Difference between Feasibility Study and Business Plan

Difference between Feasibility Study and Business Plan

 

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:

  • Introduction
  • Product or Service
  • Technology
  • Market Environment
  • Competition
  • Industry
  • 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
  • Conclusion

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.

Related Articles:

Top 5 Things to Know to be a Successful Entrepreneur

The typical entrepreneurial personality has the drive and ambition for success.  Like anything in life, though, it is always harder to do something the very first time.  This can discourage many new entrepreneurs from taking that initial leap and to start their own business. 

I teach several entrepreneurial courses and have put together some important articles that I recommend to my students.  The following list contains many of these articles and some of the most important things that entrepreneurs should do in order to be successful:

  1. Read Success Stories and Attend Lectures:  An excellent way to be inspired and learn from other entrepreneurs is to read their success stories.  Onlineuniversities.com recently came up with a list of 20 Biographies Every Serious Entrepreneur Should Read.  These books include important success stories from Ben Franklin to Sam Walton.  Another very important article to read is:  50 Excellent Lectures for Small Business Owners.
  2. Learn the Truth About Failure:  Many entrepreneurs are stalled in their pursuit of success due to their fear of failure.  Even some of the most famous entrepreneurs met with failure before success.  To find out more about this, check out:  50 Famous People Who Failed Before Becoming Successful. Also see:  Famous Business Failures: Is it as Gloomy as it Sounds? Also see:  10 Famous Product Failures and the Advertisements That Did Not Sell Them.
  3. Learn the Truth About Finances Required:  Not all entrepreneurs come from wealthy families.  It can be challenging to come up with the funds required to begin a business.  Find out how some very famous entrepreneurs became successful in the article:  Famous Entrepreneurs Who Hit it Big With Humble Beginnings.
  4. Learn How Women Have Become Successful Entrepreneurs:  Some very successful entrepreneurs have been women.  Check out:  Most Inspiring Entrepreneurial Women.
  5. Learn How to Network:  One of the best ways to get a product or company known is through social media.  Part of an entrepreneur’s success is through finding their customers and their niche.  Check out:  5 Top Networking Tips for Small Businesses.

Once an entrepreneur has developed a strong idea of the direction they want to take, they need to work on their feasibility study.  Investors will want to see this to be sure that their idea is sound. Another important aspect of creating their new business is deciding on a vision and mission statement.  Check out The Top 10 Mission Statements in 2011. Once an entrepreneur has received enough funds to get their new business off the ground, they may want to consider whether or not to go IPO.  Many companies like Facebook have waited and not gone this traditional route.  Find out Why Companies Are Not Going IPO due to fear of the past dot com crash.