Business Plan Vs.

Feasibility Study
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.