms of growth and sustainability and the feasibility study in terms of idea viability.