difference between feasibility study and business plan

Difference between Feasibility Study and Business Plan

Entrepreneurs face many challenges when creating a new venture.  Although the business plan is one of the most well-known documents, the feasibility study may be just as important.  Before the entrepreneur can seek funding, he or she must demonstrate that the idea is truly a good one.

Rochester.edu explained that a feasibility study, “can be defined as a controlled process for identifying problems and opportunities, determining objectives, describing situations, defining successful outcomes, and assessing the range of costs and benefits associated with several alternatives for solving a problem.”

In order to create a feasibility study, entrepreneurs need to define dimensions of business viability including:  market viability, technical viability, business model viability, management model viability, economic and financial model viability, and exit strategy viability.

A good outline for a feasibility study includes:

• Introduction
• Product or Service
• 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

• Client Success Stories

The difference between a feasibility study & a business plan

How much wood would a woodchuck chuck if a woodchuck could chuck wood? How much would the wood cost and how dependable is supply? Does the wood have a “best by” date? How long would it take to do the chucking? And what about woodchuck retention, it is a tough market out there.

If there are wood chucking businesses (and we do have a client that clears and hauls felled trees and wood debris), they might want to consider a feasibility study and business plan before diving into an expansion or other major project. Feasibility studies and business plans are commonly needed (or required) for analysis and decision purposes such as the launch of a new business line, product or service line expansions, geographic expansion, or attracting capital. Likewise, target readers range from boards of directors for project approval purposes, management for internal planning, lenders or potential investors, grant or other assistance programs, and a number of others. 

But what are the differences between a feasibility study and a business plan, and how do the two relate? A business feasibility study is a detailed analysis of the viability of an idea or concept for a business venture. Once feasibility has been determined, a business plan documents the operational and financial objectives of the venture and the detailed plans to achieve them. In short, a business feasibility study can be looked at as “Can we?” while the business plan is “How to.” 

It is common for the “can we?” and “how to” assessments of a project to be combined into one document, but many key aspects of feasibility should be determined before diving too deep into the “how to” of a venture.

Some years ago we did a feasibility study for a large California dairy operation seeking to grow returns by introducing value-added products rather than strictly selling bulk fluid milk. The idea? Homogenize and pasteurize their own milk (some in flavors), put it in glass bottles, and deliver it to people’s doorsteps. 

After I got over my shock, we set about exploring key aspects of feasibility: Is there demand for it, and at what price points? What would it take for the company to successfully make and bottle the products? How would it be marketed? Can bottles be returned and sanitized sufficiently for safe re-use?

As you might imagine, there was not much industry data to lean on; Nielsen and IRI have no market data for home delivered milk, there are no trade associations for the home milk delivery business, and not a lot of equipment and bottle suppliers focus on that niche of the otherwise huge dairy industry.

It was a challenge. We designed a market survey and partnered with the marketing program of a local community college to take consumer surveys at farmers’ markets and other events to determine potential market interest and price points. We contacted some of the few similar operations we could find in the United States. We looked into the availability of bottles approved for both milk and multiple re-use. 

Ultimately, we found the project feasible, and with this assurance developed a business plan to lay out the “how to-s.” In the years since, the company has been a great success with stunning growth.

Tempting as it may be to dive straight into the “how to,” unless you have other supportable reasons to believe a project is feasible from such key aspects as demand, production, distribution, marketing, capital, and a thorough risk assessment, it is best to spend some time determining “Can we?”

I tell our business feasibility study clients that one result they should be prepared for is “not feasible.” It happens, but it’s still a lot less trouble and risky than jumping in without due diligence. Morrison has conducted feasibility studies and business plans for nearly 20 years for a wide variety of needs and intended readers. We’re always happy to bounce around ideas and help explore what might – or might not – work for a business’s needs.

Brent Morrison is the Founding Principal at Morrison. To get in touch with Brent, please find contact information for Morrison here .

We’ve worked with a wide variety of clients on a broad range of projects and are happy to discuss solutions that can best fit your needs.

10 Feasibility study and business plan differences you should know

by Naiyer Jawaid | Nov 8, 2021 | Development , Real Estate | 5 comments

Feasibility study and business plan differences are subtle. In this post we will discuss 10 differences will help you to evaluate and differentiate between a feasibility study and a business plan.

Do you know what is a feasibility report? Do you know what is a business plan? Can you easily differentiate between a feasibility report and a business plan?

It’s easy! Just read out through the article and it will all be easy.

Let’s start by learning about a feasibility report:

A feasibility study is a formal document that assist in the identification and investigation of a proposed project. We can identify the project's weaknesses and strengths with the support of a feasibility study report, which saves us time and energy. We can determine whether the suggested idea will be lucrative and practicable in the future.

Before investing in a project, it is critical to determine if the project will be beneficial in the long run. The organization also needs to know how much the project will cost. Overall, a feasibility analysis indicates whether the firm should invest or continue with the project.

You should also like to read When to do feasibility study?

Now let us learn about business plan:

A business plan is a formal document that contains the goals/ objective of the business, the time in which the goal will be completed and the strategies that can be adopted to reach the specific goal.

A business plan is a necessary document for every new firm to have in place before it can begin operations. Writing a credible business plan is typically a requirement for banks and venture capital companies before contemplating granting funding to new enterprises.

It is not a smart idea to operate without a business strategy. In fact, very few businesses can survive for long without one. There are many more advantages to developing and keeping to a strong business plan, such as the ability to think through ideas without investing too much money and, eventually, losing money. Business plans are used by start-ups to get off the ground and attract outside investors.

A feasibility study is used to assess if a business or a concept is viable. After the business opportunity has been identified, the business strategy is produced. “A feasibility study is carried out with the goal of determining the workability and profitability of a company venture. A feasibility study is conducted before any money is committed in a new business endeavour to see whether it is worth the time, effort, and resources.

Similarities between a Feasibility study and a business plan

It's essential to analyse the similarities between a feasibility study and a business plan because they're both implemented altogether in same ways to help you build a lucrative company. The following are some of the similarities between the two documents:

Time: Both the reports are completed before the business begins and can be repeated afterwards to decide the next stages for new concepts.

Input: Both Feasibility report and the Business plan include input from a variety of people or departments with a variety of talents.

Format: Both report formats incorporate other documents that are gathered in order to create the report.

Components: Examining the target market, market circumstances, and financial expenses are some of the topics examined.

Use: Both may be displayed to potential investors and can assist the organization's management in making choices.

Organizations uses a business plan and a feasibility study as analytical and decision-making tools.

Although the three tools can be used in conjunction with one another in decision-making processes, they each have their own strengths and weaknesses, and they appear to target and address separate processes.

You might also like to read How to write a feasibility study report?

Now let us evaluate the difference between feasibility report and a business report-

• A feasibility study is conducted to determine the viability and profitability of a business endeavour. A feasibility study is conducted before any money is committed in a new business endeavour to see whether it is worth the time, effort, and resources.

A business plan, on the other hand, is created only when it has been determined that a business opportunity exists and that the endeavour is about to begin.

• A feasibility report is the first step and after that a business plan is made to be implemented, without feasibility report a business plan cannot be made.
• A feasibility study contains computations, research, and projected financial forecasts for a company possibility. A business plan, on the other hand, is mostly comprised of tactics and strategies to be applied to establish and expand the company.
• A feasibility study is concerned with the viability of a business concept, but a business plan is concerned with the development and sustainability of a company.
• A feasibility report informs the entrepreneur about the profit potential of a company concept or opportunity, whereas a business plan assists the entrepreneur in raising the necessary start-up cash from investors.
• Key components of a feasibility study and a business plan
• A business plan does not include the description of the sales methods used, such as distribution agreements, strategic alliances, and the amount of involvement with partners, as well as the payment terms, warranties, and other customer support.

But a feasibility report includes all the sales methods, strategies, alliances to payment and customer support.

•  Feasibility report contains:
• Assists in cost estimation, describe the production site, required inputs, and sourcing region.
• Physical description of the factory, including machine, capacity, warehouse, and supply chain, is necessary.
• Indicate if the area used for production is rented or owned. This will have an impact on the financial forecast.
• Information regarding the manufacturer's capacity, order details, price, and so on, if manufacturing is outsourced. To aid in cost estimation, describe the production site, needed inputs, and sourcing location.
• A physical description of the factory, including machine, capacity, warehouse, and supply chain, is necessary.

But a business plan does not contain anything related to production and operations, but a business plan contains all the information related to management.

• A poorly written business plan – poor projections, strategies, analysis, business model, and environmental factors, among other things – can be easily adjusted during business operations, but this cannot be said of a feasibility study because an incorrect conclusion in a feasibility study can be costly — it could mean launching a venture with little chance of survival or approving a proposal that wastes the company's human and financial resources.
•  A business plan presume that a company will prosper and lays out the procedures needed to get there. Those in charge of conducting a feasibility study should not have any predetermined notions regarding the likelihood of success. They must maintain as much objectivity as possible. They do research and allow the facts to lead to the study's conclusion. If the study concludes that the idea is viable, some of the findings, such as market size predictions, may be incorporated in the company's business plan.

You should also read What is land development feasibility study?

These 10 differences will help you to evaluate and differentiate between a feasibility study and a business plan.

Feasibility study may appear to be like the business plan in many respects. "A feasibility study may easily be transformed to a business plan” but it is crucial to remember that the feasibility study is completed prior to the endeavor. The business plan should be thought of in terms of growth and sustainability, whereas the feasibility study should be thought of in terms of concept viability.

This is all you need to know and understand about feasibility study and business plan.

Get ready to apply your knowledge in the real words with lots of success.

You might also like to explore below external contents on  feasibility study :

• What Is a Feasibility Study? – Types & Benefits
• Best 8 Property Management Software
• FEASIBILITY STUDIES & BUSINESS PLANS

Hope you enjoyed this post on  feasibility study , let me know what you think in the comment section below.

Are you someone involved with real estate feasibility?

We are excited to launch the next generation of real estate feasibility software by April 2023.

claim your 15% early-bird discount

Know more about the product features

This is a very good piece of writing. When you have a concept for a company but want to be sure it’s a good idea, you do a feasibility study.

It was very helpful. Thank you so much!

Appropriately timed! A company’s future operations are laid out in great detail in the company’s business plan. Once you’ve done your feasibility study, you’ll know whether or not the proposal has merit. The next step is to lay out your goals, whether financial and otherwise, as well as the strategies you want to use to attain them and the organisational structure you envision.

Prior to the company opening, both are undertaken, and may be repeated again in the future to identify the next steps on new ideas that may arise.

Great Content.

Submit a Comment 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.

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

Follow Us On

Latest Posts

Difference Between a Business Plan and a Feasibility Study

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

Many a time when people contacting me, they ask for a feasibility study instead of asking for a business plan. That is why I always interview them to know exactly what they want to use it for and in the course interacting with them, I get to understand that what they need is actually a business plan and not a feasibility study. In this article, I will explain more for your understanding.

Table of Content:

What is a Business Plan and a Feasibility Study?

• Main Purpose of a Business Plan and a Feasibility Study
• Outline of a Business Plan and a Feasibility Study
• Challenges of a Business Plan and a Feasibility Study

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

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

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.”

There can also be used to make decisions about whether to launch a new product in 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.

Business plans are blueprints for implementing actions that have already been deemed feasible by the company’s management. 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 says negative, then there will be no need to venture into the business. Then if the feasibility study says the business will be feasible, then 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 use or external use. The internal use of a business plan is for the management and staff of the company while the external is for shareholders, investors, for bank loan and customers.

2. 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 the 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 study 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/strategies to achieve your business goal because a business plan assumes a business is going to 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 the business plan. Some investors might request for a feasibility study first before the business plan

3. 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

4. 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, risk among others, any poorly done feasibility study can lead to a costly mistake. If a business is not viable and the recommendation says the business 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, environment 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 will love to hear your thought. Kindly use the comment box below to leave your comment.

Share this:

About the author.

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

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 .

Funding Opportunities & Resources to Grow Your Business

Join the Funding and Business Resources Masterlist and unlock daily emails with access to the latest funding opportunities, business resources, and tools to plan, start, and grow your business.

• Things to Do
• Travel & Explore
• Investigations
• Marketplace
• Advertise with Us

Business Plan Vs. Feasibilty Study

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.

• University of Rochester: Business Feasibility Study Outline

Brian Hill is the author of four popular business and finance books: "The Making of a Bestseller," "Inside Secrets to Venture Capital," "Attracting Capital from Angels" and his latest book, published in 2013, "The Pocket Small Business Owner's Guide to Business Plans."

Image Credit

Jupiterimages/Photos.com/Getty Images

Home » Business Plans

Feasibility Study vs Business Plan – What’s the Difference

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 ? Well, I will advice you read on to find the answers you seek. Now there seem to be a mix up between feasibility study and business plan. While some say they are the same, others argue they are not.

So I want to use this medium to draw a line between a feasibility report and a business plan. Though the process involved in developing a feasibility report and a business are similar, I will reveal to you some basic difference between conducting feasibility study and writing 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.

I hope this few words have been able to point out the key differences between feasibility study and business plan. I feel 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.

• Go to Chapter 3: U nderstanding the Difference Between a Business Plan and a Strategic Plan
• Go Back to Chapter 1: W hy Should You Develop a Business Plan ?
• Go Back to Introduction and Table of Content

More on Conduct Feasibility Study