write the difference between feasibility study and business plan

Difference Between Feasibility Study and Business Plan

Many people don’t know that there is a difference between a business plan and a feasibility study.

Frequently, clients reach out seeking a feasibility study, but after an in-depth conversation, it becomes evident that what they truly require is a comprehensive business plan. In this article, I’ll clarify this common misconception and provide a clearer understanding of the distinction.

So let us start with the first one, which will give us a brief overview of what a business plan and a feasibility study is all about

Table of Contents

What is the Difference Between Feasibility Study and Business Plan

Business plans and feasibility studies are vital business tools for analysis and for making business decisions. However, a feasibility study is not the same thing as a business plan because a feasibility study gives a conclusion or recommendation that would be completed prior to developing the business plan.

Feasibility Study

A feasibility study is done to determine whether a proposed business has a high enough probability of success that it should be undertaken. A feasibility study is carried out first in order to know if the business will be viable before venturing into it. Before a company can invest in a business or launch a new product, a feasibility study is done to determine if there will be a return on investment.

According to Rochester.edu, 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.”

It can also be used to make decisions about whether to launch a new product for an existing company or enter a new market. Feasibility studies are sometimes termed cost-benefit analyses because the projected costs of the project are compared to the expected benefits to yield a conclusion.

For instance, imagine that you have been an instructor in a company that provides IT training and certifications in the USA and you want to come to Africa to impact the knowledge by starting a new business and even adding training like IT Certification Practice Test Dumps , but you are faced with the big question, “Would my business fly?”. Is there a market for my services?

In this situation, the best decision is to conduct a feasibility study to determine if those IT programmes have an established market. If they are a company that needs interns trained by your company.

Business plans are guidelines for carrying out actions that the company’s management has already determined to be feasible. So a business plan is like a roadmap for your business that outlines goals and details how you plan to achieve those goals.

Business plans map out the direction a company intends to take to reach its revenue and profit objectives in the future. They are a compilation of numerous decisions made by the management team about how the company should be run. A business plan is done after a feasibility study has been carried out. If the recommendation of the feasibility study is negative, then there will be no need to venture into the business. Then, if the feasibility study says the business will be feasible, a business plan is developed, which will then map out plans and strategies to adopt in order to achieve business goals, including revenue generation, market penetration, customer acquisition, marketing, and sales strategies, among others.

A business plan can be done for internal or external use. The internal use of a business plan is for the management and staff of the company, while the external use is for shareholders, investors, bank loans, and customers.

Main Purpose of a Business Plan and a Feasibility Study

In short, a feasibility study gives a conclusion or recommendations, while a business plan gives a roadmap.

The feasibility study helps determine whether an idea or business is a viable option.  Therefore, a feasibility study is done first before investing a dime in the business. Before considering approaching investors, you must have done your research to know that the business is feasible before taking any decision. That is why a feasibility study gives a conclusion or recommendations.

A business plan will map out the roadmap and strategies to achieve your business goal because a business plan assumes a business is viable and presents the steps necessary to achieve success. If you are looking forward to approaching an investor or trying to get a bank loan, what you need is a business plan. Some investors might request for a feasibility study before the business plan

Outline of a Business Plan and a Feasibility Study

Below is the outline of a business plan:

• Executive Summary
• Business/Company Overview
• Products/Services
• Market/Industry Analysis
• Operation Plan
• Management/Personal plan
• Sales Forcast
• Financial Plan
• Appendices and Exhibits

A good outline for a feasibility study includes:

• Introduction
• Product or Service
• Market Environment
• Competition
• 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

Challenges of a Business Plan and a Feasibility Study

Looking at both the business plan and feasibility study, you will discover that both attempt to predict future outcomes using assumptions about what is likely to happen in the business and the business environment, which include government policies, the market, competition, and risk, among others. Any poorly done feasibility study can lead to a costly mistake. If a business is not viable and the recommendation says it will be viable, the end result will not be palatable. This will affect the business plan and the operation of the business adversely.

A poorly done business plan—poor projections, strategies, analysis, business model, and environmental factors, among others—can easily be adjusted in the course of running the business, but the same cannot be said of a feasibility study because, in a feasibility study, an incorrect conclusion can be costly—it could mean launching a venture that has very little chance of surviving or approving a project that wastes the company’s human and financial resources.

If you need a standard business plan,  check out the list of Business Plan we have

Do you want us to develop a unique business plan for you, Check out our  business plan service page

I would love to hear your thoughts. Kindly use the comment box below to leave your comment.

Thank you for reading this post, don't forget to subscribe!

Share this:

Are you interested in receiving the latest grant, funding, and business opportunities? Join our newsletter for free and stay updated! Click here to join our newsletter Join our community: Join our WhatsApp group Join our Telegram group Join our Facebook group

About The Author

5 thoughts on “Difference Between Feasibility Study and Business Plan”

This is beautiful. Thank you for sharing this informative article by shading more light on the two.

I’ve been planning to hire a feasibility analysis service, so I’ll have an idea, whether my candle business is feasible. I agree with you that this must be done first before approaching the investors. It is also true that an incorrect conclusion in the feasibility study could be costly.

It’s inevitable! It helps you to make the right decision.

My business plan is ready but I will like you to review it

Alright, You can reach out to me on 07031542324 or email me at [email protected]

Leave a Reply Cancel reply

This site uses Akismet to reduce spam. Learn how your comment data is processed .

• Product overview
• All features
• App integrations

CAPABILITIES

• project icon Project management
• Project views
• Custom fields
• Status updates
• goal icon Goals and reporting
• Reporting dashboards
• workflow icon Workflows and automation
• portfolio icon Resource management
• Time tracking
• my-task icon Admin and security
• Admin console
• asana-intelligence icon Asana AI
• list icon Personal
• premium icon Starter
• briefcase icon Advanced
• Goal management
• Organizational planning
• Campaign management
• Creative production
• Content calendars
• Marketing strategic planning
• Resource planning
• Project intake
• Product launches
• Employee onboarding
• View all uses arrow-right icon
• Project plans
• Team goals & objectives
• Team continuity
• Meeting agenda
• View all templates arrow-right icon
• Work management resources Discover best practices, watch webinars, get insights
• What's new Learn about the latest and greatest from Asana
• Customer stories See how the world's best organizations drive work innovation with Asana
• Help Center Get lots of tips, tricks, and advice to get the most from Asana
• Asana Academy Sign up for interactive courses and webinars to learn Asana
• Developers Learn more about building apps on the Asana platform
• Community programs Connect with and learn from Asana customers around the world
• Events Find out about upcoming events near you
• Partners Learn more about our partner programs
• Support Need help? Contact the Asana support team
• Asana for nonprofits Get more information on our nonprofit discount program, and apply.

Featured Reads

• Project planning |
• How to conduct a feasibility study: Tem ...

How to conduct a feasibility study: Templates and examples

Conducting a feasibility study is an important step in successful project management. By evaluating the viability of a proposed project, a feasibility study helps you identify potential challenges and opportunities, ensuring you make informed decisions. In this guide, we’ll walk you through how to conduct a feasibility study with practical templates and real-world examples, designed for project managers seeking to optimize their project planning process.

It can be exciting to run a large, complex project that has a huge potential impact on your organization. On the one hand, you’re driving real change. On the other hand, failure is intimidating. 

What is a feasibility study? 

A feasibility study—sometimes called a feasibility analysis or feasibility report—is a way to evaluate whether or not a project plan could be successful. A feasibility study evaluates the practicality of your project plan in order to judge whether or not you’re able to move forward with the project. 

It does so by answering two questions: 

Does our team have the required tools or resources to complete this project? 

Will there be a high enough return on investment to make the project worth pursuing? 

Benefits of conducting a feasibility study

There are several key benefits to conducting a feasibility study before launching a new project:

Confirms market opportunities and the target market before investing significant resources

Identifies potential issues and risks early on

Provides in-depth data for better decision making on the proposed project's viability

Creates documentation on expected costs and benefits, including financial analysis

Obtains stakeholder buy-in by demonstrating due diligence

Feasibility studies are important for projects that represent significant investments for your business. Projects that also have a large potential impact on your presence in the market may also require a feasibility assessment. 

As the project manager , you may not be directly responsible for driving the feasibility study, but it’s important to know what these studies are. By understanding the different elements that go into a feasibility study, you can better support the team driving the feasibility study and ensure the best outcome for your project.

When should you conduct a feasibility analysis?

A feasibility study should be conducted after the project has been pitched but before any work has actually started. The study is part of the project planning process. In fact, it’s often done in conjunction with a SWOT analysis or project risk assessment , depending on the specific project. 

Feasibility studies help: 

Confirm market opportunities before committing to a project

Narrow your business alternatives

Create documentation about the benefits and disadvantages of your proposed initiative

Provide more information before making a go-or-no-go decision

You likely don’t need a feasibility study if:

You already know the project is feasible

You’ve run a similar project in the past

Your competitors are succeeding with a similar initiative in market

The project is small, straightforward, and has minimal long-term business impact

Your team ran a similar feasibility analysis within the past three years

One thing to keep in mind is that a feasibility study is not a project pitch. During a project pitch, you’re evaluating whether or not the project is a good idea for your company and whether the goals of the project are in line with your overall strategic plan. Typically, once you’ve established that the project is a good idea, you'll run a feasibility study to confirm that the project is possible with the tools and resources you have at your disposal. 

Types of feasibility studies

There are five main types of feasibility studies: technical feasibility, financial feasibility, market feasibility (or market fit), operational feasibility, and legal feasibility. Most comprehensive feasibility studies will include an assessment of all five of these areas.

Technical feasibility

A technical feasibility study reviews the technical resources available for your project. This study determines if you have the right equipment, enough equipment, and the right technical knowledge to complete your project objectives . For example, if your project plan proposes creating 50,000 products per month, but you can only produce 30,000 products per month in your factories, this project isn’t technically feasible. 

Financial feasibility

Financial feasibility describes whether or not your project is fiscally viable. A financial feasibility report includes a cost-benefit analysis of the project. It also forecasts an expected return on investment (ROI) and outlines any financial risks. The goal at the end of the financial feasibility study is to understand the economic benefits the project will drive. 

Market feasibility

The market feasibility study is an evaluation of how your team expects the project’s deliverables to perform in the market. This part of the report includes a market analysis, a market competition breakdown, and sales projections.

Operational feasibility

An operational feasibility study evaluates whether or not your organization is able to complete this project. This includes staffing requirements, organizational structure, and any applicable legal requirements. At the end of the operational feasibility study, your team will have a sense of whether or not you have the resources, skills, and competencies to complete this work. 

Legal feasibility

A legal feasibility analysis assesses whether the proposed project complies with all relevant legal requirements and regulations. This includes examining legal and regulatory barriers, necessary permits, licenses, or certifications, potential legal liabilities or risks, and intellectual property considerations. The legal feasibility study ensures that the project can be completed without running afoul of any laws or incurring undue legal exposure for the organization.

Feasibility assessment checklist

Most feasibility studies are structured in a similar way. These documents serve as an assessment of the practicality of a proposed business idea. Creating a clear feasibility study helps project stakeholders during the decision making process. 

The essential elements of a feasibility study are: 

An executive summary describing the project’s overall viability

A description of the product or service being developed during this project

Any technical considerations , including technology, equipment, or staffing

The market survey , including a study of the current market and the marketing strategy 

The operational feasibility study evaluates whether or not your team’s current organizational structure can support this initiative

The project timeline

Financial projections based on your financial feasibility report

6 steps to conduct a feasibility study

You likely won’t be conducting the feasibility study yourself, but you will probably be called on to provide insight and information. To conduct a feasibility study, hire a trained consultant or, if you have an in-house project management office (PMO) , ask if they take on this type of work. In general, here are the steps they’ll take to complete this work: 

1. Run a preliminary analysis

Creating a feasibility study is a time-intensive process. Before diving into the feasibility study, it’s important to evaluate the project for any obvious and insurmountable roadblocks. For example, if the project requires significantly more budget than your organization has available, you likely won’t be able to complete it. Similarly, if the project deliverables need to be live and in the market by a certain date but won’t be available for several months after that, the project likely isn’t feasible either. These types of large-scale obstacles make a feasibility study unnecessary because it’s clear the project is not viable.

2. Evaluate financial feasibility

Think of the financial feasibility study as the projected income statement for the project. This part of the feasibility study clarifies the expected project income and outlines what your organization needs to invest—in terms of time and money—in order to hit the project objectives. 

During the financial feasibility study, take into account whether or not the project will impact your business's cash flow. Depending on the complexity of the initiative, your internal PMO or external consultant may want to work with your financial team to run a cost-benefit analysis of the project. 

3. Run a market assessment

The market assessment, or market feasibility study, is a chance to identify the demand in the market. This study offers a sense of expected revenue for the project and any potential market risks you could run into. 

The market assessment, more than any other part of the feasibility study, is a chance to evaluate whether or not there’s an opportunity in the market. During this study, it’s critical to evaluate your competitor’s positions and analyze demographics to get a sense of how the project will go. 

4. Consider technical and operational feasibility

Even if the financials are looking good and the market is ready, this initiative may not be something your organization can support. To evaluate operational feasibility, consider any staffing or equipment requirements this project needs. What organizational resources—including time, money, and skills—are necessary in order for this project to succeed? 

Depending on the project, it may also be necessary to consider the legal impact of the initiative. For example, if the project involves developing a new patent for your product, you will need to involve your legal team and incorporate that requirement into the project plan.

5. Review project points of vulnerability

At this stage, your internal PMO team or external consultant have looked at all four elements of your feasibility study—financials, market analysis, technical feasibility, and operational feasibility. Before running their recommendations by you and your stakeholders, they will review and analyze the data for any inconsistencies. This includes ensuring the income statement is in line with your market analysis. Similarly, now that they’ve run a technical feasibility study, are any liabilities too big of a red flag? (If so, create a contingency plan !) 

Depending on the complexity of your project, there won’t always be a clear answer. A feasibility analysis doesn’t provide a black-and-white decision for a complex problem. Rather, it helps you come to the table with the right questions—and answers—so you can make the best decision for your project and for your team.

6. Propose a decision

The final step of the feasibility study is an executive summary touching on the main points and proposing a solution. 

Depending on the complexity and scope of the project, your internal PMO or external consultant may share the feasibility study with stakeholders or present it to the group in order to field any questions live. Either way, with the study in hand, your team now has the information you need to make an informed decision.

Feasibility study examples

To better understand the concepts behind feasibility assessments, here are two hypothetical examples demonstrating how these studies can be applied in real-world scenarios.

Example 1: New product development

A consumer goods company is considering launching a new product line. Before investing in new product development, they conduct a feasibility study to assess the proposed project.

The feasibility study includes:

Market research to gauge consumer interest, assess competitor offerings, and estimate potential market share for the target market.

Technological considerations, including R&D requirements, production processes, and any necessary patents or certifications.

In-depth financial analysis projects sales volumes, revenue, costs, and profitability over a multi-year period.

Evaluation of organizational readiness, including the skills of the current management team and staff to bring the new product to market.

Assessment of legal feasibility to ensure compliance with regulations and identify any potential liability issues.

The comprehensive feasibility study identifies a promising market opportunity for the new business venture. The company decides to proceed with the new project, using the feasibility report as a template for their business development process. The study helps secure funding from key decision-makers, setting this start-up product initiative up for success.

Example 2: Real estate development deal

A property developer is evaluating the feasibility of purchasing land for a new residential community. They commission a feasibility study to determine the viability of this real estate development project.

The feasibility assessment covers:

Detailed analysis of the local housing market, including demand drivers, comparable properties, pricing, and absorption rates.

Site planning to assess the property's capacity, constraints, and technological considerations.

In-depth review of legal feasibility, including zoning, permitting, environmental regulations, and other potential legal hurdles.

Financial analysis modeling various development scenarios and estimating returns on investment.

Creation of an opening day balance sheet projecting the assets, liabilities, and equity for the proposed project.

Sensitivity analysis to evaluate the impact of changes in key assumptions on the project's scope and profitability.

The feasibility study concludes that while the real estate start-up is viable, it carries significant risk. Based on these findings, the developer makes an informed decision to move forward, but with a revised project's scope and a phased approach to mitigate risk. The comprehensive feasibility analysis proves critical in guiding this major investment decision.

Which phase of the project management process involves feasibility studies?

Feasibility studies are a key part of the project initiation and planning phases. They are typically conducted after a project has been conceptualized but before significant resources are invested in detailed planning and execution.

The purpose of a feasibility assessment is to objectively evaluate the viability of a proposed project, considering factors such as technical feasibility, market demand, financial costs and benefits, legal requirements, and organizational readiness. By thoroughly assessing these aspects, a feasibility study helps project stakeholders make an informed go-or-no-go decision.

While feasibility studies are a critical tool in the early stages of project management, they differ from other planning documents like project charters, business cases, and business plans. Here's a closer look at these key differences:

Feasibility study vs. project charter

A project charter is a relatively informal document to pitch your project to stakeholders. Think of the charter as an elevator pitch for your project objectives, scope, and responsibilities. Typically, your project sponsor or executive stakeholders review the charter before ratifying the project. 

A feasibility study should be implemented after the project charter has been ratified. This isn’t a document to pitch whether or not the project is in line with your team’s goals—rather, it’s a way to ensure the project is something you and your team can accomplish.

Feasibility study vs. business case

A business case is a more formalized version of the project charter. While you’d typically create a project charter for small or straightforward initiatives, you should create a business case if you are pitching a large, complex initiative that will make a major impact on the business. This longer, more formal document will also include financial information and typically involve more senior stakeholders. 

After your business case is approved by relevant stakeholders, you'll run a feasibility study to make sure the work is doable. If you find it isn’t, you might return to your executive stakeholders and request more resources, tools, or time in order to ensure your business case is feasible.

Feasibility study vs. business plan

A business plan is a formal document outlining your organization’s goals. You typically write a business plan when founding your company or when your business is going through a significant shift. Your business plan informs a lot of other business decisions, including your three- to five-year strategic plan . 

As you implement your business and strategic plan, you’ll invest in individual projects. A feasibility study is a way to evaluate the practicality of any given individual project or initiative.

Achieve project success with Asana

Are you done with your feasibility study? You’re ready to run a project! Set your project up for success by tracking your progress with a work management tool like Asana. From the small stuff to the big picture, Asana organizes work so teams know what to do, why it matters, and how to get it done.

Related resources

4 ways to establish roles and responsibilities for team success

Cost control: How to monitor project spending to increase profitability

How to track utilization rate and drive team profitability

How to accomplish big things with long-term goals

Business Plan Vs. Feasibility Study

• Small Business
• Business Planning & Strategy
• Business Plans
• ')" data-event="social share" data-info="Pinterest" aria-label="Share on Pinterest">
• ')" data-event="social share" data-info="Reddit" aria-label="Share on Reddit">
• ')" data-event="social share" data-info="Flipboard" aria-label="Share on Flipboard">

How to Write a Business Plan for Starting a Medical Spa Practice

What are the key elements of a business plan, what are the components of a global business plan.

• How to Write a Business Plan for a Food Truck Business
• What Is a Dehydrated Business Plan?

If you're considering starting a business, you'll need both a feasibility study and a business plan. Both documents should be written after conducting thorough research and critical thinking, and conveyed in formats that others can understand. That way, you can show both to people whose opinions you value as well as to those you hope will invest in your idea. Before you begin, it's important to define and distinguish between a feasibility study and a business plan.

Defining Both Terms

A feasibility study is done before starting a business, when you have the idea for the business but you want to make sure it's feasible, or advisable. Put another way, is it worth your time, effort and money to create this business? Several different professionals may contribute to the study, such as an accountant, entrepreneurs who have opened successful businesses, and Realtors who advise on the worth of the location and pricing, comparing similar businesses in the area.

A business plan details how the business will operate. It assumes your feasibility study has been completed and it was determined the idea is viable. Now you're going to spell out your financial and other objectives, the methods you plan to use to achieve them, and your proposed organizational structure.

Consider the Similarities

Comparing the similarities between feasibility study and business plan is important because both are used in different ways to help you create a profitable business. Similarities between the two documents include:

• Timing : Both are initially done before the business opens, and can be conducted again later to determine the next steps on future ideas.
• Input : Both include input from several individuals or departments that have different skills. 
• Format : Both include other documents that are pulled together in order to compose the report.
• Components : Some of the issues analyzed are similar, including examining the target market, market conditions and financial costs.
• Usage : Both help the organization's management make decisions, and can also be shown to potential investors.

Understand the Differences

It's equally important to understand the difference between feasibility study and business plan . They are not the same, and one cannot substitute for the other. Differences include:

• Purpose : Feasibility studies determine whether to go ahead with the business or with another idea, whereas business plans are designed after the decision to go ahead has already been made.
• Methodology : Essentially, feasibility studies are research projects, whereas business plans are projections for the future.
• Risks : Feasibility studies determine the risks associated with the idea, whereas business plans explain how management will deal with the risks so that it will make a profit.
• Cost : Feasibility studies can require hiring outside professionals with expertise who will conduct thorough studies, whereas business plans are written by employees of the business, as part of their jobs.

Conducting a Feasibility Study

If you're doing the feasibility study yourself, conduct a complete competitive analysis considering the following:

• Product demand:  Is there a need or want for your product or service? Is the need already being met, or is there room for another product?
• Market conditions :  Who would buy your product and where are they?  Can you serve their location? Is the market saturated, or is there room/need for more products?
• Pricing:  What do current users pay for similar products? What do you need to charge so that you will be profitable, and will consumers pay your price?
• Risks : What are the risks associated with your idea?
• Probability of Success : Can you reasonably overcome the risks to become profitable?

Writing a Business Plan

Writing a business plan may seem daunting, but if you take it step-by-step, it will come to fruition. The Small Business Administration advises that business plans should include the following:

• Executive Summary : Include your mission statement, products and or services, some brief information about your leadership team and key employees, as well as the location of your business. To attract investors, add current financial information and projections for growth.
• Company description : Detail the problems your business solves; its target market; its competitive advantages, compared with the competition, and anything else that makes your company superior to others: i.e.,  product awards or recognition, big increases in sales, and so on.
• Market analysis : Perform competitive research of what other businesses are doing; their strengths and weaknesses, and how and why your business will be competitive and successful in the market.
• Organization or management: State the  legal status of your business, such as a corporation or partnership, and include an organizational chart showing management levels, departments, and so on.
• Service or product line : State what you will sell or provide and describe the benefits of each. Explain any research done, and any patents filed, and so on. 
• Marketing and sales : Explain in detail your marketing strategy and how sales will be made.
• Funding request : If necessary, detail the amount of funding you’ll need for the next five years - specifically,  what you’ll do with the funds, and the terms you’re asking for.
• Financial projections : This is the business’s financial outlook for the next five years. Include current financial statements, if the business is in operation.
• Appendix : This includes supporting documents or requested materials, such as resumes, product photos, letters of reference, patents, licenses and so on.
• MBN: Market Business News: What is a Feasibility Study? Definition and Examples
• Cleverism: How to Conduct a Feasibility Study the Right Way
• Entrepreneur: 7 Steps to a Perfectly Written Business Plan
• SBA: Write Your Business Plan

Barbara Bean-Mellinger is a freelance writer who lives in the Washington, D.C. area. She has written on business topics for bizfluent.com, afkinsider.com, Harbor Style Magazine, the Charlotte Sun and more. Barbara holds a B.S. from the University of Pittsburgh and has won numerous awards in B2B and B2C marketing.

Related Articles

How to write a comprehensive business plan, how to design an effective business plan, what is the role of a business plan in getting venture capital funding, how to outline a feasibility study, what factors make the difference between a good business plan & an excellent one, 6 types of business plans, examples of business feasibility reports, how to create a business plan as an entrepreneur, how to write a business description, most popular.

• 1 How to Write a Comprehensive Business Plan
• 2 How to Design an Effective Business Plan
• 3 What Is the Role of a Business Plan in Getting Venture Capital Funding?
• 4 How to Outline a Feasibility Study

• Accountancy
• Business Studies
• Organisational Behaviour
• Human Resource Management
• Entrepreneurship

Difference between Feasibility Study and Business Plan

• Difference between Business Plan and Business Proposal
• Difference Between Business Intelligence and Machine Learning
• Difference between Business Continuity Plan and Disaster Recovery Plan
• Difference between Planning and Forecasting
• Difference Between Data Science and Business Intelligence
• Difference between Business Intelligence and Data Mining
• Difference between Planning and Strategy
• Difference Between Data Science and Business Analytics
• Difference between Marketing Strategy and Marketing Plan
• Difference Between Business Intelligence and Data analytics
• Difference Between Entrepreneur and Businessman
• Difference between Project Report and Business Report
• Difference between Project Report and Feasibility Report
• Difference between Project Management and Business Management
• Difference between MRP and MRP II
• Difference between ERP and SCM
• Difference between BRD and SRS
• Differences between ERP and SAP
• Difference between Business Intelligence and Predictive Analytics

Feasibility Study and Business Plan are essential tools in the business development process. They serve different purposes and are conducted at different stages. A feasibility study helps determine the viability of a business idea; whereas, a business plan provides a detailed roadmap for executing that idea and achieving business goals.

What is a Feasibility Study?

A feasibility study is a comprehensive assessment conducted at the early stages of a business idea or project to evaluate its potential viability and identify potential risks and challenges. The primary purpose of a feasibility study is to determine whether the proposed business venture is feasible and worth pursuing further.

Features of the Feasibility Study are:

• Market Analysis: Feasibility Study evaluates the target market , including its size, growth potential, demographics, and competition. This involves researching customer needs, preferences, and behavior to assess demand for the proposed product or service .
• Technical Feasibility: A feasibility study assesses the technical requirements and capabilities needed to develop and deliver the product or service. This may involve evaluating technology, equipment, facilities, and expertise required for production or implementation.
• Financial Feasibility: A feasibility study conducts financial analysis to estimate the costs involved in starting and operating the business, as well as potential revenue and profitability. This includes preparing financial projections, such as income statements , cash flow statements , and Return on Investment (ROI) calculations.

What is a Business Plan?

A business plan is a comprehensive document that outlines the goals, strategies, operations, and financial projections of a business. It serves as a roadmap for the organization’s future direction and provides a detailed blueprint for how the business will be structured, managed, and operated.

Features of a Business Plan are:

• Executive Summary: A business plan gives a brief overview of the business concept, objectives, products or services offered, target market, competitive advantage, and financial projections.
• Company Description: It gives detailed information about the business, including its history, mission statement, vision, values, legal structure, location, and ownership.
• Market Analysis: A business plan is formed after analyzing the target market, including its size, growth potential, demographics, buying behavior , market trends, and competition. This section also outlines the business’s market positioning and competitive strategy.

Feasibility Study and Business Plan – FAQs

When should a feasibility study be conducted.

A feasibility study is typically conducted at the early stages of developing a business idea or project, before significant resources are invested. It helps entrepreneurs and stakeholders make informed decisions about whether to proceed with the venture.

Who conducts a feasibility study?

Feasibility Studies are often conducted by entrepreneurs, business owners, project managers, consultants, or other professionals with expertise in the relevant industry or field. They may also involve collaboration with specialists such as market researchers, engineers, financial analysts, and legal advisors.

When should a business plan be developed?

A business plan is typically developed after a feasibility study has been conducted and the decision to move forward with the business venture has been made. It provides a detailed blueprint for executing the business idea and achieving its objectives.

Who uses a business plan?

Business plans are used by entrepreneurs, startups, existing businesses, investors, lenders, partners, employees, and other stakeholders interested in understanding the organization’s goals, strategies, operations, and financial prospects.

What are the benefits of conducting a feasibility study?

Benefits of conducting a feasibility study include minimizing risks, identifying potential challenges and opportunities, validating assumptions, attracting investors or lenders, guiding decision-making , and increasing the likelihood of success for the proposed business venture.

Please Login to comment...

Similar reads.

• Commerce - Difference Between

Improve your Coding Skills with Practice

What kind of Experience do you want to share?

Business Plan Vs. Feasibilty Study

by Brian Hill

Published on 1 Jan 2021

Business plans and feasibility studies are analysis and decision-making tools used by companies. Feasibility studies are used to determine whether a proposed action has a high enough probability of success that it should be undertaken. Business plans are blueprints for implementing actions that have already been deemed feasible by the company's management.

Many Decisions vs. One

Business plans map out the direction a company intends to take to reach its revenue and profit objectives in the future. They are a compilation of numerous decisions made by the management team about how the company should be run. Feasibility studies are designed to provide guidance for one decision. Feasibility studies are often done to decide whether to start the business or not -- whether the likelihood of success is high enough to make the financial risk worthwhile. They can also be used to make decisions about whether to launch a new product in an existing company, or enter a new market -- any activity where there is a question about whether the company should take the action or not. Feasibility studies are sometimes termed cost/benefit analyses because the projected costs of the project are compared to the expected benefits to yield a conclusion.

Although the content and emphasis of business plans vary by company and industry, all plans have many elements in common. They describe the products or services the company intends to sell, why customers need these products or services, the target customers, how the company intends to reach them through its marketing strategy, the background and capabilities of the management team, and risk factors the company may face. They also contain information on projected revenue and profit. Plans contain these specific elements because many times they will be read by investors or other people outside the company, and these individuals want to see very specific information in a plan. Feasibility studies may have some or many of the same elements of a business plan, including a description of the human resources required and financial projections, but all the information leads to a conclusion or recommendation.

Differences

A business plan assumes a business is going to succeed and presents the steps necessary to achieve success. Those in charge of conducting a feasibility study should not have a preconceived view about whether success will be attained. They must be as objective as possible. They conduct research and let the facts lead to the ultimate opinion given in the study. If the study's conclusion is that the project is viable, some of the research done may be included in the company's business plan, such as projections of the size of the market.

Both business plans and feasibility studies attempt to predict future outcomes using assumptions about what is likely to happen in the business environment -- the economy and the company's competition. But this environment is always changing and the assumptions a company uses in its projections of revenue or profit may prove to be incorrect. Companies find that some of the strategies in their plan do not work to the degree the business owner expected, and have to be adjusted. In the case of a feasibility study, an incorrect conclusion can be especially costly -- it could mean launching a venture that has very little chance of surviving or approving a project that wastes the company's human and financial resources.

Feasibility study: definition, benefits and differences with a Business Plan

• Last updated on 09 January, 2024

Welcome to our series of articles on feasibility studies.

• What is a Feasibility study?
• What is a bankable feasibility study?
• How to do a feasibility study?
• Feasibility study consultants: expertise needed
• Cost of a feasibility study
• Car Park Feasibility Study: Key considerations
• Hotel Feasibility Study: Methodology
• Feasibility study of solar PV projects: Key components
• Feasibility study of real estate developments
• Feasibility study of marina projects

In this post, we will touch on all the basic concepts behind a feasibility study. definition, benefits of doing it, main parts, differences with a business plan, etc. Aninver Development Partners is a consulting firm specializing in Feasibility studies for projects such as hotels, infrastructure, energy, technology, etc. We assist clients globally. 

Definition of Feasibility study

A feasibility study is a comprehensive and systematic analysis and evaluation of a proposed project, business venture, or initiative to determine its practicality, viability, and potential for success. It involves a thorough examination of various factors, such as financial, technical, operational, legal, environmental, and market-related aspects, to assess whether the project is feasible and worth pursuing. 

The primary goal of a feasibility study is to provide stakeholders with essential information and insights to make informed decisions about whether to proceed with the project, abandon it, or make necessary adjustments to enhance its chances of success.

Differences between a feasibility study and a business plan

Feasibility studies and business plans are both important tools in the development and evaluation of a business or project, but they serve different purposes and are created at different stages of the process. Here are the key differences between a feasibility study and a business plan:

Differences in Purpose

• Feasibility Study : Feasibility studies are conducted in the early stages of project development or business planning. Their primary purpose is to determine whether a proposed project or business idea is viable and should be pursued. Feasibility studies focus on assessing the potential risks, challenges, and opportunities associated with the project.
• Business Plan : Business plans are created after the feasibility study, once it has been established that the project is viable. The purpose of a business plan is to outline in detail how the business will be structured, operated, and grown. It serves as a roadmap for the future of the business and is often used to secure financing.

Differences in Content

• Feasibility Study : A feasibility study includes an analysis of the project's overall concept, market research, technical requirements, financial projections, potential risks, and recommendations. It provides a high-level overview of the project's feasibility.
• Business Plan : A business plan is a detailed document that outlines the company's mission, vision, goals, organizational structure, market strategy, marketing and sales plans, financial forecasts, and operational details. It delves into the specifics of how the business will operate.

Differences in Timing

• Feasibility Study : Feasibility studies are conducted at the outset of a project or business idea to assess its potential feasibility. They help stakeholders decide whether to move forward with the project.
• Business Plan : Business plans are typically created after the feasibility study, once it has been determined that the project is feasible and worth pursuing. They provide a roadmap for the actual operation and growth of the business.

Differences in Audience

• Feasibility Study : The primary audience for a feasibility study includes project stakeholders, investors, and decision-makers who need to determine whether the project should proceed.
• Business Plan : Business plans are used to communicate the business's vision and strategy to a wider audience, including potential investors, lenders, partners, and employees.

In summary, a feasibility study is a preliminary assessment of the potential success of a project, while a business plan is a detailed document that outlines how a business will be run. The feasibility study helps determine whether a business plan should be developed, while the business plan provides a comprehensive strategy for the ongoing operation and growth of the business.

Feasibility study vs Pre-feasibility study

Let's explore now the key differences between a prefeasibility study and a feasibility study:

Purpose and Scope : A prefeasibility study and a feasibility study both play critical roles in project evaluation, but they serve distinct purposes. A prefeasibility study is typically the initial phase in the assessment process. Its primary purpose is to provide a preliminary evaluation of a project's potential viability. It helps stakeholders decide whether it's worth investing further resources into a detailed feasibility study. In contrast, a feasibility study goes into much greater depth and detail, assessing the project's practicality from technical, financial, operational, and market perspectives. It aims to provide a comprehensive understanding of whether the project is feasible and worth pursuing.

Level of Detail : One of the key distinctions between the two studies is the level of detail they encompass. A prefeasibility study offers a broad overview of the project, examining high-level factors like market demand, technical requirements, and rough cost estimates. It provides enough information to make an initial go/no-go decision. In contrast, a feasibility study drills down into finer details, providing precise financial projections, risk assessments, engineering specifics, and a comprehensive business plan. It seeks to leave no stone unturned in assessing the project's practicality.

Resource and Cost Implications : A prefeasibility study is generally less resource-intensive and cheaper to conduct compared to a full feasibility study. It acts as a cost-effective filter to eliminate unviable projects early in the evaluation process. Once a project passes the prefeasibility stage and proceeds to a feasibility study, it implies a commitment of more resources, time, and finances due to the comprehensive nature of the study. A prefeasibility study helps in efficient resource allocation by focusing only on the most promising projects, while a feasibility study is a more intensive process suitable for projects that have demonstrated a higher likelihood of success during the prefeasibility assessment.

Benefits of doing a Feasibility study

Conducting a feasibility study offers numerous benefits, making it an essential step in the decision-making process for any project, business venture, or initiative. Here are the key advantages of performing a feasibility study:

• Risk Assessment : Feasibility studies help identify potential risks and challenges associated with a project. By thoroughly examining technical, financial, operational, and market-related aspects, stakeholders can pinpoint areas of concern and develop strategies to mitigate or manage these risks effectively.
• Decision-Making : Feasibility studies provide critical information to decision-makers, helping them make informed choices about whether to proceed with a project. These studies offer a basis for go/no-go decisions, preventing resources from being wasted on unviable endeavors.
• Resource Allocation : By assessing the feasibility of a project, stakeholders can allocate resources more efficiently. They can avoid overinvesting in projects with limited potential and allocate resources to those with a higher likelihood of success.
• Financial Planning : Feasibility studies include detailed financial projections and cost estimates. This financial information is invaluable for securing funding from investors, lenders, or other sources. It helps in creating a solid business case.
• Market Insight : Market feasibility studies provide insights into customer demand, market trends, and competitive dynamics. This information is crucial for designing products or services that meet market needs and for formulating effective marketing strategies.
• Optimized Design : Technical feasibility studies ensure that a project's technical requirements and design are viable. They help in avoiding costly design flaws and ensuring that the project can be implemented as planned.
• Legal and Regulatory Compliance : Feasibility studies can identify potential legal and regulatory challenges. This allows for the development of strategies to navigate and comply with relevant laws and regulations, reducing the risk of legal complications later on.
• Enhanced Project Viability : Feasibility studies may lead to adjustments and improvements in the project plan, making it more viable and likely to succeed. This iterative process ensures that potential issues are addressed proactively.
• Investor and Stakeholder Confidence : When potential investors and stakeholders see that a comprehensive feasibility study has been conducted, they are more likely to have confidence in the project. This can make it easier to secure funding and support.
• Long-Term Planning : Feasibility studies not only assess the viability of a project in the short term but also help in long-term planning. They provide insights into the sustainability and growth potential of a business or initiative.

In summary, conducting a feasibility study is a valuable step in the project development process. It provides a structured approach to assess the viability of a project, manage risks, make informed decisions, secure financing, and set the stage for a successful venture. The benefits of a feasibility study extend beyond initial decision-making and contribute to the overall success and sustainability of a project or business.

Components of a Feasibility study

A feasibility study typically consists of several key components that provide a comprehensive evaluation of a project, business venture, or initiative. These components help stakeholders make informed decisions about the feasibility and viability of the proposed endeavor. The main components of a feasibility study include:

Executive Summary

The executive summary provides a concise overview of the entire feasibility study. It includes a brief description of the project, its objectives, and the key findings and recommendations. It serves as a quick reference for decision-makers.

Project Description

This section outlines the project's goals, objectives, and scope. It defines the problem the project aims to solve or the opportunity it seeks to capture. It also specifies the project's location and the stakeholders involved.

Market Analysis

Market analysis assesses the demand for the product or service within the target market. It includes information on target customers, market size, growth potential, competition, and market trends. This component helps determine whether there is a viable market for the project.

Technical Feasibility

Technical feasibility examines the project's technical requirements. It assesses whether the necessary technology, equipment, and resources are available or can be developed. It also identifies any technical challenges that may need to be addressed.

Operational Feasibility

Operational feasibility evaluates how the project will be implemented and operated. It includes details about project timelines, workflow, personnel requirements, and operational processes. This section helps in understanding how the project will function on a day-to-day basis.

Financial Feasibility

Financial feasibility is a critical component that includes detailed financial projections and analysis. It covers aspects such as startup costs, revenue forecasts, expense estimates, cash flow analysis, and return on investment calculations. It assesses the project's financial viability and potential profitability.

Legal and Regulatory Analysis

This section examines the legal and regulatory requirements that may impact the project. It identifies permits, licenses, or compliance issues that need to be addressed. Understanding and addressing legal and regulatory aspects are essential to avoid potential obstacles.

Risk Assessment

The risk assessment component identifies potential risks and challenges associated with the project. It evaluates the probability and impact of these risks and suggests risk mitigation strategies. Risks can be financial, technical, operational, market-related, or related to external factors.

Recommendations and Conclusion

In this section, the feasibility study summarizes the findings and presents clear recommendations based on the assessment. It often includes a conclusion that states whether the project is feasible and worth pursuing or whether it should be abandoned or modified.

The appendices contain additional supporting documentation and data, such as detailed financial spreadsheets, market research reports, technical specifications, and any other relevant information. These provide a more in-depth reference for stakeholders.

The main components of a feasibility study collectively provide a thorough assessment of a project's viability from multiple angles, ensuring that decision-makers have a comprehensive understanding of the project's potential, risks, and benefits.

Examples of Feasibility studies

Let's look now into some examples of feasibility studies for different types of projects and initiatives:

• Real Estate Development

A real estate developer is considering constructing a residential apartment complex in a growing urban area. A feasibility study would assess factors like market demand, location, zoning regulations, construction costs, potential revenue from rentals, and the financial viability of the project.

• Manufacturing Plant Expansion

A manufacturing company is considering expanding its operations by building a new production facility. The feasibility study would evaluate factors such as available land, infrastructure, equipment requirements, workforce, environmental impact, and the financial feasibility of the expansion.

• Small Business Startup

An entrepreneur is exploring the feasibility of starting a small restaurant in a specific location. The feasibility study would examine the local market, including competitors, target customer demographics, startup costs, regulatory requirements, and financial projections for the first few years of operation.

• Renewable Energy Project

A renewable energy company is considering the construction of a solar power plant. The feasibility study would assess the site's solar exposure, grid connection feasibility, equipment costs, revenue from energy sales, environmental impact, and the return on investment over the project's lifespan.

• Healthcare Facility Expansion

A hospital is contemplating an expansion to meet growing patient demands. The feasibility study would include an assessment of the required medical equipment, staffing needs, regulatory compliance, funding sources, and the anticipated patient load.

• Tourism Development

A tourist destination is considering the construction of a new hotel and recreational facilities. The feasibility study would evaluate the area's appeal to tourists, competition with existing businesses, construction costs, expected occupancy rates, and potential revenue from tourism.

• Nonprofit Program Expansion

A nonprofit organization is looking to expand its community outreach programs. The feasibility study would assess the need for the programs, funding sources, volunteer availability, operational costs, and the impact of the expansion on the organization's mission and goals.

• E-commerce Startup

An entrepreneur plans to launch an e-commerce website. The feasibility study would examine market demand, website development costs, marketing strategies, competitive analysis, and projected sales revenue and profitability.

These examples illustrate how feasibility studies are conducted in various fields and industries to evaluate the potential success and viability of a wide range of projects and initiatives. The specific components and focus areas of a feasibility study will vary depending on the nature of the project and the questions it seeks to address.

7 steps to conduct a Feasibility study

Now, let's think we are going to write a feasibility study. Let's check what steps we need to take to develop the final report.

• Conduct a Preliminary Analysis

Begin by conducting an initial evaluation of the project's objectives and scope. This step involves defining the problem the project intends to address or the opportunity it aims to seize. Ensure that the project's goals are clear and well-defined.

• Analyze Technical Specifications

Examine the technical aspects of the project in detail. Evaluate the availability of required technology, equipment, and resources. Verify that the project's technical requirements can be met effectively.

• Conduct a Commercial Analysis

Perform a comprehensive analysis of the project's commercial aspects. This step involves assessing the market's demand for the product or service, analyzing market size, competition, customer needs, and market trends. Determine if there is a feasible market for the project.

• Prepare a Projected Income Statement

Create a detailed projected income statement for the project. This includes estimating startup costs, revenue forecasts, expense projections, and cash flow analysis. Calculate the return on investment (ROI) to determine the project's financial viability, the Internal Rate of Return (IRR) of the investment and the Net Present Value (NPV) of future cash flows.

• Prepare a Day-Zero Balance Sheet

Develop a balance sheet that represents the project's financial position at the outset (day zero). This financial snapshot should account for all assets, liabilities, and equity to provide a clear overview of the project's financial situation before it begins.

• Analyze Different Alternatives for Feasibility

Explore various alternatives and scenarios for the project's feasibility. Assess different approaches, technologies, or business models to identify the most viable option. Consider the potential impact of these alternatives on the project's success. Make sensibilities to potentila risks.

• Make a Go/No-Go Decision

Based on the findings and analysis conducted throughout the feasibility study, make a well-informed decision on whether to proceed with the project (a "Go" decision) or abandon it (a "No-Go" decision). Ensure that the decision aligns with the project's goals and aligns with the information presented in the study.

These steps provide a structured approach to conducting a feasibility study, ensuring that all relevant aspects of the project are thoroughly assessed and considered before making a decision on its viability.

In conclusion, a feasibility study is an indispensable tool for any project, business venture, or initiative. It serves as the critical bridge between a concept and a well-informed decision. By following a systematic process that includes a preliminary analysis, technical assessment, commercial evaluation, financial projections, and a careful consideration of alternatives, stakeholders can gain a comprehensive understanding of a project's viability.

The feasibility study's ability to assess market demand, technical feasibility, operational requirements, financial viability, and potential risks empowers decision-makers to make informed choices. Whether it's a real estate development, a new product launch, a manufacturing expansion, an IT system upgrade, or any other endeavor, a feasibility study helps in risk management, efficient resource allocation, and, ultimately, the successful realization of the project's goals.

It's important to remember that a well-conducted feasibility study not only serves the purpose of greenlighting a project but also provides a foundation for its long-term success. It gives stakeholders the confidence that the project is based on sound analysis and planning. In a world of complex challenges and opportunities, the feasibility study is a guiding compass for those seeking to turn innovative ideas into reality.

Make sure you hire the right consultants to deliver your feasibility study or business plan. Our firm, Aninver Development Partners, specializes in designing bankable feasibility studies  to make sure projects continue to their following phase. 

Send us a message on our contact page and we can discuss how we can help you. 

Some of our experience conducting feasibility studies can be seen below:

• Feasibility Study for a new marina in the island of San Andrés through PPP
• Pre-feasibility study for construction of silo storages in Northern Ghana through PPP
• Feasibility study of a real estate WAQF project in Cotonou (Benin)
• Feasibility study and analysis of strategic alternatives of a touristic development in Natal
• Feasibility study for creation of an Investment and Export Promotion Agency of Health services in Tunisia
• Feasibility Study for car parks in Bishkek though PPP
• Feasibility study of markets in Benin and Togo under PPP scheme
• Feasibility Study for the establishment of a Large-Scale Cashew Processing Plant in Zambia
• Public Private Partnership (PPPs) study in the Housing Sector
• Review of Business Case for Manila Central Subway
• First Mover PPP Prefeasibility Study
• Review of the feasibility study of the PPP project Complejo El Brillante, in Cordoba (Spain)
• Review of pre-feasibility study of a Health PPP project

Alvaro de la Maza is one the founding partners of Aninver Development Partners. Alvaro is a Civil Engineer, MS on Infrastructure Management and MBA by IESE Business School.Alvaro has extensive experience in Infrastructure and Public Private Partnerships. Alvaro has worked and led multiple consulting projects for clients such as the World Bank, the African Development Bank and other donors.Alvaro enjoys creating digital products and he has led the development of market intelligence platforms in d...

Most popular articles

 Related insights

Join our newsletter.

• What is the difference between a feasibility study and a business plan?

Navigating the dynamic business world requires a high degree of strategic acumen and meticulous preparation, especially for senior management roles. In this article, we'll delve into two paramount tools that can significantly assist in this journey: business plans and feasibility studies.

Both tools are used extensively by seasoned professionals such as senior finance managers, real estate development managers, asset managers, and procurement managers. Yet, the relationship and differentiation between business plans and feasibility studies often confuse. Through this article, we'll demystify these concepts and reveal how business plan and feasibility study consultants can be crucial in bolstering your strategic decision-making.

Unravelling the relationship

Business plans and feasibility studies are interconnected yet serve different purposes. A business plan outlines your organisation's direction, detailing the approach to achieving set goals, while a feasibility study analyses the viability of a specific business venture before it's initiated.

Consider a corporation contemplating a shift to solar power. They begin with a feasibility study, engaging a consultant to evaluate factors like sunlight availability, installation costs, regulatory environment, and potential impact on their market position. If this study finds that the location isn't sunny enough, costs are too high, or infrastructure is unsuitable, the idea is scrapped, saving the corporation from a costly mistake.

However, if the feasibility study deems the transition viable, the corporation proceeds to the business plan stage. They hire a business plan consultant to outline a detailed strategy, covering aspects such as budgeting, sourcing, installation timelines, risk mitigation, and communication plans.

Dissecting the differences

While both a business plan and a feasibility study are crucial, they're not interchangeable. A feasibility study asks, "Should we do this?" while a business plan asks, "How will we do this?"

To explain better, let's consider a scenario involving a restaurant. If a restaurateur is considering opening a new branch in a different city, they would first conduct a feasibility study. They'd assess the local market demand, competition, demographics, potential locations, costs, and projected revenue. If the study finds that the new branch wouldn't be profitable or sustainable, they would shelve the idea. However, if the feasibility study reveals that the new branch is likely to be successful, they'd proceed to create a business plan. This would detail how they intend to launch and run the new branch, such as the restaurant's concept, target customers, marketing strategies, menu, pricing, staffing, and financial projections.

In essence, the feasibility study is about whether they should open the restaurant, and the business plan is about how they will open and operate it, illustrating the key difference between the two tools.

The rationale behind business plans and feasibility studies

Why should your organisation invest time and resources in these tools? Essentially, they provide clarity and confidence in decision-making. A feasibility study examines the practicability of your idea. It determines if the proposed project is worth the risk and investment. It's akin to a 'litmus test', helping you avoid costly missteps.

On the other hand, a business plan provides a detailed roadmap for your business. It lays out your business's objectives and strategies, management and operational structure, and financial projections. It facilitates internal understanding and commitment and helps attract external investors when well-executed.

The role of consultants

Given the complexity and the high stakes involved, many organisations engage business plan consultants and feasibility study consultants. These experts bring an external perspective, help avoid internal biases, and contribute specialist knowledge and methodologies.

Feasibility study consultants conduct comprehensive market research, cost analyses, and risk assessments. They help determine if your proposed project is both profitable and achievable. On the other hand, business plan consultants assist in crafting compelling business plans that communicate your vision effectively. They analyse your business's strengths, weaknesses, opportunities, and threats (SWOT) and devise strategies that align with your objectives and capabilities.

Final thoughts

For senior management, these tools offer invaluable assistance. A robust feasibility study allows managers to make informed go/no-go decisions. It facilitates risk management and helps align the team around a shared understanding of the project's potential. Business plans, meanwhile, provide a clear vision and direction for the organisation. They assist managers in tracking progress, managing changes, and communicating with stakeholders. They're essential for steering the corporate ship in an often turbulent business sea.

In conclusion, business plans and feasibility studies, assisted by professional consultants, play an instrumental role in shaping and executing your business strategy. They underpin decision-making, mitigate risks, and maximise potential returns. Whether you're evaluating a new project or charting your organisation's path, consider investing in a well-crafted feasibility study and a comprehensive business plan - the rewards can be immense.

Related Services: Feasibility Study , Business Plan , Strategic Advisory

What is the role of a business valuation in estate planning?

Navigating the dynamic business world requires a high degree of strategic acumen and meticulous preparation, especially for senior management roles. In this article, we'll delve into two paramount tools that...

Recommended for you

Approximately 12,600 residential units in qatar are in the pipeline for q4 2022.

Do neo-banks pose a threat to mainstream banking network in GCC?

The advantages of working with remote teams.

Your folder is empty

Transaction Enquiry

Recover password.

• Business & Commerce

What is the difference between feasibility study and business plan?

• No comments
• 7 minute read

What is the difference between heath and heather?

Share article, table of contents hide, what is a feasibility study, what is a business plan, the key differences between a feasibility study and a business, when to use a feasibility study vs. a business plan, how to create a feasibility study, how to create a business plan, what are the types of feasibility studies, what are the types of business plans.

A feasibility study is an analysis of whether a business idea is practical and viable , while a business plan outlines the strategy and operations of a business in detail. Essentially, a feasibility study is a precursor to a business plan, helping to determine whether the business idea is worth pursuing before investing time and resources into developing a full plan.

(Photo by Firmbee.com on Unsplash )

A feasibility study is an analysis of the viability of an idea, proposal, or concept. It assesses the likelihood that a project will be successful in meeting its objectives and goals, and whether it is worth pursuing.

A feasibility study is not the same as a business plan. A business plan is a document that outlines the financial and operational goals of a business. It includes information on the company’s products or services, marketing strategy, and target market.

A feasibility study looks at all aspects of a proposed project, including technical feasibility, financial feasibility, and operational feasibility. It is used to determine whether a project is worth pursuing and to identify any potential risks or limitations.

Technical feasibility looks at whether a proposed project can be completed with the available resources. This includes evaluating the technical requirements, such as hardware and software requirements, and assessing whether these can be met. Financial feasibility looks at whether a proposed project is financially viable. This includes assessing the costs and benefits of the project, as well as any potential sources of funding. Operational feasibility looks at whether a proposed project can be completed successfully within the given constraints. This includes evaluating the resources required for the project and assessing whether they are available.

The goal of a feasibility study is to identify any potential problems with a proposed project so that they can be addressed before moving forward. By doing this, it increases the chances of success for the project overall.

(Photo by Jason Goodman on Unsplash )

A business plan is a comprehensive document that outlines the strategy, operations, and financial projections for a business. It typically includes information on the company’s products or services, target market, competition, marketing and sales strategies, management team, and financial projections.

A well-written business plan is an important tool for entrepreneurs and business owners, as it provides a roadmap for the future of the business and helps to secure funding from investors or lenders. It allows the business owner to clearly articulate their vision and goals, and to identify potential challenges and opportunities.

The key components of a business plan typically include an executive summary , company description, market analysis, marketing and sales strategy, management and organization, product or service line, financial projections, and funding request.

The executive summary provides an overview of the business plan, highlighting the key points and objectives. The company description provides background information on the business, including its history , mission, and goals. The market analysis outlines the target market, competition, and industry trends. The marketing and sales strategy describes how the business will reach and engage customers. The management and organization section details the management team and organizational structure of the business. The product or service line outlines the products or services the business will offer. The financial projections include income statements, balance sheets, and cash flow statements. Finally, the funding request outlines the amount of funding needed and how it will be used.

Overall, a business plan is a critical document for any business, providing a roadmap for success and a way to attract funding and support from investors and lenders.

Purpose: A feasibility study is conducted to determine whether a business idea is practical and viable, while a business plan is developed to outline the strategy, operations, and financial projections for a business.

Scope : A feasibility study is a preliminary analysis that focuses on the market, technical, and financial feasibility of a business idea, while a business plan is a comprehensive document that covers all aspects of a business, including its products or services, target market, competition, marketing and sales strategies, management team, and financial projections.

Timing : A feasibility study is typically conducted before developing a business plan to determine whether the business idea is worth pursuing, while a business plan is developed once the decision to proceed with the business has been made.

Audience : A feasibility study is primarily used to inform the entrepreneur or management team about the viability of the business idea, while a business plan is used to secure funding from investors or lenders.

Level of detail : A feasibility study provides a high-level analysis of the business idea, while a business plan provides a detailed roadmap for the future of the business, including its marketing and sales strategies, management team, and financial projections.

A feasibility study is typically used when starting a new business or venture, and its purpose is to determine if the proposed business idea is viable. A feasibility study will assess the market potential, technical feasibility, and financial viability of the proposed business. It is important to note that a feasibility study is not the same as a business plan; rather, it is one tool that can be used in developing a business plan.

In contrast, a business plan is typically used once a business has already been established. Its purpose is to outline the company’s strategy for achieving its goals and objectives. Unlike a feasibility study, which assesses the viability of a proposed idea, a business plan focuses on an existing businesses’ ability to execute its strategy and achieve its goals.

A feasibility study is an analysis of whether a proposed project is likely to be successful. A business plan is a more detailed document that outlines the specifics of the business, such as its products or services, marketing strategy, and financial projections.

Creating a feasibility study typically requires four main steps:

• Define the problem or opportunity. This step includes understanding the needs of the potential customer or client.
• Research and gather data. This step includes secondary research, such as market analysis and industry trends, as well as primary research, such as customer surveys or interviews.
• Analyze the data and make recommendations. This step includes determining whether the problem or opportunity can be solved and whether the proposed project is likely to be successful.
• Prepare a written report . This step includes documenting the findings of the feasibility study in a clear and concise manner.

Creating a business plan can seem like a daunting task, but it doesn’t have to be. You can start by doing some research and then outlining your goals and objectives. Once you have a good understanding of what you want to achieve, you can start putting together a more detailed plan.

There are a few key things that should be included in any business plan:

• An executive summary. This is a brief overview of your business and what you hope to accomplish.
• A description of your product or service. What are you offering and why do your customers need it?
• A marketing plan. How will you reach your target market and what strategies will you use to promote your product or service?
• A financial plan. What are your revenue and expense projections? How much money do you need to get started or to keep your business running?
• An operational plan. What are the day-to-day details of running your business? Who will handle what tasks?
• A risk management plan. What could go wrong and how will you handle it if it does?

Market Feasibility

A market feasibility study assesses the potential for a product or service to be successful in a given market. It takes into account multiple factors such as the size of the target market, growth trends, competitor analysis, and customer needs and buying habits. This type of feasibility study is important for businesses to understand whether there is a demand for their product or service in the marketplace.

Technical Feasibility

A technical feasibility study assesses the ability of a business to successfully develop and implement a proposed solution. This includes assessing the technical risks involved, as well as ensuring that the necessary resources (e.g., personnel, equipment) are available. A technical feasibility study is important to determine whether a proposed solution is achievable and will meet the needs of the business.

Financial Feasibility

A financial feasibility study assesses the potential financial impact of a proposed solution. This includes an assessment of the costs and benefits of implementing the solution, as well as any potential risks and uncertainties associated with it. A financial feasibility study is important to determine whether a proposed solution is financially viable and will have a positive impact on the business’s bottom line.

Managerial Feasibility

A managerial feasibility study assesses the ability of management to successfully develop and implement a proposed solution. This includes an assessment of management’s experience, skills,

There are three types of business plans :

Internal business plan

An internal business plan is a document that outlines the company’s strategy for achieving its objectives. It is typically created by the company’s management team and is not shared with outsiders.

External business plan

An external business plan is a document that is shared with outsiders, such as investors, potential partners, and customers. Its purpose is to persuasively communicate the company’s strategy and how it will achieve its objectives.

Hybrid business plan

A hybrid business plan combines elements of both an internal and an external business plan. It typically includes a high-level overview of the company’s strategy that can be shared with outsiders, as well as more detailed information on operational matters that is meant for internal use only.

Featured Image By – Photo by Daria Nepriakhina 🇺🇦 on Unsplash

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Save my name, email, and website in this browser for the next time I comment.

You May Also Like

What is the difference between duopoly and oligopoly market?

• January 19, 2023

Class A vs. Class B Shares: Key Differences

• Difference Digest
• February 7, 2024

What is the difference between solvency and liquidity?

• January 15, 2024

Sewer vs. Drain: Understanding the Key Differences

• April 29, 2024

Torque Converter vs Fluid Coupling: Key Differences

• March 21, 2024

Conscious vs. Unconscious: Key Distinctions

• March 16, 2024

Debt Consolidation vs. Debt Relief: Key Differences

Feasibility study and business plan: Feasibility Study vs: Business Plan: Understanding the Difference

1. what are feasibility studies and business plans and why are they important, 2. what is it, what are its components, and how to conduct one, 3. what is it, what are its components, and how to write one, 4. what are the similarities and differences between them, 5. what are the scenarios and situations where you need one or both of them, 6. how to apply them to different types of businesses and projects, 7. how to make your feasibility study and business plan effective and successful, 8. what are the key takeaways and recommendations from your blog.

Before launching a new venture or expanding an existing one, entrepreneurs need to assess the viability and profitability of their ideas. This is where feasibility studies and business plans come in handy. These are two different but complementary tools that can help entrepreneurs make informed decisions and secure funding for their projects. However, many people confuse the two or use them interchangeably, which can lead to misunderstandings and missed opportunities. In this article, we will explore the differences and similarities between feasibility studies and business plans, and how to use them effectively.

- A feasibility study is a preliminary analysis that evaluates the potential and practicality of a business idea. It answers the question: Is this idea worth pursuing ?

- A business plan is a detailed document that describes the goals, strategies, and operations of a business. It answers the question: How will this idea be executed and succeed?

Some of the main differences between feasibility studies and business plans are:

1. Purpose : A feasibility study is used to test the viability of an idea before investing too much time and money into it. It can help entrepreneurs identify the strengths, weaknesses, opportunities, and threats of their idea, as well as the market demand, customer preferences, competition, costs, risks, and legal issues. A feasibility study can also provide a go/no-go decision or a recommendation for further research. A business plan, on the other hand, is used to communicate the vision and direction of a business to potential investors, partners, employees, and customers. It can help entrepreneurs secure funding , attract talent, establish partnerships, and monitor progress. A business plan can also serve as a roadmap for implementing and managing the business.

2. Format : A feasibility study is usually a concise and focused report that summarizes the findings and conclusions of the analysis. It can range from a few pages to a few dozen pages, depending on the complexity and scope of the idea. A business plan is typically a comprehensive and structured document that covers various aspects of the business, such as the executive summary, the company description, the market analysis , the product or service description, the marketing and sales plan, the financial plan, and the appendix. It can range from 10 to 100 pages, depending on the size and stage of the business.

3. Timing : A feasibility study is usually conducted before a business plan , as it can help entrepreneurs determine whether their idea is worth pursuing or not. A feasibility study can save entrepreneurs from wasting time and money on an unfeasible or unprofitable idea. A business plan is usually developed after a feasibility study, as it can help entrepreneurs refine and elaborate on their idea. A business plan can also be updated and revised as the business grows and changes.

An example of a feasibility study is a market research that evaluates the demand and preferences of potential customers for a new product or service . An example of a business plan is a pitch deck that showcases the value proposition, the competitive advantage, and the financial projections of a new venture .

What are feasibility studies and business plans and why are they important - Feasibility study and business plan: Feasibility Study vs: Business Plan: Understanding the Difference

A feasibility study is a crucial step in the process of launching a new venture or project. It is an analysis that evaluates the viability of an idea, product, service, or solution before investing time, money, and resources into it. A feasibility study helps to answer questions such as:

- Is there a market demand for the proposed offering?

- What are the technical, operational, legal, and financial requirements and risks involved?

- How much will it cost to develop, produce, and deliver the offering?

- How much revenue and profit can be expected from the offering?

- What are the strengths, weaknesses, opportunities, and threats (SWOT) of the offering and the business environment?

- What are the alternatives and competitors in the market?

A feasibility study typically consists of the following components:

1. Executive summary : This is a brief overview of the main findings and recommendations of the feasibility study. It should highlight the objectives, scope, methodology, results, and conclusions of the analysis.

2. Market analysis : This is a detailed examination of the current and potential market for the proposed offering. It should include information such as market size, segmentation, trends, growth, demand, customer preferences, buying behavior, and competitive landscape.

3. Technical analysis : This is a thorough assessment of the technical aspects of the proposed offering. It should cover topics such as product or service design , specifications, features, functionality, quality, performance, reliability, safety, and compliance.

4. Operational analysis : This is a comprehensive evaluation of the operational requirements and capabilities of the proposed offering. It should address issues such as production or service delivery processes , equipment, materials, labor, facilities, logistics, distribution, inventory, maintenance, and quality control.

5. Financial analysis : This is a rigorous estimation of the financial implications and outcomes of the proposed offering. It should include elements such as cost-benefit analysis , break-even analysis, cash flow analysis , income statement, balance sheet, return on investment, and sensitivity analysis.

6. Risk analysis : This is a systematic identification and mitigation of the potential risks and uncertainties associated with the proposed offering. It should consider factors such as technical, operational, market, financial, legal, regulatory, environmental, social, and ethical risks.

7. Recommendation and conclusion : This is a clear and concise statement of the overall feasibility and desirability of the proposed offering. It should summarize the main findings and arguments of the feasibility study and provide a recommendation on whether to proceed, modify, or abandon the idea.

To conduct a feasibility study , one should follow these steps:

- Define the objectives and scope of the study

- Gather relevant data and information from primary and secondary sources

- analyze the data and information using appropriate methods and tools

- Evaluate the results and compare them with the predefined criteria and benchmarks

- draw conclusions and make recommendations based on the evidence and logic

For example, suppose a company wants to launch a new online platform that connects freelance writers with clients who need content creation services. A feasibility study would help the company to determine the following:

- The size and characteristics of the target market and the potential demand for the platform

- The technical features and functionality of the platform and the development costs and time involved

- The operational processes and resources required to run and maintain the platform and the service quality and customer satisfaction levels expected

- The financial projections and outcomes of the platform and the revenue streams and cost structures involved

- The risks and challenges that the platform might face and the strategies and contingency plans to overcome them

- The recommendation and conclusion on whether the platform is feasible and profitable and the next steps to take

What is it, what are its components, and how to conduct one - Feasibility study and business plan: Feasibility Study vs: Business Plan: Understanding the Difference

A feasibility study and a business plan are two different but related documents that entrepreneurs and business owners need to prepare before launching a new venture. While a feasibility study evaluates the viability of a business idea, a business plan outlines the strategy and goals of the business . In this article, we will compare and contrast these two documents and explain how to create them.

## How to create a business plan

A business plan is a comprehensive document that describes the vision, mission, objectives, strategies, and financial projections of a business . It serves as a roadmap for the business and a communication tool for potential investors, partners, and stakeholders. A business plan should answer the following questions :

- What is the purpose and value proposition of the business?

- Who are the target customers and what are their needs and preferences?

- What are the products or services that the business will offer and how will they differ from the competitors?

- How will the business reach and attract the customers and what are the marketing and sales strategies ?

- What are the resources and capabilities that the business will need and how will they be acquired and managed?

- What are the risks and challenges that the business will face and how will they be mitigated and overcome?

- What are the financial assumptions and projections that the business will make and how will they be measured and evaluated?

A business plan typically consists of the following components:

1. Executive summary : A brief overview of the business plan that summarizes the main points and highlights the key aspects of the business . It should capture the attention and interest of the readers and entice them to read the rest of the document.

2. Company description : A detailed description of the business that covers its history, vision, mission, values, goals, and structure. It should also include information about the founders, team members, and advisors of the business.

3. Market analysis : A thorough analysis of the industry, market, and competition that the business will operate in. It should identify the size, growth, trends, opportunities, and threats of the market and the strengths, weaknesses, opportunities, and threats of the business. It should also define the target market segment and the customer profile and behavior.

4. Product or service description : A clear and concise description of the products or services that the business will offer and how they will meet the needs and solve the problems of the customers . It should also explain the unique selling proposition and competitive advantage of the products or services and how they will be developed, delivered, and supported.

5. Marketing and sales plan : A strategic plan that outlines the marketing and sales objectives, strategies, and tactics of the business. It should specify the marketing mix elements such as product , price, place, and promotion and how they will be implemented and coordinated. It should also describe the sales process and cycle and how the business will generate leads , convert prospects, and retain customers.

6. Operational plan : A practical plan that describes the operational aspects of the business such as the location, facilities, equipment, technology, inventory, supply chain, quality control, legal and regulatory compliance , and human resources. It should also detail the roles and responsibilities of the staff and the organizational chart and culture of the business.

7. Financial plan : A realistic plan that projects the financial performance and position of the business for the next three to five years. It should include the income statement, balance sheet, cash flow statement , break-even analysis, and financial ratios. It should also state the sources and uses of funds and the assumptions and scenarios that underlie the projections.

8. Appendix : An optional section that contains any additional or supporting information that may be relevant or useful for the readers of the business plan. It may include resumes, testimonials, references, patents, licenses, contracts, charts, graphs, tables, or other documents.

To write a business plan , one should follow these steps:

- Conduct a thorough research on the industry, market, and competition and gather relevant and reliable data and information.

- Define the purpose and scope of the business plan and identify the target audience and their expectations and needs.

- Outline the structure and content of the business plan and organize the information into logical and coherent sections and subsections.

- Write the first draft of the business plan using clear , concise, and persuasive language and tone. Use bullet points, headings, subheadings, and numbers to make the document easy to read and understand. Use examples, anecdotes, and stories to illustrate the concepts and ideas.

- Review and revise the draft of the business plan and check for accuracy , consistency, completeness, and clarity. Eliminate any errors, gaps, or redundancies and improve the flow and transitions of the document. Seek feedback from others and incorporate their suggestions and comments.

- Format and design the final version of the business plan and make it visually appealing and professional. Use fonts, colors, images, and graphics to enhance the presentation and impact of the document. Add a cover page, table of contents, and page numbers to make the document easy to navigate and reference.

A business plan is a dynamic and flexible document that should be updated and revised regularly as the business evolves and grows . It should reflect the current situation and goals of the business and incorporate the feedback and learning from the market and customers. A business plan is a valuable tool for the success and sustainability of any business.

What is it, what are its components, and how to write one - Feasibility study and business plan: Feasibility Study vs: Business Plan: Understanding the Difference

Before launching a new venture or expanding an existing one, entrepreneurs need to assess the viability and profitability of their ideas. Two common tools that can help them with this task are feasibility studies and business plans. Although they are often used interchangeably, they have different purposes, scopes, and contents. In this section, we will explore the similarities and differences between these two documents and how they can complement each other.

- Similarities : Both feasibility studies and business plans are based on research and analysis of the market, the industry, the competitors, and the customers. They both aim to provide evidence and rationale for the proposed venture or project. They both use quantitative and qualitative data to support their claims and projections. They both require clear and concise writing and presentation skills to communicate the findings and recommendations to the stakeholders .

- Differences : The main difference between feasibility studies and business plans is the level of detail and the intended audience . A feasibility study is a preliminary document that evaluates the technical , economic , legal , and social aspects of a potential venture or project. It answers the question: Is this idea feasible? A feasibility study is usually conducted for internal use, such as for the management team or the board of directors . A business plan is a comprehensive document that describes the vision , mission , goals , strategies , and action plans of a venture or project. It answers the question: How will this idea succeed? A business plan is usually prepared for external use, such as for investors, lenders, or partners.

- Examples : To illustrate the differences between feasibility studies and business plans, let us consider two hypothetical scenarios. Suppose you want to open a new coffee shop in your neighborhood. A feasibility study would help you determine the demand , the supply , the costs , and the risks of this idea. You would need to research the market size , the customer preferences , the competitor analysis , the location analysis , the legal requirements , and the financial projections . A business plan would help you define the value proposition , the target market , the marketing mix , the operational plan , the organizational structure , and the financial plan of your coffee shop. You would need to outline the vision statement , the mission statement , the objectives , the strategies , the tactics , and the milestones of your business. Suppose you want to develop a new mobile app that connects users with local service providers. A feasibility study would help you assess the technical , the market , the legal , and the social feasibility of this idea. You would need to research the user needs , the existing solutions , the technology requirements , the data protection , and the social impact of your app. A business plan would help you present the business model , the competitive advantage , the revenue streams , the distribution channels , the customer segments , and the cost structure of your app. You would need to describe the problem , the solution , the unique value proposition , the customer relationships , the key resources , and the key activities of your business.

Both feasibility study and business plan are important tools for entrepreneurs and investors who want to evaluate the potential of a new venture or project. However, they serve different purposes and should be used in different situations. Depending on the nature, scope, and stage of your idea, you may need one or both of them to make informed decisions and secure funding. Here are some scenarios and situations where you need a feasibility study, a business plan, or both:

- You need a feasibility study when you have a new idea or opportunity that you want to explore further. A feasibility study is a preliminary analysis that helps you assess the viability and profitability of your idea before investing too much time and money into it. It helps you identify the market demand, the technical requirements, the operational challenges, the legal and regulatory issues , the financial projections, and the risks and opportunities involved in pursuing your idea. A feasibility study can help you answer questions such as: Is there a need or gap in the market that your idea can fill? Can you deliver your product or service in a cost-effective and efficient way? What are the potential revenues and expenses of your idea? What are the strengths and weaknesses of your idea compared to the existing alternatives? What are the external factors that can affect your idea positively or negatively? A feasibility study can help you determine whether your idea is worth pursuing further or not. For example, if you want to start a new online platform that connects freelance writers and editors, you may conduct a feasibility study to see if there is enough demand for such a service, how you can differentiate yourself from the existing competitors, what are the technical and operational requirements to run the platform, how much it will cost to develop and maintain the platform, and what are the potential revenues and risks involved.

- You need a business plan when you have a feasible idea that you want to execute and communicate. A business plan is a detailed document that describes your business idea, your goals and objectives, your strategies and actions, your resources and capabilities, and your expected outcomes and results. It helps you plan and organize your business activities, track and measure your progress and performance, and communicate and persuade your stakeholders and potential investors. A business plan can help you answer questions such as: What is your mission and vision for your business? Who are your target customers and what are their needs and preferences? How will you reach and serve your customers and what value proposition will you offer them? Who are your competitors and how will you gain a competitive advantage over them? What are your short-term and long-term goals and how will you achieve them? What are the key activities, resources, and partners that you need to run your business? How will you generate revenues and control costs? How will you manage and mitigate the risks and uncertainties in your business environment? A business plan can help you turn your idea into a reality and convince others to support your business. For example, if you have a feasible idea for a new online platform that connects freelance writers and editors, you may create a business plan to outline your business model, your marketing and sales strategies, your financial projections, and your funding requirements.

- You need both a feasibility study and a business plan when you have a complex or large-scale idea that requires a thorough evaluation and a comprehensive plan. Sometimes, your idea may be too complex or large-scale to be assessed by a feasibility study alone or executed by a business plan alone. You may need both a feasibility study and a business plan to cover all the aspects and stages of your idea. A feasibility study can help you explore and validate your idea, while a business plan can help you implement and communicate your idea. You may use the feasibility study as a basis for your business plan, or you may conduct them simultaneously or iteratively. For example, if you want to start a new biotechnology company that develops and commercializes innovative drugs, you may need both a feasibility study and a business plan to evaluate the scientific and commercial potential of your drugs, to plan and manage the research and development process, to secure the intellectual property rights and regulatory approvals, to establish the manufacturing and distribution channels, to market and sell your drugs to the customers and payers, and to raise funds from the investors and partners.

Feasibility studies and business plans are both essential tools for entrepreneurs , investors, and managers who want to evaluate the potential and viability of a new venture or project. However, they are not interchangeable and serve different purposes. A feasibility study is a preliminary analysis that assesses whether a project is technically, financially, and legally feasible, as well as socially and environmentally desirable. A business plan is a comprehensive document that outlines the goals , strategies, and operational details of a venture, as well as its market analysis, financial projections, and risk assessment.

To illustrate how feasibility studies and business plans can be applied to different types of businesses and projects, let us consider the following examples:

1. A restaurant: A feasibility study for a restaurant would examine the demand and supply of the target market, the location and accessibility of the site, the availability and cost of raw materials and equipment, the legal and regulatory requirements , the competition and differentiation, and the social and environmental impact . A business plan for a restaurant would specify the vision and mission, the target customers and value proposition, the menu and pricing, the marketing and promotion, the staffing and management, the financial plan and budget, and the contingency plan and exit strategy .

2. A software product: A feasibility study for a software product would evaluate the technical feasibility of the product idea, the market opportunity and customer needs, the competitive landscape and unique selling proposition, the legal and ethical implications , and the social and environmental benefits . A business plan for a software product would describe the product features and benefits , the customer segments and personas , the go-to-market strategy and channels, the revenue model and pricing , the development and testing process, the team and organization, the financial plan and milestones, and the risk analysis and mitigation .

3. A solar farm: A feasibility study for a solar farm would assess the suitability and availability of the land, the solar radiation and climate conditions, the grid connection and power purchase agreement , the capital and operating costs, the legal and regulatory framework , and the social and environmental impact. A business plan for a solar farm would define the objectives and scope, the market and customer analysis, the technical and operational plan, the marketing and sales plan, the financial plan and cash flow , the organizational and governance structure, and the risk management and sustainability plan.

How to apply them to different types of businesses and projects - Feasibility study and business plan: Feasibility Study vs: Business Plan: Understanding the Difference

A feasibility study and a business plan are both essential tools for entrepreneurs who want to turn their ideas into reality . However, they serve different purposes and should not be confused with each other. A feasibility study is a preliminary analysis that evaluates the viability of a business idea, while a business plan is a comprehensive document that outlines the goals, strategies, and actions of a business. To make your feasibility study and business plan effective and successful, you should follow these tips and best practices :

- conduct a thorough market research . Before you start writing your feasibility study or business plan, you need to understand the market potential, customer needs, competitor strengths, and industry trends of your business idea. You can use various methods such as surveys, interviews, focus groups, online research, and observation to gather relevant data and insights. This will help you validate your assumptions, identify your target market , and assess the demand and profitability of your product or service.

- Define your value proposition and competitive advantage . A value proposition is a clear statement that explains how your product or service solves a customer problem, meets a need, or provides a benefit. A competitive advantage is a unique feature or benefit that sets your business apart from others in the market. You should articulate your value proposition and competitive advantage in your feasibility study and business plan, and demonstrate how they align with your market research and customer feedback . For example, if you are planning to open a vegan bakery, your value proposition could be "We offer delicious and healthy vegan baked goods that cater to the growing demand for plant-based food", and your competitive advantage could be "We use organic and locally sourced ingredients , and we have a loyal customer base from our online presence".

- set realistic and measurable goals and objectives. Your feasibility study and business plan should include specific, attainable, and quantifiable goals and objectives that reflect your vision and mission. goals are the long-term outcomes that you want to achieve, such as increasing sales, expanding market share , or improving customer satisfaction . Objectives are the short-term steps that you need to take to reach your goals, such as launching a new product, hiring more staff, or securing funding. You should also define the key performance indicators (KPIs) that will help you track and measure your progress and success . For example, if your goal is to increase sales, your objective could be "To sell 10,000 units of our new product in the first year", and your KPI could be "The number of units sold per month".

- Develop a realistic and detailed financial plan. A financial plan is a crucial component of your feasibility study and business plan, as it shows the expected costs and revenues of your business , and the projected cash flow and profitability . You should prepare a realistic and detailed financial plan that covers the following aspects: startup costs, operating costs, sales forecast, income statement, balance sheet, and break-even analysis. You should also include a sensitivity analysis that shows how your financial performance would change under different scenarios, such as changes in market conditions, customer demand, or pricing strategy. This will help you assess the financial feasibility and sustainability of your business, and identify the potential risks and opportunities.

- Seek feedback and revise accordingly. Before you finalize your feasibility study and business plan, you should seek feedback from various sources, such as potential customers, partners, investors, mentors, or experts. You should ask for honest and constructive feedback that can help you improve the quality and clarity of your documents, and address any gaps or weaknesses. You should also be open to revise your feasibility study and business plan based on the feedback, and update them regularly as your business evolves and grows. This will help you ensure that your feasibility study and business plan are accurate, relevant, and effective.

After comparing and contrasting the feasibility study and the business plan, we can draw some important conclusions and recommendations for entrepreneurs and investors. These are:

- A feasibility study is a preliminary analysis that evaluates the viability of a business idea or project before committing to a full-scale plan. It helps to identify the strengths, weaknesses, opportunities, and threats (SWOT) of the proposed venture, as well as the market demand, competition, costs, risks, and potential returns.

- A business plan is a comprehensive document that outlines the goals, strategies, and actions of a business, as well as the financial projections, marketing plan, and operational plan. It serves as a roadmap for the execution and management of the business, as well as a communication tool for attracting funding, partners, and customers.

- Both the feasibility study and the business plan are essential for the success of a business, but they serve different purposes and audiences. A feasibility study is more exploratory and tentative, while a business plan is more definitive and persuasive. A feasibility study is mainly for the benefit of the entrepreneur, while a business plan is mainly for the benefit of the investors and other stakeholders.

- Therefore, our recommendations are:

1. Conduct a feasibility study before writing a business plan, to ensure that your business idea or project is worth pursuing and has a reasonable chance of success.

2. Use the findings and recommendations of the feasibility study as the basis for developing your business plan , to ensure that your business plan is realistic, consistent, and aligned with your goals and vision.

3. Tailor your business plan to the specific needs and expectations of your target audience, to ensure that your business plan is clear, concise, and convincing.

For example, if you are planning to start a coffee shop, you should first conduct a feasibility study to assess the demand, competition, location, costs, and risks of your business idea. Based on the results, you can decide whether to proceed with the business plan or not. If you decide to proceed, you should use the feasibility study as a guide to develop your business plan , which should include your mission, vision, objectives, value proposition, market analysis, marketing strategy, operational plan, financial plan, and risk management plan . Depending on who you are presenting your business plan to, you should emphasize different aspects of your business, such as the market opportunity, the competitive advantage, the financial projections, or the social impact.

By following these steps, you can increase the chances of launching and running a successful business. We hope that this blog has helped you understand the difference between a feasibility study and a business plan, and how to use them effectively for your business venture. Thank you for reading and stay tuned for more insights and tips on entrepreneurship and business development .

Read Other Blogs

Visual PPC (Pay-Per-Click) advertising stands as a cornerstone in the digital marketing domain,...

One of the most important metrics for startups to track is the cost per session (CPS), which...

There are a few things you should know about venture capitalists before you start seeking their...

The balance sheet is a financial statement that provides a snapshot of what a company owns and...

The International Monetary Fund (IMF) is a pivotal institution in the global financial landscape,...

Ayurveda is an ancient system of holistic medicine that originated in India and has been practiced...

Private placements represent a cornerstone of startup funding, offering a unique avenue for...

1. The Power of Inclusion: Breaking Down Barriers In today's rapidly evolving business landscape,...

Navigating the complex landscape of regulations in the wellness industry requires a nuanced...

• [email protected]
• +234(0) 8105636015
• Business Plan

The Difference Between a Business Plan and a Feasibility Study

• October 24, 2023
• No Comments

Successful businesses don’t happen by chance; they are the result of careful planning and assessment. Whether you’re launching a startup or considering a new project, you need a roadmap that outlines your goals, strategies, and financial projections. This is where a business plan and a feasibility study come into play.

In this article, we will delve deep into the realms of business planning and feasibility analysis, exploring the crucial distinctions between these two fundamental tools.

Understanding Business Plans

Definition and Purpose

A business plan is a comprehensive document that outlines the objectives, strategies, and financial projections for your business. Its primary purpose is to provide a detailed roadmap for your company’s future. It acts as a strategic guide for entrepreneurs, investors, and stakeholders.

Components and Elements

Business plans typically consist of several key components, including:

• Executive Summary : A concise overview of the entire plan.
• Market Analysis : Research on the industry, competition, and target audience.
• Marketing Strategies : Detailed plans for branding, promotion, and sales.
• Financial Projections : Forecasts for income, expenses, and profitability.
• Operational Plan : Information on day-to-day operations and management structure.
• Risk Assessment : Identification and mitigation of potential risks.
• Exit Strategy : Plans for future expansion, sale, or closure.

Role in Business Operations

A business plan serves as a strategic document that guides your business operations. It provides clarity on your business model, goals, and how you intend to achieve them. Moreover, it is often a critical tool for attracting investors and securing financing.

Exploring Feasibility Studies

A feasibility study is a systematic analysis of the practicality and viability of a business idea. Its primary purpose is to determine whether a concept is achievable and sustainable. Feasibility studies are often conducted in the early stages of business development to assess the potential success of a project.

Key Components and Areas of Focus

Feasibility studies typically encompass the following key components:

• Market Research : Detailed analysis of the market, including target demographics, competition, and demand.
• Technical Feasibility : Evaluation of the project’s technical requirements and capabilities.
• Financial Feasibility : Assessment of the project’s financial viability, including cost estimates and revenue projections.
• Operational Feasibility : Examination of the logistical and operational aspects of the project.
• Legal and Regulatory Feasibility : Review of legal and regulatory requirements that may impact the project’s execution.
• Sensitivity Analysis : Testing various scenarios to assess the project’s adaptability to changing circumstances.

Determining Viability

A feasibility study is primarily concerned with determining the viability of a business idea. It helps answer critical questions, such as whether the project is financially feasible, whether the market will support it, and whether potential risks can be mitigated effectively.

Timing and Sequence

Chronological Order

One key difference between a business plan and a feasibility study is the chronological order in which they are typically created. Feasibility studies often precede the development of a business plan.

Why Feasibility Studies Come First

Feasibility studies are conducted early in the business development process to assess the viability of a concept before investing significant time and resources in a comprehensive business plan. If a feasibility study reveals that a project is not feasible, it can save a business from pursuing an unviable idea.

Data Collection and Analysis

Research and Data Collection

Both business plans and feasibility studies involve extensive research and data collection. However, the focus and purpose of this research differ.

Data Analysis in Business Plans

In business plans, data analysis is geared toward understanding the market, competition, and financial projections. It aims to provide a strategic direction for the business.

Data Analysis in Feasibility Studies

Feasibility studies conduct in-depth analysis, focusing on market research, technical feasibility, financial feasibility, and other areas to determine the practicality of a project. The goal is to evaluate whether the project is worth pursuing based on collected data and analysis.

Risk Assessment

Identifying and Mitigating Risks

Both business plans and feasibility studies address the critical aspect of risk assessment, but their approaches differ.

Risk Assessment in Business Plans

Business plans identify and outline potential risks but often focus on strategic plans to minimize and manage these risks.

Risk Assessment in Feasibility Studies

Feasibility studies dig deeper into the assessment of potential risks, challenges, and market uncertainties. They are essential for determining whether the project is too risky or whether risks can be effectively mitigated.

Financial Projections

Detailed Financial Forecasts

Both business plans and feasibility studies involve financial projections, but the depth of these projections varies.

Financial Projections in Business Plans

Business plans include detailed financial forecasts, such as income statements, balance sheets, and cash flow projections. These projections are integral for attracting investors and securing financing.

Financial Analysis in Feasibility Studies

Feasibility studies provide financial analysis that focuses on determining the project’s financial viability. They assess whether the project can be completed within budget and whether it has the potential to generate sufficient revenue to cover costs.

Market Analysis

In-Depth Market Assessment

Market analysis is an important aspect of both business plans and feasibility studies.

Market Analysis in Business Plans

Business plans provide an overview of the market, including target demographics, competition, and market size. Market analysis in business plans is often geared toward supporting sales and marketing strategies.

Market Analysis in Feasibility Studies

Feasibility studies conduct in-depth market research, delving into the specific needs of the target audience, competition, and market demand. The goal is to assess whether the market can support the project and whether it presents a viable opportunity.

Resource Allocation and Budgeting

Allocating Resources

Resource allocation and budgeting are considerations in both business plans and feasibility studies, but the focus varies.

Rea also: The difference between a traditional business plan and a lean startup plan

Resource Allocation in Business Plans

Business plans often include plans for allocating resources, such as staff, equipment, and capital. They outline budgetary requirements for various aspects of the business.

Resource Allocation in Feasibility Studies

Feasibility studies assess the resource requirements of the project and provide an estimate of the budget needed for project development. This information is essential for evaluating whether the project can be executed within the available resources.

Decision-Making Impact

Influencing Decisions

The outcomes of both business plans and feasibility studies have a significant impact on decision-making.

Impact of Feasibility Studies

Feasibility studies influence the decision to proceed with a business idea. If a feasibility study reveals insurmountable challenges, it may deter entrepreneurs from pursuing the project.

Role of Business Plans

Once a project is deemed feasible through the feasibility study, a business plan becomes the tool for executing the strategies and operations outlined in the feasibility study. It guides the day-to-day activities of the business.

Scalability and Adaptability

Adapting to Change

Scalability and adaptability are crucial aspects of both business plans and feasibility studies, but they approach change differently.

Scalability in Business Plans

Business plans may be less adaptable in the face of changing market conditions. They often represent a set path that the business intends to follow.

Adaptability in Feasibility Studies

Feasibility studies emphasize adaptability and flexibility. They recognize that market conditions can change rapidly, and the project may need to adapt to these changes to remain viable.

Integration for Success

The Synergy of Both Tools

While business plans and feasibility studies serve distinct purposes, they can complement each other effectively in the business development process.

How They Work Together

Business plans and feasibility studies work together to create a robust business strategy. The insights gained from the feasibility study can inform the development of a comprehensive business plan. The feasibility study’s findings on market viability, resource requirements, and potential risks can be integrated into the business plan’s strategies and financial projections.

Real-Life Examples

Learning from Successful Businesses

To illustrate the practical application of business plans and feasibility studies, let’s explore a few real-world case studies:

• Case Study 1: Tech Startup : A technology startup conducts a feasibility study to assess the demand for its innovative product. The study reveals strong market interest, leading the startup to create a business plan focused on market expansion and revenue growth.
• Case Study 2: Restaurant Chain : A restaurant chain plans to expand into a new region. A feasibility study helps determine the viability of the expansion, considering factors like competition and consumer preferences. Subsequently, the business plan outlines the specifics of the expansion, including location, marketing strategies, and financial projections.
• Case Study 3: Manufacturing Company : A manufacturing company conducts a feasibility study to explore the possibility of adopting new technology to improve efficiency. The study reveals that the technology is feasible and financially viable. A business plan is then developed to guide the implementation of the new technology, detailing the required resources and the expected impact on production.

“The Difference Between a Business Plan and a Feasibility Study” is not just a matter of paperwork; it’s a fundamental decision that can shape the future of your business. While both tools are critical, it’s essential to recognize their distinct purposes and when to employ them. The key is to leverage the insights from a feasibility study to inform the development of a robust business plan.

In your entrepreneurial journey, you may find that a hybrid approach that combines elements of both business plans and feasibility studies works best for your business. The critical factor is to maintain flexibility and be open to adjusting your planning strategy as your business evolves.

In summary, a feasibility study is the compass that guides you toward viable business concepts, while a business plan is the roadmap that leads you to your destination. Together, they form a powerful combination that can set your business on the path to success.

If you’re unsure about how to approach a feasibility study or develop a business plan for your specific business idea, seek professional guidance. Contact us at Dayo Adetiloye Business Hub via [email protected] or [email protected]. or give us a call at 08105636015, 08076359735 and 08113205312 to access expert assistance and take your business idea to the next level. Making the right decisions today can have a profound impact on the success of your business tomorrow.

Like this article?

Leave a comment

Leave a reply cancel reply.

Your email address will not be published. Required fields are marked *

DayoHub is an Human Capacity Development firm and a social enterprise that started in 2012 with focus on Vocational Training Services, broad consulting, implementation and design of customized/outreach training courses to governments, small businesses, civil society organizations, aid agencies, and individuals around the world seeking to improve their effectiveness and productivity.

Quick Links

Copyright 2024 dayo adetiloye business hub. all rights reserved.

Terms   |  Privacy

• Start Your Business
• Grow Your Business
• Business Ideas
• Business Plan Writing

The Difference Between A Feasibility Study And A Business Plan

Should you prepare a feasibility study report or a business plan? This is a question that is always asked by thousands of people daily. They want to prepare either of the two but classify both as the same without understanding the clear distinction between a feasibility study report and a business plan.

Feasibility study reports and business plans have different goals, although similar. One is more in-depth than the other, and the reasons for preparing each is partly different from the other.

While a feasibility study report and a business plan are both analysis and decision making tools, it is highly important to know the difference between a feasibility study report and a business plan at all times, as I have detailed below:

See Also:   The Difference Between A Business Plan And A Business Proposal

Reasons For A Feasibility Study Report

A feasibility study report is a document that is prepared after a feasibility study has been carried out. It contains in-depth analysis, projections, cost estimates, production requirements, production processes, and is the ultimate tool to determine whether a business should be started or not.

Since the feasibility study that’s first carried out is a comprehensive market research, its results will show the market size, their demographics, genders, age brackets, number of businesses operating in the industry, and much more.

These results are then put together in the report along with their cost projections, and will ultimately show whether the business is worth following through or not.

Feasibility Study Report Structure

A sample feasibility study report structure could look like the list below:

• Introduction
• Product or Service
• Market Environment
• Competition
• Business Model
• Market and Sales Strategy
• Production Operations Requirements
• Management and Personnel Requirements
• Regulations and Environmental Issues
• Critical Risk Factors
• Financial Projections

See Also:   How To Write A Feasibility Study Report In Nigeria Or Africa: The Complete Guide

Reasons For A Business Plan

A business plan is a strategy and tactical document that is prepared after a successful feasibility study has been carried out. It is written based on the results of a feasibility study, and focuses instead on how the business can achieve a successful market penetration and growth.

A business plan also contains financial projections, cash flow statements, balance sheets, profit and loss statements, break even analysis, and much more. It shows how profitable or not the business will be after acting on the results gotten from the feasibility study, and what it can do to either grow its revenues or change its focus to another industry.

Business Plan Structure

A sample business plan structure could look like the list below:

• Executive Summary
• Business Description
• Service or Product Line
• Market Analysis & Strategies
• Organization & Management
• Funding Request

See Also:   How To Write A Business Plan: The Complete Guide

What Then Do You Need?

If you know nothing about the business you intend to start, the first step is to prepare a feasibility study report after an extensive market research has been carried out. After which, you can go on to prepare a business plan, so you can show the growth, sustainability, and profit potential of the business you’ve set out to run.

See Also:   How to Choose A Business Plan Consultant

What are your thoughts on the difference between a feasibility study report and a business plan? Let me know by leaving a comment below.

Latest articles

How To Increase Your Profits With TradingView

How To Start A Lucrative Export of Limestone From Nigeria and Africa To International Buyers: The Complete Guide

How To Start A Lucrative Export of Calcium Carbonate From Nigeria and Africa To International Buyers: The Complete Guide

How To Start A Lucrative Calcium Carbonate Production and Supply Business In Nigeria and Africa: The Complete Guide

Related articles

How To Start A Lucrative Solar Energy Installation Business In Nigeria and Africa: The Complete Guide

How to start a lucrative ketchup production business in nigeria and africa: the complete guide, how to start a lucrative salt production business in nigeria and africa: the complete guide, 20 comments.

Until now,I always think that business plan and feasibility study report are the same. Thank you a million times for pointing out the difference to me. An eye opener I may say.Thanks once again.

Imeh Enuah.

I’m glad you found the article valuable, Imeh.

Do have a great time!

Thank you brother ❤️👍

Thanks for the effort but still not crystal clear to me…

Thank you for the comment, Victor.

Indeed they’re similar. But the simplest way to understand it is that “a feasibility study is first carried out and documented in a report before a business plan is written to show how you can execute your plans to take the market”.

Stan, even though we don’t go writing you for those your valuable articles, which are changing a lot of lives for good, mullions of people are there silently waiting to read your article everyday. Thanks for impacting knowledge and sharing those priceless write-ups.

Thank you for the kind words and for being a reader, Elvis.

Stan, this has cleared my inquisition on the differentiating factor between the two.

I’m glad you found the article valuable, Daniel.

Thank you for the comment.

Thanks a lot for the article. My position as a Consulting Executive in my previous employment taught me that in industry every feasibility studies is accompanied by a business plan all in one report.

Business plans usually standalone for only existing businesses which usually requires such things as a new marketing or market research, cashflow analysis and asset reappraisal.

Thank you for the contribution, Jeremiah.

Indeed a detailed feasibility report is an in-depth business plan.

What is the difference between a marketing plan and bussines plan

We’d still post an article about that.

Do look out for it on the blog.

Thank you for asking.

Very insightful to say the least. Well done sir!

Thank you for the kind words, Tobechi.

Indeed you are doing a great job.i feel so blessed and fortunate to have such unquontifiable opportunity of learning daily,God bless you, thanks.

Thank you for the kind words, Gideon.

Hello, I wanto prepare a feasibility study report for a potential investor I have a meeting with in another 2 weeks. How do I reach you and where do we start from?

Stan, this is lovely I think I have a better conclusion n knowledge. God bless you.

Thank you for reading, Obi.

Comments are closed.

Popular articles

How To Start A Lucrative Ram and Sheep Rearing Business In Nigeria and Arica: The Complete Guide

25+ Lucrative Telecom Business Ideas To Start in Nigeria or Africa

How To Start A Lucrative Hibiscus Farming Business in Nigeria and Africa: The Complete Guide

35+ Lucrative Small-Scale Manufacturing Business Ideas In Nigeria Or Africa

Recent Articles

Subscribe to get the latest news, offers and special announcements.

© Copyright 2023 - Startup Tips Daily Media

What is a Feasibility Study?

Steps in a feasibility study, contents of a feasibility report, types of feasibility study, more resources, feasibility study.

An assessment of the practicality of a proposed project/plan

A feasibility study, as the name suggests, is designed to reveal whether a project/plan is feasible. It is an assessment of the practicality of a proposed project/plan.

A feasibility study is part of the initial design stage of any project/plan. It is conducted in order to objectively uncover the strengths and weaknesses of a proposed project or an existing business. It can help to identify and assess the opportunities and threats present in the natural environment, the resources required for the project, and the prospects for success. It is conducted in order to find answers to the following questions:

• Does the company possess the required resources and technology?
• Will the company receive a sufficiently high return on its investment?

Conducting a feasibility study involves the following steps:

• Conduct preliminary analyses.
• Prepare a projected income statement . What are the possible revenues that the project can generate?
• Conduct a market survey. Does the project create a good or service that is in demand in the market? What price are consumers willing to pay for the good or service?
• Plan the organizational structure of the new project. What are the staffing requirements? How many workers are needed? What other resources are needed?
• Prepare an opening day balance of projected expenses and revenue
• Review and analyze the points of vulnerability that are internal to the project and that can be controlled or eliminated.
• Decide whether to go on with the plan/project.

A feasibility report should include the following sections:

• Executive Summary
• Description of the Product/Service
• Technology Considerations
• Product/ Service Marketplace
• Identification of the Specific Market
• Marketing Strategy
• Organizational Structure
• Financial Projections

1. Technical feasibility

• Technical: Hardware and software
• Existing or new technology
• Site analysis
• Transportation

2. Financial feasibility

• Initial investment
• Resources to procure capital: Banks, investors, venture capitalists
• Return on investment

3. Market feasibility

• Type of industry
• Prevailing market
• Future market growth
• Competitors and potential customers
• Projection of sales

4. Organizational feasibility

• The organizational structure of the business
• Legal structure of the business or the specific project
• Management team’s competency, professional skills, and experience

The practice of companies blindly following available templates comes with enormous risks. Whether companies design or copy certain business models, it is necessary to conduct a feasibility study using models to reduce the risk of failure. A feasibility study of the business model should be centered on the organization’s value-creation processes.

Thank you for reading CFI’s guide on Feasibility Study. To keep learning and advancing your career, the additional CFI resources below will be useful:

• Cross-Sectional Data Analysis
• Financial Statements Examples – Amazon Case Study
• Market Planning
• See all management & strategy resources

• Share this article

Create a free account to unlock this Template

Access and download collection of free Templates to help power your productivity and performance.

Already have an account? Log in

Supercharge your skills with Premium Templates

Take your learning and productivity to the next level with our Premium Templates.

Upgrading to a paid membership gives you access to our extensive collection of plug-and-play Templates designed to power your performance—as well as CFI's full course catalog and accredited Certification Programs.

Already have a Self-Study or Full-Immersion membership? Log in

Access Exclusive Templates

Gain unlimited access to more than 250 productivity Templates, CFI's full course catalog and accredited Certification Programs, hundreds of resources, expert reviews and support, the chance to work with real-world finance and research tools, and more.

Already have a Full-Immersion membership? Log in

Feasibility Study vs Business Plan Similarities And Differences

Feasibility Study vs Business Plan

Setting up a business enterprise can present a lot of challenges for the entrepreneur. The preliminary stage which involves a lot of brainstorming often gets down to preparing two important documents: the feasibility study and the business plan, both of which are quite indispensable if you’re considering starting a business, and doing it properly.

The possibility of success in a venture predicates upon the proper delivery of these documents, which should be written after conducting careful research and critical analysis, and conveyed in formats that others can understand, because you might want to seek for funds or investors, or even solicit for a loan, and so won’t be the only person reading them.

It, therefore, becomes needful for any entrepreneur to be able to distinguish between a feasibility study and a business plan, to know how to go about creating them.

What is a feasibility study?

As the name implies, a feasibility study is an analysis of the viability of an idea. Feasibility studies help answer the essential question, “Should we proceed with the proposed idea?” The objective study may be completed in conjunction with a SWOT planning process, which looks at the strengths, weaknesses, opportunities, and threats that may be present externally (the environment) or internally (resources).

Feasibility studies help determine: a) does the company possess the required resources or technologies, and b) does the proposal offer a reasonable return vs. risk from the investment.

So a feasibility study lets you know whether the idea you have for a business is worth the time, effort, and money you are willing to invest in it. It’s just like asking yourself, “Is it advisable that I go into this business?”.

While you might be able to conduct this study yourself, it would be more productive and prudent to get the contributions of different professionals such as accountants, entrepreneurs who have opened successful businesses, and realtors who can advise you on the worth of the location and pricing (values you would need in costing and price estimation), comparing similar businesses in the location where you wish to set up your enterprise.

What is a Business Plan?

A business plan “is a written document describing the nature of the business, the sales and marketing strategy, and the financial background, and containing a projected profit and loss statement”.

A business plan is also a road map that provides directions so a business can plan its future and helps it avoid bumps in the road. The time you spend making your business plan thorough and accurate and keeping it up-to-date is an investment that pays big dividends in the long term.

The business plan comes after you have conducted a proper feasibility study and ascertained that your idea is worth going “all out for”. So creating a business plan is like saying, “Yes I’m convinced about the profitability of this idea. This is how I intend to make it profitable”.

Every business is established for the sole purpose of making a profit. If profiting is not the goal, then it is no business, but rather a non-profit organization. Hence details of how a business will operate and make a profit are contained in the business plan.

This is where you’re going to spell out your financial and other objectives, the methods you plan to use to achieve them, and your proposed organizational structure.

Now, let’s look at what makes a feasibility study and a business plan appear similar.

Similarities between feasibility study and business plan

Comparing the similarities between a feasibility study and a business plan is important because both are used in different ways to help you create a profitable business. Similarities between the two documents include:

Timing : Both are done in the beginning before the work opens, and can be done again later to define the next steps for future ideas.

Inputs : They both involve input from multiple individuals or departments with different skills.

Format : Both contain other documents that are grouped to create the report.

Components : Some of the issues analyzed are similar, including examining the target market, market conditions, and financial costs.

Use : Both help the management of the organization in making decisions, and they can also be shown to potential investors.

By now you should have a considerable understanding of how a feasibility study differs from a business plan. But to expound your knowledge it would do to know what the varying components are.

Purpose : While a feasibility study determines the viability of a business idea, a business plan comes after the decision has been made to go ahead with the business.

Methodology : In essence, a feasibility study is based significantly on research, while a business plan makes projections into the future.

Risks : A feasibility study ascertains the risks associated with the idea, whereas a business plan explains how these risks will be dealt with to ensure that the business makes the desired profit.

Cost : A feasibility study can require hiring professionals with expertise who will conduct thorough studies, whereas a business plan may be written by employees of the business, as part of their jobs.

How do you conduct a Feasibility Study?

If you’re doing the feasibility study yourself, conduct a complete competitive analysis considering the following outlines:

Product demand: Is there a need or want for your product or service? Is the need already being met, or is there room for another product?

Market conditions : Who would buy your product and where are they? Can you serve their location? Is the market saturated, or is there room/need for more products?

Pricing : What do current users pay for similar products? What do you need to charge so that you will be profitable, and will consumers pay your price?

Risks : What are the risks associated with your idea?

Probability of Success : Can you reasonably overcome the risks to become profitable?

• Shea Butter Production In Nigeria 2021 Business Plan

Writing a Business Plan?

Writing a business plan may seem daunting, but if you take it step-by-step, it will come to fruition. The Small Business Administration advises that business plans should include the following:

Executive Summary : Include your mission statement, products and or services, some brief information about your leadership team and key employees, as well as the location of your business. To attract investors, add current financial information and projections for growth.

Company description : Detail the problems your business solves; its target market; its competitive advantages, compared with the competition, and anything else that makes your company superior to others: i.e., product awards or recognition, big increases in sales, and so on.

Market analysis : Perform competitive research of what other businesses are doing; their strengths and weaknesses, and how and why your business will be competitive and successful in the market.

Organization or management : State the legal status of your business, such as a corporation or partnership, and include an organizational chart showing management levels, departments, and so on.

Service or product line : State what you will sell or provide and describe the benefits of each. Explain any research done, and any patents filed, and so on.

Marketing and sales : Explain in detail your marketing strategy and how sales will be made.

Funding request : If you are going to be requesting do fund, detail the amount of funding you’ll need for the next five years – specifically, what you’ll do with the funds, and the terms you’re asking for.

Financial projections : This is the business’s financial outlook for the next five years. Include current financial statements, if the business is in operation.

Appendix : This includes supporting documents or requested materials, such as resumes, product photos, letters of reference, patents, licenses, and so on.

In conclusion, it should be obvious by now that a feasibility study and a business plan cannot substitute for each other, and both exist as essential planning documents for successful businesses. If you have the intention of preparing any or both of these documents, it is advisable to seek the aid of a professional writer wherever you might encounter difficulties.

Leave a Comment Cancel reply

Save my name, email, and website in this browser for the next time I comment.

• Search Search Please fill out this field.

What Is a Feasibility Study?

Understanding a feasibility study, how to conduct a feasibility study, the bottom line.

• Business Essentials

Feasibility Study

Yarilet Perez is an experienced multimedia journalist and fact-checker with a Master of Science in Journalism. She has worked in multiple cities covering breaking news, politics, education, and more. Her expertise is in personal finance and investing, and real estate.

A feasibility study is a detailed analysis that considers all of the critical aspects of a proposed project in order to determine the likelihood of it succeeding.

Success in business may be defined primarily by return on investment , meaning that the project will generate enough profit to justify the investment. However, many other important factors may be identified on the plus or minus side, such as community reaction and environmental impact.

Although feasibility studies can help project managers determine the risk and return of pursuing a plan of action, several steps should be considered before moving forward.

Key Takeaways

• A company may conduct a feasibility study when it’s considering launching a new business, adding a new product line, or acquiring a rival.
• A feasibility study assesses the potential for success of the proposed plan or project by defining its expected costs and projected benefits in detail.
• It’s a good idea to have a contingency plan on hand in case the original project is found to be infeasible.

Lara Antal / Investopedia

A feasibility study is an assessment of the practicality of a proposed plan or project. A feasibility study analyzes the viability of a project to determine whether the project or venture is likely to succeed. The study is also designed to identify potential issues and problems that could arise while pursuing the project.

As part of the feasibility study, project managers must determine whether they have enough of the right people, financial resources, and technology. The study must also determine the return on investment, whether this is measured as a financial gain or a benefit to society, the latter in the case of a nonprofit project.

The feasibility study might include a cash flow analysis, measuring the level of cash generated from revenue vs. the project’s operating costs . A risk assessment must also be completed to determine whether the return is enough to offset the risk of undergoing the venture.

When doing a feasibility study, it’s always good to have a contingency plan that is ready to test as a viable alternative if the first plan fails.

Benefits of a Feasibility Study

There are several benefits to feasibility studies, including helping project managers discern the pros and cons of undertaking a project before investing a significant amount of time and capital into it.

Feasibility studies can also provide a company’s management team with crucial information that could prevent them from entering into a risky business venture.

Such studies help companies determine how they will grow. They will know more about how they will operate, what the potential obstacles are, who the competition is, and what the market is.

Feasibility studies also help convince investors and bankers that investing in a particular project or business is a wise choice.

The exact format of a feasibility study will depend on the type of organization that requires it. However, the same factors will be involved even if their weighting varies.

Preliminary Analysis

Although each project can have unique goals and needs, there are some best practices for conducting any feasibility study:

• Conduct a preliminary analysis, which involves getting feedback about the new concept from the appropriate stakeholders.
• Analyze and ask questions about the data obtained in the early phase of the study to make sure that it’s solid.
• Conduct a market survey or market research to identify the market demand and opportunity for pursuing the project or business.
• Write an organizational, operational, or business plan, including identifying the amount of labor needed, at what cost, and for how long.
• Prepare a projected income statement, which includes revenue, operating costs, and profit .
• Prepare an opening day balance sheet .
• Identify obstacles and any potential vulnerabilities, as well as how to deal with them.
• Make an initial “go” or “no-go” decision about moving ahead with the plan.

Suggested Components

Once the initial due diligence has been completed, the real work begins. Components that are typically found in a feasibility study include the following:

• Executive summary : Formulate a narrative describing details of the project, product, service, plan, or business.
• Technological considerations : Ask what will it take. Do you have it? If not, can you get it? What will it cost?
• Existing marketplace : Examine the local and broader markets for the product, service, plan, or business.
• Marketing strategy : Describe it in detail.
• Required staffing : What are the human capital needs for this project? Draw up an organizational chart.
• Schedule and timeline : Include significant interim markers for the project’s completion date.
• Project financials
• Findings and recommendations : Break down into subsets of technology, marketing, organization, and financials.

Examples of a Feasibility Study

Below are two examples of a feasibility study. The first involves expansion plans for a university. The second is a real-world example conducted by the Washington State Department of Transportation with private contributions from Microsoft Inc.

A University Science Building

Officials at a university were concerned that the science building—built in the 1970s—was outdated. Considering the technological and scientific advances of the last 20 years, they wanted to explore the cost and benefits of upgrading and expanding the building. A feasibility study was conducted.

In the preliminary analysis, school officials explored several options, weighing the benefits and costs of expanding and updating the science building. Some school officials had concerns about the project, including the cost and possible community opposition. The new science building would be much larger, and the community board had earlier rejected similar proposals. The feasibility study would need to address these concerns and any potential legal or zoning issues.

The feasibility study also explored the technological needs of the new science facility, the benefits to the students, and the long-term viability of the college. A modernized science facility would expand the school’s scientific research capabilities, improve its curriculum, and attract new students.

Financial projections showed the cost and scope of the project and how the school planned to raise the needed funds, which included issuing a bond to investors and tapping into the school’s endowment . The projections also showed how the expanded facility would allow more students to be enrolled in the science programs, increasing revenue from tuition and fees.

The feasibility study demonstrated that the project was viable, paving the way to enacting the modernization and expansion plans of the science building.

Without conducting a feasibility study, the school administrators would never have known whether its expansion plans were viable.

A High-Speed Rail Project

The Washington State Department of Transportation decided to conduct a feasibility study on a proposal to construct a high-speed rail that would connect Vancouver, British Columbia, Seattle, Washington, and Portland, Oregon. The goal was to create an environmentally responsible transportation system to enhance the competitiveness and future prosperity of the Pacific Northwest.

The preliminary analysis outlined a governance framework for future decision making. The study involved researching the most effective governance framework by interviewing experts and stakeholders, reviewing governance structures, and learning from existing high-speed rail projects in North America. As a result, governing and coordinating entities were developed to oversee and follow the project if it was approved by the state legislature.

A strategic engagement plan involved an equitable approach with the public, elected officials, federal agencies, business leaders, advocacy groups, and Indigenous communities. The engagement plan was designed to be flexible, considering the size and scope of the project and how many cities and towns would be involved. A team of the executive committee members was formed and met to discuss strategies, as well as lessons learned from previous projects, and met with experts to create an outreach framework.

The financial component of the feasibility study outlined the strategy for securing the project’s funding, which explored obtaining funds from federal, state, and private investments. The project’s cost was estimated to be $24 billion to $42 billion. The revenue generated from the high-speed rail system was estimated to be $160 million to $250 million.

The report bifurcated the money sources between funding and financing. Funding referred to grants, appropriations from the local or state government, and revenue. Financing referred to bonds issued by the government, loans from financial institutions, and equity investments, which are essentially loans against future revenue that need to be paid back with interest.

The sources for the capital needed were to vary as the project moved forward. In the early stages, most of the funding would come from the government, and as the project developed, funding would come from private contributions and financing measures. Private contributors included Microsoft Inc., which donated more than $570,000 to the project.

The benefits outlined in the feasibility report show that the region would experience enhanced interconnectivity, allowing for better management of the population and increasing regional economic growth by $355 billion. The new transportation system would provide people with access to better jobs and more affordable housing. The high-speed rail system would also relieve congested areas from automobile traffic.

The timeline for the study began in 2016, when an agreement was reached with British Columbia to work together on a new technology corridor that included high-speed rail transportation. The feasibility report was submitted to the Washington State Legislature in December 2020.

What Is the Main Objective of a Feasibility Study?

A feasibility study is designed to help decision makers determine whether or not a proposed project or investment is likely to be successful. It identifies both the known costs and the expected benefits.

In business, “successful” means that the financial return exceeds the cost. In a nonprofit, success may be measured in other ways. A project’s benefit to the community it serves may be worth the cost.

What Are the Steps in a Feasibility Study?

A feasibility study starts with a preliminary analysis. Stakeholders are interviewed, market research is conducted, and a business plan is prepared. All of this information is analyzed to make an initial “go” or “no-go” decision.

If it’s a go, the real study can begin. This includes listing the technological considerations, studying the marketplace, describing the marketing strategy, and outlining the necessary human capital, project schedule, and financing requirements.

Who Conducts a Feasibility Study?

A feasibility study may be conducted by a team of the organization’s senior managers. If they lack the expertise or time to do the work internally, it may be outsourced to a consultant.

What Are the 4 Types of Feasibility?

The study considers the feasibility of four aspects of a project:

Technical : A list of the hardware and software needed, and the skilled labor required to make them work

Financial : An estimate of the cost of the overall project and its expected return

Market : An analysis of the market for the product or service, the industry, competition, consumer demand, sales forecasts, and growth projections

Organizational : An outline of the business structure and the management team that will be needed

Feasibility studies help project managers determine the viability of a project or business venture by identifying the factors that can lead to its success. The study also shows the potential return on investment and any risks to the success of the venture.

A feasibility study contains a detailed analysis of what’s needed to complete the proposed project. The report may include a description of the new product or venture, a market analysis, the technology and labor needed, and the sources of financing and capital. The report will also include financial projections, the likelihood of success, and ultimately, a “go” or “no-go” decision.

Washington State Department of Transportation. “ Ultra-High-Speed Rail Study .”

Washington State Department of Transportation. “ Cascadia Ultra High Speed Ground Transportation: Framework for the Future .”

Washington State Department of Transportation. “ Ultra-High-Speed Rail Study: Outcomes .”

Washington State Department of Transportation. “ Ultra-High-Speed Ground Transportation Business Case Analysis ,” Page ii (Page 3 of PDF).

• Terms of Service
• Editorial Policy
• Privacy Policy

Difference Between Feasibility Study, Business Plan, And Business Proposal

Here is the difference between a feasibility study report and a business plan ? Can a feasibility study report be converted to a business plan? Find out.

DIFFERENCE BETWEEN FEASIBILITY STUDY AND BUSINESS PLAN SAMPLE

In the course of the article, we will be highlighting the major differences between business plan, business proposal and feasibility study .

RELATIONSHIP BETWEEN FEASIBILITY STUDY AND BUSINESS PLAN AND PROPOSAL

Need to write a plan for your venture? Download a FREE Business Plan PDF Sample to develop a template for your own startup.

A business plan, business proposal and a feasibility study are all analysis and tools utilised for decision making by organizations.

In as much as the 3 tools can be utilised alongside one another in decision making processes, they have their differences and they seem to target and tackle different processes.

DEFINITIONS

WHAT IS A BUSINESS PLAN?

A business plan can be considered to be that document that highlights a concise description of how a business is established. The business plan is usually a 5-year plan of a particular business and it shows the company structure, market finding and analysis, products and services, marketing strategy and financial projections.

WHAT IS A BUSINESS PROPOSAL?

A business proposal can be considered to be a sales document that is drafted to highlight how a particular project will be carried out, estimate the value of the project to the client and then seeks the client’s involvement in the business. The business proposal is usually document that an organization submits to another organization to effect a business arrangement.

WHAT IS A FEASIBILITY STUDY

A feasibility study is considered to be that document that is drafted with the purpose of finding out how workable and profitable a business venture will be. Before any action is taken in a business, it is the feasibility study that will determine if the business will be worth the time, resources and efforts.

COMPARING BUSINESS PLAN VS FEASIBILITY STUDY

The differences between a business plan, business proposal and feasibility study can be categorised into 2

• The reason or purpose of the write-up
• The structure or element of the write-up

DIFFERENCES IN TERMS OF REASONS OR PURPOSE

REASONS FOR A BUSINESS PLAN

A reason why a business plan is written out in a business is to to document the vision of the business and the steps that will be taken to accomplish the vision. A typical business plan will contain the financial projections of the cost of the business and also give an estimation of the revenues that the business will generated.

The purpose of the business plan is to provide a concise explanation of the business to be utilised by the potential investors, employees, suppliers, attorneys, accountants and any other set of people that will need a quick and comprehensive knowledge of what the organization does and its ability to achieve success

REASON FOR A BUSINESS PROPOSAL

A business proposal, most of the times, is an unsolicited business ideas that is presented to another business entity or they may be a response to requests made by a potential client to your company. The scope of a business proposal is quite limited to a particular project. In fact, we can say the major reason for a business proposal is to request for a business opportunity.

REASON FOR A FEASIBILITY STUDY

Feasibility is most of the times carried out with the purpose of finding out the profitability and workability of a business idea. Unlike a business plan, a feasibility study is always filled with calculations and estimated projections for a project.

DIFFERENCES IN TERMS OF STRUCTURE

STRUCTURE OF A BUSINESS PLAN

A business plan comprises of 3 major elements:

• A detailed description of the business model
• The marketing model
• And the financial projection

Other information sections of the business plan will include the executive summary, description of the business, competitive analysis, marketing model, operations plan, financial information and projections. These are the structures of a typical business plan

STRUCTURE OF A BUSINESS PROPOSAL

A business proposal that is written as a response to an RFP must follow the format that is requested in the RFP. The structure of the business proposal will involve a description of the services your company renders that are relevant to the goals that are specified in the RFP.

Your business proposal will also comprise of the answers to the specific questions that are asked in the RFP and a quote on the information about the materials, labour, tools, delivery and other costs that will be incurred in the course of the project.

STRUCTURE OF A FEASIBILITY STUDY

The activities for creating the feasibility study for a business venture are general in nature and are quite applicable to all kinds of businesses or projects irrespective of the technicalities involved in the running of the project.

The basic structures of a feasibility study will be:

• The scope of the project, which will be used to describe the problems of the business and the opportunities
• The current analysis is used to understand the current methodologies that will be utilised in the implementation of the project.
• The requirements of the projects. These depend on the object of the project’s attention
• The approach can be considered to be the prescribed solution to satisfy the requirement. On the approach, various alternatives can be considered and detailed explanations on why the solution is preferred to other solutions highlighted.
• Evaluation will examine the cost efficiency of the approach that is selected. This starts with the analysis of the estimated cost of the entire project.
• Review is then done to assemble all the elements into the feasibility study. The review has two different purposes.
• To initiate a project decision, which will be either to approve or reject the project or better still, ask that the project be revised before a final decision is made
• To ensure that the feasibility study is thorough and accurate.

Leave a Comment Cancel reply

Difference Between a Feasibility Study Report and a Business Plan

By: Author Tony Martins Ajaero

Home » Starting a Business » Conduct Feasibility Study

Is a feasibility report the same as a business plan? What’s the difference between a feasibility study report and a business plan? Can a feasibility report be converted to a small business plan?

One of the ways to ensure that you start your business on a promising note is to make sure you have a workable business plan and you also have a comprehensive feasibility study report. With that in place, you will be able to predict how the business will perform in one, two, three years, and beyond.

In this article, we will look at the difference between a feasibility study report and a business plan. We will also look at how you can use these business documents to your advantage if you plan to start a business or if you want to scale up your business.

What is a Feasibility Study Report?

A feasibility report is a report that assesses a group of potential project pathways or solutions to see if they are viable. The person who writes a feasibility report assesses the feasibility of several ideas and then makes a suggestion for the best alternative.

Companies frequently face difficulties that can be solved using a variety of approaches, and it is critical that they select the optimal one. A feasibility report can assist you in evaluating the viability of several options in order to select the best one. If your organization wants to determine the best path for a project or solution to an issue, knowing how to write a feasibility report can help.

What is a Business Plan?

A business plan is an outline of the strategy of a business that outlines its goals and plans for accomplishing them. It includes a go-to-market strategy, financial estimates, market research, a corporate purpose, and a mission statement. Schedule and key personnel accountable for completing the goals may also be mentioned in the business plan.

A business plan serves three functions: It summarizes the organization’s strategy in order to execute it over time, attracts funding from investors, and assists in forecasting future business demands.

Please keep in mind that there is no one-size-fits-all business plan because there are so many different enterprises on the market today. Every organization, from startups with just one founder to historic household names, requires a business plan.

What are the Differences Between a Feasibility Study Report and a Business Plan?

1.  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.

On the other hand, a business plan is developed only after it has been established that a business opportunity exist and the venture is about to commence. This simply means that a business plan is prepared after a feasibility study has been conducted.

2.  A feasibility report is filled with calculations, analysis and estimated projections of a business opportunity. While a business plan is made up of mostly tactics and strategies to be implemented in other to start and grow the business.

3.  A feasibility study is all about business idea viability while a business plan deals with business growth plan and sustainability.

4.  A feasibility study report reveals the profit potential of a business idea or opportunity to the entrepreneur, while a business plan helps the entrepreneur raise the needed startup  capital from investors.

5. A feasibility study report is used to determine the sustainability of a company idea or project before launching it, whereas a business plan is used to explain the strategy and operations of an existing or new business.

6. A feasibility study report focuses on one aspect of a business idea or project, such as market analysis, technical feasibility, financial feasibility, or organizational feasibility, whereas a business plan covers a broader range of topics, such as market research, marketing strategy, operations plan, financial projections, and management structure.

7. A feasibility study report is normally written for internal use by the business owner, stakeholders, or investors to assess the possible risks and rewards of a business idea or project, whereas a business plan is typically prepared for external use in order to attract finance, partners, or customers.

8. A feasibility study report may be more informal and structured as a report or presentation, whereas a business plan is often more formal and structured as a written document with a defined format.

9. A feasibility study report is normally produced before a business plan and may take less time to complete, but a business plan is an ongoing document that is updated on a regular basis to reflect changes in the business environment.

It’s also worthwhile to know that a feasibility report can readily be converted to a business plan. To achieve this, all you need to do is incorporate your business strategies and tactics into the feasibility report; and you are good to go.

In conclusion,

Paying attention to these two key business documents (Feasibility Study Report and Business Plan) is what is expected of every entrepreneur or investor who truly wants to become successful with their business.

As a matter of fact, we usually advise entrepreneurs to hire business consultants who are specialized in writing Feasibility Studies and Business Plans to help them prepare a workable document (Feasibility Study Report and Business Plan). With that, you can be assured that your business will be starting on the right footing.

Related Posts:

• How to Do Feasibility Study for a Business and Write a Report
• 10 Factors to Consider When Choosing a Business Location
• 5 Conditions That Makes a Business Opportunity Feasible
• A Sample Template for Conducting Business Risk Assessment
• 10 Ways Socio–Cultural Factors Affect Business

What Is a Feasibility Study: Step-by-Step Guide

Key takeaways What is a feasibility study? A feasibility study is an analytical tool used to evaluate the practicality of a proposed project or business idea. It assesses various factors such as financial viability, technical requirements, legal constraints, and market demand. The study aims to answer the question “Are the goals of this project realistically…

Reviewed by

Technology Advice is able to offer our services for free because some vendors may pay us for web traffic or other sales opportunities. Our mission is to help technology buyers make better purchasing decisions, so we provide you with information for all vendors — even those that don’t pay us.

Published Date:

Table Of Contents

Share this article

Key takeaways

• A feasibility study is an essential analytical tool that evaluates the viability of a proposed project on multiple fronts, such as financials, technical requirements, and market demand.
• Conducted during the project initiation phase, this type of study serves as an early checkpoint to identify potential roadblocks and assess risks.
• Feasibility studies act as the first line of defense against project failure, saving time, money, and resources.

What is a feasibility study?

A feasibility study is an analytical tool used to evaluate the practicality of a proposed project or business idea. It assesses various factors such as financial viability, technical requirements, legal constraints, and market demand. The study aims to answer the question “Are the goals of this project realistically attainable?” by examining data, studies, and other relevant information.

A feasibility study is a crucial step to take before diving into any project and is generally performed during the project initiation phase of project management . It helps identify potential roadblocks, assess risks, and estimate resource allocation; skipping this step can lead to project failure, wasted resources, and financial losses.

Feasibility studies represent one of the many intricacies of project planning . Understanding the other requirements of this crucial step can give you a well-rounded view of how to set your project up for success.

Steps to conduct a feasibility study

Successfully executing a project hinges on thorough planning and risk assessment. Following this step-by-step guide for conducting a feasibility study will help you meticulously evaluate the viability of your project from the outset.

Step 1: Conduct preliminary analysis

This is where you take a good, hard look at your project to determine whether it’s worth pursuing. At this stage, you should also decide if a more detailed feasibility study is necessary.

A few key criteria usually come into play during this initial assessment. First, consider a general sense of the market demand for your project, the resources you have at your disposal, and some ballpark figures for initial costs. If it’s difficult to get clear estimates, it may be worthwhile to invest additional time and resources in a more comprehensive feasibility study. If no significant roadblocks pop up in this preliminary analysis, then you have the green light to proceed.

Some project management software includes useful features that can help you efficiently collect and organize all this data. These features can be very helpful in decision-making, especially when you’re looking at multiple variables.

Step 2: Create a projected income statement

This vital component of the feasibility study involves forecasting the income, expenses, and profitability associated with the proposed project. The projected income statement is akin to peering into a financial crystal ball to see how the numbers might align.

There are several approaches you can take to assess a project’s financial impact. Historical data and industry benchmarks, for example, can serve as reliable guides. These projections are important for assessing financial feasibility and making informed decisions.

The significance of these forecasts cannot be overstated — they help stakeholders understand the project’s potential ROI and ultimately make the go/no-go decision for the project.

Step 3: Survey the market

The market survey stage involves rolling up your sleeves to gather valuable data and insights about your target market(s) and audience(s). Think of it as your project’s reconnaissance mission: You’re scouting the terrain to understand what you’re getting into.

To start, you’ll want to learn your customers’ preferences to see if your project will fulfill a need or solve a problem they currently face. For example, a software company’s research might reveal customer demand for a new feature that aligns with the project’s goals.

Also consider if your project is timely and whether it will make a significant impact now or in the near future, depending on emerging market trends. It may be useful to conduct competitor research as well; knowing what and who you’re up against can help stakeholders decide whether you should move forward with the project and, if so, how you will approach it.

Surveys and interviews are ideal for firsthand quantitative and qualitative data. However, don’t underestimate the power of existing market reports. This preexisting data can offer a broad market landscape view, helping you make data-driven decisions. You can also leverage other research and data collection methods, such as focus groups and publicly available databases like Statista and the U.S. Census Bureau .

Step 4: Review and analyze the data

With all of the necessary information in hand, use tools like a SWOT analysis to evaluate the project’s strengths, weaknesses, opportunities, and threats. A risk assessment is another go-to method that can help you identify potential pitfalls that could derail your project.

At this point in the feasibility study, weigh key metrics and indicators like projected ROI, milestone dates, market penetration rates, and possible vulnerabilities. These gauges, when reviewed in tandem, paint a broader picture of your project’s viability and value.

Step 5: Determine the next steps

Use your research-backed analysis to decide whether the project you’ve proposed is the best way to address the problems it intends to address. If the metrics are favorable and the risks are manageable, you should feel confident advancing to the planning phase. Too many red flags, however, may mean you need to go back to the drawing board.

Here’s a little tech tip to make this decision easier: Many project management software dashboards can compile your key metrics and findings neatly in one visual package. It’s like having a project feasibility snapshot right at your fingertips, which makes it much easier for stakeholders to understand important data and make informed decisions.

Types of feasibility studies

There are different types of feasibility studies that each focus on a unique aspect of projects and project planning . By understanding the nuances of each, you’ll become better equipped to make well-informed decisions, mitigate risks, and ultimately steer your project toward success.

Technical feasibility

Technical feasibility digs into the nuts and bolts of the project. You’re looking at what kind of technology you’ll need, whether it’s available, and if it can be integrated into your current systems. It’s like checking if you have all the ingredients you need before cooking a specific recipe.

Economic feasibility

This study is all about the money — how much the project will cost and what kinds of economic or profitability benefits it will bring forth. With an economic feasibility study, you’re most often doing a cost-benefit analysis to see if the financials add up in your favor. It’s like weighing the pros and cons but in dollar signs. 

Legal feasibility

This is your legal checkpoint. You’re looking at any laws or regulations that might create risks or restrict your project. This feasibility study could also involve checking compliance with industry-specific or regional regulations.

Operational feasibility

An operational feasibility study will help you see how the project fits into your current operations and operational goals and resources. After completing this type of study, you should know if your project will require new workflows and if your team can handle project tasks alongside their current workloads.

This study also evaluates whether the organization has the expertise to accomplish all project goals.

Scheduling feasibility

This feasibility study is all about time. You’re considering how long the project will take and whether you can afford any delays. Gantt charts , a feature commonly found in project management software, can be convenient in this type of study.

These visual timelines allow you to map out the entire project schedule, set milestones, and identify potential bottlenecks. You can also easily see if your project’s timeline is realistic or if you need to make adjustments to avoid delays.

Feasibility study examples

Feasibility studies add value to the project lifecycle across diverse industries. With each of these examples, the feasibility study is a critical preliminary step to identify potential roadblocks and assess the likelihood of project success.

Construction

A construction project feasibility study might focus on land evaluation, zoning laws, and material costs to determine if a new housing development is viable. In this example, the study helps avoid legal snags and ensure profitable land use.

A healthcare feasibility study may assess the demand for a new medical facility in a specific location by looking at factors like local population health statistics and existing healthcare infrastructure. This type of research helps determine whether a new facility would serve the community appropriately and utilize resources effectively.

Information technology

An IT feasibility study might analyze the technical requirements, cost, and market demand for a new software application to understand whether the development effort would offer a reasonable return on investment. This information helps project teams avoid sinking time and money into software that no one wants or needs.

Free feasibility study template

Download our feasibility study template for free:

Why are feasibility studies crucial in project management?

In project management, feasibility studies help you gauge whether your project is a go or a no-go, saving you time, money, and a lot of headaches in the long run. But it’s not just about giving your project a thumbs-up or down.

Feasibility studies are also invaluable for decision-making and risk assessment. They provide the data and insights you need to make informed choices. Whether it’s deciding on the project scope, budget, or timeline, these studies offer a comprehensive view of what you’re up against.

Plus, feasibility studies help you identify potential roadblocks and risks, allowing you to prepare effective contingency plans. Operating with a feasibility study as your project’s foundation is like giving your team both a roadmap and a weather forecast to help you better navigate your project journey.

Featured Partners Featured Partners

Related Posts

Top API Integration Platforms for 2024

Best Field Service Management Software for Small Business

What are the 5 V’s of Big Data?

Join 10,000 Project Management Insider readers and start getting the latest on weekly PM industry news, guides, and resources.

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
• Market Environment
• Competition
• 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.

Related Articles:

• Top 30 Links for the Successful Entrepreneur
• Top 10 Companies Code of Ethics and Conduct
• Top 10 Company Mission Statements
• How to Conduct a Feasibility Study
• How to Create a Business Plan
• Business Plan Outline
• Feasibility Plan Outline
• Writing a Winning Business Plan

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *