Is Feasibility Study Same As A Business Plan?
Mr. Murray is venturing into starting a healthy yoghurt chain. He has carefully studied the competition and is sure that the market is primed for his wholesome offering. Just as they near the launch, his team is hankering him to prepare a business plan.
However, he has already conducted a detailed feasibility study to estimate the workability and viability of the business venture and dismisses a business plan as quite superfluous!
But does the profitability potential returned by a feasibility study really make a business plan redundant? If no, what is the precise need for a business plan when the feasibility study has returned positive answers?
Where is the difference?
It should be noted that though the process of creating a feasibility study and a business plan may seem quite similar, there are many basic differences between these two tools of business planning. Such as:
- Purpose: The sole purpose of a feasibility study is to determine whether the business idea is viable or not. On the other hand, a business plan concentrates on how to bring the business idea to fruition.
- Timing: The feasibility study is the first step to launching a business. It is developed before any kind of investment is made in the business. The business plan comes after the business opportunity has been created by the feasibility study.
- Target audience: A feasibility study is solely for the entrepreneur’s benefit as it helps him ascertain whether it is worthwhile to proceed with the idea or not. In contrast, a business plan is targeted at the investors and aims to raise the necessary startup capital for the business.
- Focus: The feasibility study is all about calculations, analysis and projections that flesh out the latent potential of the business opportunity. It concentrates on the size of the potential market, availability of suppliers and distributors, pricing and the entrepreneur’s abilities. A business plan has more to do with strategies and tactics such as location, management, operations and marketing. It is also loaded with meticulous financial projections.
- Occasion: A feasibility study is essential a one-time thing as it is carried out only at the beginning of the project. But a professional business plan goes through numerous iterations and continues to evolve with the business.
In sum, a feasibility study is solely concentrated on finding out whether the business opportunity is worth the time, effort and resources or not. Meanwhile, a professional business plan is all about the growth and sustainability of the business. However, expert business plan executives can even convert a feasibility study into a workable business plan!
It is important to keep in mind that in case the feasibility study is done poorly or happens to return a negative report for the business idea, there will be no need for the business plan per se. Therefore, both tools are distinct yet equally important to business success!