difference between business plan and feasibility plan

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

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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.

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Difference between Feasibility Study and Business Plan

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.

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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

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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]

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What is the difference between feasibility study and business plan?

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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.

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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.

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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.

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.

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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:

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:

• Methodology

Conducting a Feasibility Study

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

• Product demand:
• Market conditions:
• Probability of Success

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
• Company description
• Market analysis
• Organization or management:
• Service or product line
• Marketing and sales
• Funding request
• Financial projections
• 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 an award-winning writer in the Washington, DC area. She writes nationally for newspapers, magazines and websites on topics including careers, education, women, marketing, advertising and more. She holds a Bachelor of Science from the University of Pittsburgh.

Difference Between a Feasibility Study and a Business Plan

The main difference between a feasibility study and a business plan is that a feasibility study is conducted to assess the viability of a proposed project or venture before significant resources are invested, focusing on analyzing various aspects such as economic, legal, technical, and scheduling considerations. In contrast, a business plan is a comprehensive document that outlines a company’s strategy, goals, market analysis, financial projections, and operational plans, used primarily for executing and managing the business, as well as for attracting investors and lenders.

Table of Contents

What is a Feasibility Study and What is a Business Plan

Feasibility Study refers to an analysis and evaluation of a proposed project to determine if it is technically feasible, economically viable, and legally permissible. It is usually conducted before significant investments are made to understand the likelihood of the project’s success. The feasibility study considers various factors, including market research, technical requirements, legal constraints, financial modeling, and risk assessment. The purpose of this study is to ascertain the strengths and weaknesses of a proposed venture, opportunities and threats present in the environment, the resources required, and ultimately the prospects for success.

Business Pl a n, on the other hand, is a detailed plan of how a business will operate and achieve its goals. It serves as a roadmap for the business, detailing the strategy, target market, competition, marketing and sales strategies, organizational structure, and financial projections. A business plan is essential for both new and established businesses. It helps in securing funding from investors or banks, guiding the management team in making strategic decisions, and monitoring the progress of the business. Business plans are dynamic documents that should be updated regularly as the business grows and market conditions change.

Key Differences Between a Feasibility Study and a Business Plan

• Purpose and Focus : A feasibility study is conducted to evaluate the viability of a project before significant resources are committed, whereas a business plan is used for the execution and ongoing management of a business.
• Scope of Analysis : Feasibility studies typically have a narrower focus, examining specific aspects like economic viability and technical requirements, while business plans provide a comprehensive overview of the entire business operation.
• Timing : A feasibility study is often conducted before a business plan, helping to decide whether or not to proceed with the business idea.
• Audience : Feasibility studies are usually intended for internal decision-making, while business plans are often created with external stakeholders, such as investors and lenders, in mind.
• Content : A feasibility study includes detailed analysis on viability aspects, whereas a business plan includes broader information like marketing strategies, organizational structure, and financial forecasts.
• Use in Decision Making : Feasibility studies are used to make go/no-go decisions on a project, while business plans are used to guide the operational, financial, and marketing decisions of a business.

Key Similarities Between a Feasibility Study and a Business Plan

• Planning Tools : Both are essential planning tools used in the decision-making process of starting or managing a business or project .
• Research-Based : Both require extensive research and analysis of the market, competition, and internal capabilities.
• Risk Assessment : Both involve assessing risks and identifying potential challenges and opportunities.
• Financial Considerations : Both include financial analysis, although the focus and depth may vary.
• Goal Orientation : Both are oriented towards achieving specific goals – whether it’s determining the viability of a project or outlining the strategy for a business.
• Dynamic Documents : Both should be considered dynamic documents that can be revised and updated as new information becomes available or circumstances change.

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• 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.

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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.

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The Difference Between a Business Plan and a Feasibility Study

• October 24, 2023
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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.

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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...

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Business Feasibility Study: Turning Business Ideas into Reality

Over 30 years in business as an owner, restaurateur, and consultant, offering a unique understanding of business and marketing expertise.

“ Chase the vision, not the money, the money will end up following you. “ ~ Tony Hsieh

Key Takeaways

• Business Feasibility Study : An evaluation process to determine the viability of a business idea, covering market viability, financial feasibility, and operational capacity.
• Market Research : Investigates the target market, customer demand, competitive landscape, and market opportunities to validate the product or service demand.
• Financial Viability Assessment : Involves detailed financial projections, including start-up costs, operating expenses, revenue forecasts, and profitability analysis, to ensure financial sustainability.
• Technical Feasibility : Examines the technical resources, technology, and infrastructure required to deliver the product or service effectively.
• Legal and Regulatory Compliance : Identifies legal obligations, industry-specific regulations, and ethical considerations impacting the business.
• Operational Feasibility : Assesses the operational processes, resource allocation, and scalability of business operations.
• Risk Analysis : Identifies potential business risks and develops contingency plans to mitigate these risks.

Introduction to a Business Feasibility Study

Got an idea for a new business venture? Whether it's a small startup or an expansion of an existing business, one of the first steps you should consider is conducting a Business Feasibility Study. Think of it as your business's reality check. This article provides you with the information you need to determine if your business idea is viable and has the potential for success.

At its core, a Business Feasibility Study is a comprehensive process that evaluates the practicality of your business idea. It's not just about finding out if your idea can work, but it's also about identifying potential obstacles and opportunities that lie ahead. This study looks into various aspects of the business, such as market viability, financial feasibility, legal compliance, and more.

The purpose of this study is not to discourage you but to give you a clear picture of what you're stepping into. It helps you answer crucial questions like: Is there a demand for your product or service? Can you realistically compete in the market? What are the financial requirements and risks involved? By addressing these questions early on, you can make informed decisions and avoid costly mistakes.

As you investigate deeper into the feasibility study, you'll come across several components, from analyzing your target market to understanding the financial implications of your venture. Each component plays a vital role in shaping your business strategy and ensuring that your venture is grounded in reality.

Remember, the goal here is not just to validate your business idea but also to lay down a solid foundation for your business plan. A well-conducted Business Feasibility Study can be a powerful tool in attracting investors, securing loans, and guiding your strategic decisions as you move forward.

In the following sections, we'll explore each aspect of the Business Feasibility Study in detail, guiding you through the steps to conduct one effectively. Especially if you're a budding entrepreneur, understanding how to navigate through these studies can be a game-changer for your business success.

Steps in Conducting a Business Feasibility Study

Now that we've broached the topic of a Business Feasibility Study let's walk through the steps to conduct one effectively. This type of hike can seem daunting at first, but breaking it down into manageable steps makes it much more approachable. Each of the following steps will give you valuable insights into the feasibility of your business idea. The key is to approach this study with an open mind and a willingness to evaluate every aspect of your business idea critically.

• Define Your Business Idea and Goals : The first step is crystal clear: know what your business idea is and what you want to achieve with it. This might seem obvious, but having a well-defined goal will guide the entire feasibility study.
• Conduct Preliminary Analysis : Before diving deep, do a quick initial check to see if your idea has any obvious flaws or if there are immediate red flags. This analysis could include a basic market scan, a quick review of similar existing products or services, and a brief assessment of your potential customer base.
• Market Research : This is where you roll up your sleeves and dive into the nitty-gritty of your target market. Who are your potential customers? What do they need? What are the current trends affecting your industry? Market research can range from online surveys and focus groups to in-depth competitor analysis.
• Organizational and Technical Assessment : Here, you need to evaluate whether you have or can obtain the necessary resources, including technology, staff, and expertise, to turn your idea into reality. This step is crucial in understanding the operational aspect of your business.
• Financial Viability Assessment : One of the most critical aspects of the feasibility study is financial assessment. This involves creating detailed financial projections, including start-up costs, operating costs, revenue forecasts, and profitability analysis. It's about figuring out if your idea can be profitable and sustainable in the long term.
• Legal and Regulatory Compliance : Every business operates within a legal framework. In this step, you should identify the legal and regulatory requirements related to your business. This could include licenses, permits, or any industry-specific regulations.
• Risk Assessment and Contingency Planning : No business venture is without risk. Identifying potential risks and developing contingency plans to mitigate these risks is a vital part of the feasibility study.
• Conclusion and Recommendations : Based on your findings, draw conclusions about the viability of your business idea. Is it feasible? If so, what are the next steps? If not, what alternative strategies could you consider?

Market Feasibility Study

In this section, let's talk about how you gather a wealth of information that will be critical in making informed decisions about your business idea. The goal is to ensure that there is a market for your product or service and to understand the dynamics of that market to position your business for success strategically.

• Market Analysis for Feasibility : Understanding your market is a cornerstone of business success. A thorough market analysis for feasibility involves examining the industry you're entering, the demand for the product or service you plan to offer, and the dynamics of the market itself. This step is not just about seeing if there's a market for your idea but understanding the nuances of that market – its size, growth trends, and customer behaviors. This knowledge is crucial in shaping your business strategies and offerings to ensure they resonate with your target audience .
• Customer Demand Analysis Feasibility : Diving deeper, customer demand analysis focuses on the needs and preferences of your target demographic. It's about asking questions like, Who are your potential customers? What are their buying habits? What problems do they need to solve? This analysis helps you tailor your product or service to the specific needs and desires of your customers, increasing the likelihood of your business's success.
• Market Opportunity Assessment : Identifying market opportunities is about spotting gaps in the market that your business can fill. This might include underserved areas, emerging trends, or unique angles your competitors havent explored. By identifying these opportunities, you can position your business to take advantage of them, giving you a competitive edge.
• Competitive Analysis Feasibility Study : Finally, understanding your competition is vital. A competitive analysis involves looking at who your competitors are, what they offer, their strengths and weaknesses, and how they meet the market's needs. This analysis not only helps you find your unique selling proposition but also teaches you about the successes and failures of others in your industry.

Financial Feasibility Study

It is here you'll gain a comprehensive understanding of the financial aspects of your business. It's about ensuring that your business idea is not just viable in the market but is also financially sound and capable of generating profits.

• Financial Viability Assessment : This step is all about the numbers. A financial viability assessment examines whether your business idea makes financial sense. It's where you crunch the numbers to understand the financial health of your proposed venture. This includes forecasting revenues, estimating start-up and operating costs, and projecting profits and cash flow . The goal here is to determine if your business can be financially sustainable and profitable in the long term.
• Cost Analysis in Feasibility Study : Every business incurs costs, and understanding these is crucial. In this part of the study, you'll break down all the costs associated with starting and running your business. This includes direct costs like inventory and labor, as well as indirect costs like marketing and administrative expenses. A thorough cost analysis helps you plan your finances more effectively and avoid unexpected financial challenges.
• Investment Feasibility Analysis : This analysis focuses on the investment aspect of your business. How much capital will you need to get started, and where will it come from? This section explores potential funding sources such as loans, investors, or personal savings and assesses the feasibility of securing the required funds. It also involves evaluating the risk associated with these investments and their potential returns.
• Return on Investment in Feasibility : Lastly, calculating the Return on Investment (ROI) is a key component. This involves estimating how much profit your investment will generate relative to its cost. It's a crucial metric that helps you understand the value you can expect from your business venture. A favorable ROI indicates that your business idea could be a wise investment.

Technical Feasibility Study

The goal of the following section is to provide you with a comprehensive understanding of the legal landscape in which your business will operate. It's about ensuring that your business idea is robust, not just in terms of market and financial viability but also in its ability to meet legal and ethical standards.

• Legal Requirements Feasibility : When starting a business , you must navigate a maze of legal requirements. This part of the feasibility study focuses on understanding all the legal aspects related to your business. This includes local, state, and federal laws that apply to your business , industry-specific regulations, and requirements for permits and licenses. The aim is to ensure that your business idea is not only feasible from a market and financial perspective but also legally viable. Legal compliance is more than just ticking boxes; it's about understanding how legal aspects can impact your business operations. For instance, if you're in a highly regulated industry like healthcare or finance, legal compliance becomes even more critical. The study should also consider the implications of not meeting these legal requirements, which could range from fines to the shutdown of your business operations.
• Evaluating Ethical Considerations : In addition to legal compliance, it's also important to consider the ethical implications of your business. This involves evaluating how your business practices align with ethical standards and societal expectations. Its about doing the right thing, not just the legally required thing. For example, if your business deals with sensitive customer data, you need to ensure that data is handled ethically and responsibly.
• Impact on Business Strategy : Legal and ethical considerations can significantly impact your business strategy. For example, if there are stringent environmental regulations in your industry, your business strategy may need to include sustainable practices and eco-friendly solutions. The feasibility study should assess how legal and ethical considerations can be integrated into your business strategy, ensuring that your business is not only compliant but also socially responsible.

Risk Analysis and Scheduling

This section of your feasibility study will arm you with the knowledge and strategies to anticipate and manage the risks associated with your business venture. It's about being prepared and proactive, rather than reactive, to the challenges that your business might face.

• Risk Assessment in Feasibility Studies : Starting a business is inherently risky, but understanding and planning for these risks can greatly improve your chances of success. In this part of your feasibility study, you'll identify potential risks that could impact your business. This includes financial risks, such as unexpected costs or revenue shortfalls. Operational risks like supply chain disruptions, market risks, such as changing consumer preferences, and other external risks, including regulatory changes or economic downturns. After identifying these risks, the next step is to assess their likelihood and potential impact on your business. This involves not only recognizing the risks but also understanding how they could affect your operations and financial health. Risk assessment helps you develop strategies to mitigate these risks, such as diversifying your product line, securing insurance , or establishing strong supplier relationships.
• Project Management in Feasibility : Effective project management is crucial in executing your business plan and in conducting your feasibility study. This includes planning, organizing, directing, and controlling resources to achieve specific goals. Good project management in feasibility studies ensures that your research is thorough, timely, and aligned with your business objectives. It also involves setting realistic timelines for your project, allocating resources efficiently, and managing stakeholders' expectations. Incorporating project management principles into your feasibility study can help in scheduling and organizing the various components of the study. It ensures that the study is completed in a systematic and efficient manner, providing you with reliable and actionable insights.

Business Model and Strategy

In this section, you're not just evaluating the feasibility of your business idea but also ensuring that it aligns with a larger strategic vision. It's about crafting a business model and strategy that are not only feasible but also poised for growth and success in the long run.

• Business Model Evaluation : The heart of your business feasibility study lies in evaluating your proposed business model. This is where you align your business idea, market research, financial assessments, and technical capabilities to see if they all fit together into a viable business model. A business model evaluation involves scrutinizing how you plan to create, deliver, and capture value. It answers questions like: How will you generate revenue? What value are you providing to your customers? How will you reach your target market? What are the costs involved, and how will they be covered? This evaluation is crucial in understanding whether your business model is practical, sustainable, and profitable.
• Business Strategy Feasibility : Once you have a clear picture of your business model, the next step is to align it with your overall business strategy. This involves assessing whether your business model supports your long-term business goals and objectives. Business strategy feasibility is about ensuring that your approach to the market, your growth plans, and your operational strategy are all in sync with the findings of your feasibility study. It's about making strategic decisions that are informed by data and insights from your study rather than just intuition or assumptions.

Operational Feasibility Study

Operational Feasibility Analysis: This part of the feasibility study is about getting down to the brass tacks of how your business will operate on a day-to-day basis. It's about examining if your business plan can be effectively translated into operations. This includes assessing your operational processes, from production or service delivery to supply chain management, customer support, and sales operations.

You need to evaluate whether you have the necessary resources, such as manpower, materials, and technology, to carry out your business operations. It's also important to consider the scalability of your operations – can they grow as your business grows?

Another key aspect of operational feasibility is determining if your business operations align with your organizational structure and culture. For instance, if your business requires rapid innovation and flexibility, do your operational plan and organizational culture support that?

Operational feasibility is not just about whether you can do something but whether you can do it efficiently, effectively, and sustainably.

Specialized Feasibility Studies

This section is about tailoring your feasibility study to address the specific considerations of your industry, the environmental impact of your business, and your growth potential. It's about making sure that your business is not only viable at launch but also set up for future success.

• Industry-specific Feasibility Studies : Different industries have unique challenges and opportunities, making it crucial to conduct industry-specific feasibility studies. For instance, a feasibility study in the tech industry would focus heavily on technological innovations and market adoption rates, while one in the manufacturing sector might concentrate more on production capabilities and supply chain logistics. Understanding the nuances of your specific industry is vital to ensure that your feasibility study is relevant and accurate. It helps in identifying industry-specific risks, regulatory requirements, and market dynamics that are crucial for your businesss success.
• Environmental Impact Business Study : In an era where sustainability is increasingly important, considering the environmental impact of your business is essential. This part of the feasibility study assesses how your business operations will affect the environment and what measures you can take to minimize negative impacts. This includes looking at factors like energy consumption, waste management, and the sourcing of materials. Being environmentally responsible can not only help reduce potential liabilities but can also enhance your brand's reputation and appeal to environmentally conscious consumers.
• Business Growth Feasibility Study : This section looks beyond the initial launch of your business to its potential for growth. It involves evaluating how scalable your business model is, identifying potential areas for expansion, and assessing the feasibility of these growth plans. It's about understanding what it will take for your business to grow, both in the short-term and long-term, and whether your current plan supports this growth.

Feasibility Study Tools and Techniques

Let's now explore a variety of tools and techniques essential for conducting a well-rounded feasibility study. Understanding how to use these tools and techniques effectively is crucial in gaining a holistic view of your business ideas feasibility.

Overview of Feasibility Study Tools: To conduct an effective feasibility study, various tools can be utilized. These tools help in collecting data, analyzing information, and making informed decisions. For example, SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) is a common tool used to evaluate the strategic position of a business idea. Financial tools like cash flow forecasting , break-even analysis, and ROI calculations are essential for the financial aspect of the study. For market analysis, tools such as market surveys, customer interviews, and competitor analysis can provide valuable insights.

Techniques Used in Feasibility Studies : Besides tools, certain techniques are pivotal in conducting a thorough feasibility study. These include qualitative methods like focus groups and interviews that provide an in-depth understanding of customer attitudes and preferences. Quantitative methods like statistical analysis and market trend analysis offer concrete data on market size, growth rates, and customer demographics. Additionally, scenario planning can be used to envision various business scenarios and plan accordingly.

Utilizing Technology in Feasibility Studies : In the digital age, leveraging technology can significantly enhance the efficiency and accuracy of your feasibility study. Software tools for data analysis, project management software for organizing and tracking the study, and digital survey tools for gathering market insights are examples of how technology can aid in conducting a comprehensive feasibility study.

Integrating Findings to Formulate Conclusions : The final technique in a feasibility study is the integration of findings from various tools and methods to formulate comprehensive conclusions. This involves collating data from market, financial, technical, and legal analyses to see the overall picture. It's about synthesizing information from different sources to determine the overall feasibility and viability of your business idea.

Comparative Analysis

Now, we need to compare and contrast the roles of a business plan and a feasibility study, emphasizing how they work together in the planning and execution of a successful business venture.

Business Plan Versus Feasibility Study : It's essential to understand the difference between a business plan and a feasibility study as they serve different, yet complementary, purposes. A business plan is a detailed roadmap for the operation and growth of your business. It outlines your business goals, strategies to achieve them, operational structure, marketing plan , and financial projections. Essentially, a business plan is a guide for how to run your business and achieve success.

On the other hand, a feasibility study is more of a preliminary step. Itis conducted before the business plan to assess the viability of a business idea. The feasibility study helps determine whether your idea is worth pursuing before you invest significant time and resources into developing a business plan. It includes market analysis, financial feasibility, legal compliance, and technical assessment.

Comparatively, a feasibility study asks the question, Should this business be started? While a business plan addresses How will this business succeed? A feasibility study is what you need when deciding if your business idea is worth pursuing, and a business plan is what you'll use to guide your business's establishment and growth after deciding it's feasible.

Integrating Feasibility Study Findings into Business Planning : Often, the findings of your feasibility study will directly inform your business plan. For example, insights from market analysis in the feasibility study can shape your marketing strategies in the business plan. Financial assessments from the study can help in creating more accurate financial projections in your business plan. In this way, the feasibility study can be seen as the foundation upon which your business plan is built.

Final Thoughts on Business Feasibility Study

Summarizing Key Findings : After thoroughly examining each aspect of your business idea through the feasibility study, it's time to bring all these findings together. This summary should encapsulate the insights from market analysis, financial viability, technical assessment, legal compliance, and operational feasibility. Highlight the key strengths and opportunities your study has revealed, as well as any significant challenges or risks.

Providing Actionable Recommendations : Based on the key findings, the next step is to provide actionable recommendations. If your feasibility study shows that your business idea is viable, outline the next steps to take your idea from concept to reality. This could include developing a detailed business plan, securing funding, or initiating market entry strategies.

If the feasibility study suggests that your business idea may not be viable, or if there are significant challenges, recommend alternative approaches. This might involve pivoting your business idea, exploring different markets, or addressing the identified weaknesses before proceeding.

Emphasizing the Importance of Continuous Evaluation : It's important to remember that a feasibility study is not a one-time task but an ongoing process. As your business grows and the market evolves, continuously re-evaluating the feasibility of your business model and strategies is crucial. This ongoing evaluation ensures that your business remains relevant and competitive in a changing business environment.

Encouragement and Motivation : Lastly, whether your feasibility study results are positive or less encouraging, it's important to stay motivated. Every business journey comes with its challenges and learning opportunities. Use the insights gained from this study to refine your business idea and strategy. Remember, the ultimate goal of a feasibility study is to set the stage for a successful and sustainable business.

FAQs on Business Feasibility Study

While all components of a business feasibility study are important, the market analysis is often considered critical. It helps determine if there's a demand for your product or service and sets the foundation for the rest of your study.

The duration of a business feasibility study can vary widely depending on the complexity of the business idea and the depth of analysis required. Generally, it could take anywhere from a few weeks to several months.

It's possible to conduct a basic feasibility study on your own, especially for small-scale projects. However, for more complex or larger-scale business ideas, it might be beneficial to engage a professional consultant who can provide expertise and an objective perspective.

If your feasibility study suggests that your business idea might not be viable, consider exploring alternative ideas, adjusting your business model, or addressing the identified challenges. Sometimes, a pivot in strategy or a different approach can make a significant difference.

It's a good practice to revisit your feasibility study periodically, especially when there are significant market shifts, technological advancements, or changes in consumer behavior. This helps ensure that your business stays relevant and adapts to changing conditions.

A business feasibility study is a preliminary assessment to determine the viability of a business idea, while a pilot project is a small-scale implementation of the business plan to test its practicality in a real-world setting.

There are various software tools available for different aspects of a feasibility study, such as financial modeling (e.g., Excel), market analysis (e.g., MarketResearch.com), and project management (e.g., Trello or Asana). The choice of tools depends on your specific needs and the complexity of the study.

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Feasibility Study vs Business Plan: Key Differences Unveiled

Feasibility Study vs. Business Plan: What’s the Difference?

In the world​ of entrepreneurship and business development, two important documents guide​ a venture’s path. Which is the feasibility study and the business plan. While both are vital for assessing​ a business idea and obtaining funding, they have distinct purposes and methods.​ This article will discuss the key differences between​ a feasibility study and​ a business plan​. It will assist entrepreneurs in efficiently transitioning from ideas to execution.

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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.

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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.

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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.

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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.

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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.

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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.

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.

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Difference Between Feasibility Study, Business Plan, And Business Proposal

• by Olaoluwa
• December 3, 2023 August 28, 2024

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 STARTUP GUIDE

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

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.

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• Strategy & planning

Predict the success of your next project with a feasibility study

Georgina Guthrie

April 15, 2021

When you conduct a feasibility study, what you’re essentially asking is, “Will this project work? And does it make good business sense?” In other words, you’re analyzing a project or product’s practicality and achievability.

What is a feasibility study?

A feasibility study will help you determine the specific factors that will affect your project  before committing resources, time, or budget. So while it’s tempting to brush it aside as another exercise delaying getting to work, remember that it’s easier to address issues before you jump in than it is after.

Say, for example, you’re launching a new app. You’ll want to know if you physically have the resources and technology needed to produce it, as well as whether or not it’ll give you an acceptable return on investment (ROI). If you proceed without conducting a full analysis, you’re opening yourself up to unnecessary risk. A feasibility study mitigates that risk.

What are the benefits of a feasibility study?

• It’s flexible and scalable, which means it can be applied to any kind of project—whether that’s software development, a new product launch, or a new team process. However, the bigger the project, the more important it becomes because the investment stakes are that much higher.
• It helps you avoid project failure through logical assessment.
• It gives stakeholders a clearer picture of the project, which, in turn, helps improve focus and commitment.
• Comparing and analyzing the different options helps you narrow business alternatives while helping simplify the decision-making process.
• It outlines a valid reason for your project to exist.
• Evaluating multiple options enhances your project’s success rate.

What are the different types of feasibility studies?

There are five different types of feasibility studies. These can exist as separate tasks or tied together as one big study. Not every project will require you to examine each of these areas. For example, if your project is a small, internal-facing one, you probably don’t need to worry about the legal side of things.

The five focus areas of a feasibility study are:

• Economic feasibility (this includes a cost-benefit analysis)
• Technical feasibility (which includes a risk assessment)
• Operational feasibility (including how the project or process will be implemented and work within the current system)
• Schedule feasibility (including timeline estimations and resource optimization)
• Legal feasibility (covering zoning laws, data protection acts, and social media laws).

What’s the difference between a feasibility plan and a business plan?

Feasibility studies are for evaluating an initial idea. They’re a way to flesh out the possibilities of that lightbulb moment before anything else takes place. A business plan is much broader and outlines a company’s goals, strategies, and financial forecasts.

In a nutshell, a feasibility plan tells you if something will work. A business plan tells you how .

How to conduct a feasibility study

Every project is different, but there are six key stages to consider before any project kick-off:

1. The current analysis

Before you start a project, it’s a good idea to assess your existing processes or products. You can start this by creating a SWOT diagram to identify the strengths and weaknesses of your current system and document your findings. You may discover there’s nothing fundamentally wrong with the current situation. But if you find issues that require modifications, then you can make those changes prior to kick-off.

2. The project scope

This is when you define the business problem or opportunity – aka, the reason your project exists. Ask yourself:

• Who is this for?
• Is there a need for it?
• What’s the marketing or integration strategy?
• What are our competitors doing? (if necessary)
• What are the internal, corporate, and external constraints (such as budget, technology, marketing, logistics, laws, and regulations)?

The project scope should be thorough and clear because everyone involved will use it as their blueprint. Think of it as your project’s boundaries. Without clearly defined limits, you could end up producing or providing more than is needed or agreed upon, which is a waste of your time and resources.

3. Requirements

This is where you detail your existing and needed resources . Questions to ask yourself include:

• Do you need additional staffing?
• Will you need to invest in new software?
• Can your existing processes be improved with technology?

4. Approach

This is where you detail how your project or product will answer your business question, as well as your proposed course of action. You should also examine your alternatives here and explain why your proposed route is the best option. The two questions to ask yourself here are:

• Does this approach answer the requirements?
• Is it practical and achievable?

5. Evaluation

Next, you need to analyze the cost and projected income of the project, taking into account things like labor fees, income streams, and the project schedule. After the total cost has been calculated, you need to evaluate it with a cost-benefit analysis.

Formally set out all your findings and review your feasibility study with all interested parties. Reviewing your study with the wider team and stakeholders helps ensure accuracy (it’s easy to miss something if you’re working alone) and formalizes the decision-making process.

From here, your study will either be approved, rejected, or amended. If approved, it’s crucial everyone involved signs off on the document. This saves backtracking further down the line and ensures commitment from start to finish.

Feasibility tools

Because feasibility studies involve lots of data and different layers of approval, the more organized you are, the better.  Project management software is one way you can streamline this process. With apps like Backlog , you can document and track all tasks over time, communicate on work right within tasks, and notify the right people with key updates along the way. Plus, with features like Gantt and burndown charts, Wikis, and version control, your stakeholders can gain transparency into every stage of the process.

This post was originally published on July 31, 2019, and updated most recently on April 15, 2021.

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What Is a Feasibility Study? 6 Types and Practical Tips

A feasibility study is an analysis to determine the practicality of a proposed project or business venture—but there’s more than just one type.

Here’s a business idea: Everyone prefers to keep a perfect body temperature no matter the weather, so why not create clothing that maintains comfort in both hot and cold temperatures? The problem is it would require built-in heating and cooling mechanisms, adding weight, bulk, and electricity needs. In other words, it’s an intriguing idea, but it’s not feasible.

Decision makers and project managers must constantly assess if great ideas are truly feasible in the real world. To do this, they might conduct a feasibility study to determine if there’s a practical way to bring these ideas to life. Feasibility studies consider things like cost, resource availability, technical capacity, and potential risks.

Here’s an overview of feasibility studies, with tips on how to conduct your own feasibility analysis.

What is a feasibility study?

A feasibility study is a preliminary analysis to determine the viability and practicality of a proposed project or new business venture. It can be commissioned by a government, a business organization, or an individual during an analysis phase. Feasibility studies help stakeholders understand potential risks, benefits, costs, and challenges to predict whether a project should be pursued, modified, or simply abandoned.

A typical feasibility study evaluates timelines, budgeting, market research , supply chain information, technological considerations, and legal requirements. Assessing these feasibility factors in the early stages helps determine if the proposed project is a worthwhile investment of your time, money, and resources.

A study usually culminates in a feasibility report you can present to business owners and project leaders. The report centralizes your findings and makes a declaration about the new project or business’s viability.

Benefits of feasibility studies

Informed decision-making, financial viability assessment, risk assessment, resource management, stakeholder confidence.

Conducting a feasibility study helps determine how likely your idea or venture is to succeed. Here are the five main benefits of a feasibility assessment:

A successful business or project feasibility study helps you make informed decisions based on data and analysis rather than assumptions or guesswork. Your proposed business venture should rely on concrete numbers, not gut instinct or anecdotal evidence.

Does a market survey show there’s a viable customer base? Do your financial projections suggest the project can become profitable? Does your project management team think you have the technical resources to execute your plan? A proper feasibility study report answers these questions with solid data.

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Many great business ideas are derailed by a project’s cost. A feasibility study helps you understand if you have the financial resources to see your project through. This can prevent costly investments in projects unlikely to yield expected returns and protect your organization’s financial health.

A feasibility study can warn your management team of potential risks in a business plan. It can identify potential challenges related to money, market size, technical abilities, and legal risks. Addressing these challenges early can spare you from severe consequences, saving time, money, and resources.

Implementing a proposed plan typically requires time, physical resources, human effort, and capital. A full-scale feasibility study takes a holistic look at the resources needed to realize a particular project and determines if your organization has or can allocate and manage these resources effectively.

A well-conducted feasibility study shows stakeholders—like investors, partners, managers, and employees—that you’ve thoroughly evaluated your project before diving in. You can show them your project plan, the risks involved, the resources required, and your predicted likelihood of success. Showing your partners what lies under the hood of your project can inspire emotional and capital investment.

6 types of feasibility studies

• Operational
• Environmental

Different initiatives succeed or fail because of various factors, so feasibility studies address distinct topics. Here are six of the most commonly commissioned feasibility studies:

A market feasibility study assesses the demand for a product or service within a target market. It analyzes the total addressable market (TAM) , target customers, competition , market trends, and potential market share. Note that this type of market analysis doesn’t involve creating a marketing strategy; it determines whether there’s even a viable market to begin with.

2. Technical

A technical feasibility study examines the technical resources needed to complete a project, including the required technology, equipment, and expertise. It then assesses whether the organization has achieved the technical development required to achieve tactical or business success.

A legal feasibility study aims to identify the legal factors affecting your project, ensuring it complies with relevant laws and regulations, including zoning laws, licensing, permits, and intellectual property .

4. Financial

A financial feasibility study—or economic feasibility study—analyzes a project’s costs, revenues, and profitability to assess its economic viability and funding. This type of study often includes a business plan , projected income statement , and overall financial analysis. Some lending institutions require this study for loan approval.

5. Operational

An operational feasibility study aims to assess whether you have the operational capacity to implement the proposed project considering your physical assets, human resources, organizational structure , company culture, and workflows.

6. Environmental

An environmental feasibility study assesses a project’s potential environmental impact and outlines measures to mitigate negative effects. It also ensures alignment with environmental regulations and your organization’s sustainability goals.

How to conduct a feasibility study

• Define the project and its scope
• Conduct preliminary analysis
• Evaluate market feasibility
• Assess technical and operational feasibility
• Analyze financial feasibility
• Review legal and environmental considerations
• Prepare the final report

Using this feasibility study template to guide your process, here’s how to conduct a comprehensive feasibility study:

1. Define the project and its scope

Clearly outline your project's objectives, goals, and key deliverables. This includes identifying the problem or opportunity the project aims to address and setting specific criteria for success, including key performance indicators (KPIs) .

For example, Gloria Hwang conceived of her idea for a bike helmet company, Thousand , after her friend tragically died in a cycling accident. Her goal: Create a stylish helmet for commuters. As she explains on an episode of Shopify Masters , “If you can make a helmet people actually want to wear, you can help save lives.” Her company’s very name references her mission to save 1,000 bike riders’ lives—a key deliverable she reached in 2023.

2. Conduct preliminary analysis

A preliminary analysis provides a general assessment to determine if your project is worth pursuing. Roughly evaluate the potential market, technical requirements, financial costs, and legal constraints to identify any major obstacles. If the project clears this initial requirements analysis phase, you can dive deeper into all these topics.

When Gloria set out to research her business idea, she found that most bike helmet companies catered to high-tech riders or cycling enthusiasts—not casual riders.

“From my perspective, it was just [about] trying to find and make a product that was driven by consumer insights,” says Gloria.

Knowing that the product she wanted didn’t exist inspired her to dig deeper into research and development.

3. Evaluate market feasibility

Assuming your preliminary analysis suggests the project is viable, proceed with a comprehensive market assessment . Analyze the demand for your product or service. Profile target customers , estimate market size, size up the competition , and identify market trends.

Gloria, for example, sent out 50 surveys to people she knew with an interest in biking or skateboarding and asked what they would like to see in a helmet. In the responses, it became clear there was demand for the type of helmet she wanted to make. People expressed their primary concerns were about safety, convenience, and price—data Gloria used to refine her product’s value proposition .

4. Assess technical and operational feasibility

If a viable market exists, decide whether your organization is equipped to serve it. Examine the technical requirements of your project, including technology, resources, and expertise. Assess your organization’s capacity for implementation and operation, paying special attention to human resources, infrastructure, and company culture.

For example, Gloria knew she needed to design a helmet that had never existed before on a budget that wouldn’t allow her to hire an expensive product development firm.

“Thankfully [my dad] happened to be a former NASA engineer,” Gloria says.

5. Analyze financial feasibility

Take a hard look at whether you have the financial means to execute the project. Develop a detailed financial analysis, including cost estimates, revenue projections, and funding sources. What will the opening day balance sheet look like? When will the project be profitable? Consider creating financial models to assess the project’s profitability, return on investment (ROI) , and break-even point .

One tip: Gloria recommends finding mid-sized manufacturers to help you make your business a reality since the largest, most well-known companies may not prioritize your small business’s needs.

“Finding someone who's in it with you from a partnership perspective, I think is the best thing to do,” she says.

6. Review legal and environmental considerations

Your project will only succeed if it complies with applicable laws, regulations, and environmental standards. Determine what permits and licenses you need, and whether an environmental impact assessment is necessary.

For Gloria, this meant making sure her designs met the safety standards set for cycling and skateboarding helmets so her customers could wear her helmets for both use cases.

7. Prepare the final report

Compile your findings into a detailed report covering all aspects of the feasibility study. Start with an executive summary outlining potential business scenarios based on the information you’ve amassed. Present the report to stakeholders, highlighting key insights and recommendations. Your team can then make an informed decision about whether to proceed with the project, pursue business alternatives, or scrap the endeavor altogether.

For Gloria, the time she spent researching and refining her concept paid off. She’s reached her goal of saving lives with her helmets while getting people who never wore helmets before to start prioritizing their safety—without sacrificing style.

“It’s all centered around this idea of, ‘How can products help you express your personal style?’” Gloria says.

Because when your bike helmet expresses your style, you’re more likely to wear it.

Feasibility study FAQ

How do you write a feasibility study.

To write a feasibility study, define your project scope, conduct thorough analyses of market, technical, financial, legal, and operational factors, and compile the findings into a comprehensive report with recommendations for decision-making.

What should a feasibility study include?

A feasibility study should include an assessment of your project's market potential, technical requirements, financial viability, legal considerations, and operational capacity.

What is the average cost of a feasibility study?

The cost of a feasibility study varies tremendously based on the scope and nature of your project. Some business veterans estimate a study should be about 1% of your project’s total cost. For example, if you’re planning a $100,000 project, your feasibility study might cost around $1,000 to conduct.

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Business Development > Starting a Business > Feasibility & Business Plans

Updated July, 2020 File C5-65

What is a feasibility study.

As addressed in Information File C5-64, When to Do and How to Use a Feasibility Study , the growth and recognition of project management during the last few years has raised the need for feasibility studies. Quickly stated, a feasibility study is the initial design stage to any project or plan. As the name implies, a feasibility study is an analysis into 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.

Feasibility studies can be used in many ways but primarily focus on proposed business ventures. Farmers and others with a business idea should conduct a feasibility study to determine the viability of their idea before proceeding with the development of a business. Determining early that a business idea will not work saves time, money and heartache later.

A feasible operating change or business restructure is one where the business will generate adequate cash-flow and profits to withstand (a) the short-term risks it will encounter, and (b) remain viable in the long-term to meet the goals of the owner/founders. The venture might be an investment start-up or the purchase/expansion of an existing business, beyond its present business footprint or enterprise.

Information File C5-66, Feasibility Study Outline is provided to give you guidance on how to proceed with the study and what to include.

Also, Information File C5-64, When to Do and How to Use a Feasibility Study will help you through the process and help you get the most out of your study.

A feasibility study is only one step in the business idea assessment and business development process (Information File C5-02). Reviewing this process and reading the information below will help put the role of the feasibility study in perspective.

Contents of a Feasibility Study

The most-common feasibility study should include the following sections:

• An Executive Summary
• Description of Product or Service
• Technology Considerations
• Product or Service Marketplace
• Identification of Specific Market
• Marketing Strategy
• Organization Structure
• Financial Projections

Companies should be careful to NOT blindly follow feasibility templates. A well-designed feasibility study is one that is focused upon and centered on the business organization.

Types of Feasibility Studies

• Technical – hardware and software; existing or new; staffing skills
• Financial – initial and future stakeholder investors; ROI benchmarks
• Market- industry type; marketing characteristics; market growth; competition environment; sales projections
• Organization- structure; legal; management team’s competency

Typical Steps to a Feasibility Study

1. Preliminary Analysis To efficiently evaluate alternatives, a pre-feasibility study is often conducted after discussing a series of business ideas or scenarios. This pre-feasibility study helps to “frame” and “flesh-out” specific business scenarios, with only some studied more in-depth. It is not unusual that during this preliminary analysis, the number of business alternatives under consideration is reduced from the initial starting point.

During this first step to the feasibility process you may investigate a variety of ways to organize the business and/or to position the product in the marketplace. It is like an exploratory journey and you may take several paths before you reach your destination. Just because the initial analysis is negative does not mean that the proposal does not have merit. Sometimes limitations or flaws in the proposal can be corrected.

If the findings lead you to proceed with the feasibility study, your work may have resolved some basic issues. A consultant may help you with the pre-feasibility study, but you should be involved. This is an opportunity for you to understand the issues of business development.

2. Market Assessment A market assessment may be conducted that will help determine the viability of a proposed product or service in the marketplace. The market assessment will also help to identify demand in the market, and at what price. If no opportunities are found, there may be no reason to proceed further with the feasibility study. If opportunities are found, the market assessment can give focus and direction in the construction of business scenarios to investigate in the feasibility study. A market assessment will provide much of the information for the marketing feasibility section of the feasibility study

3. Organizational Structures This step in the feasibility analysis pertains to organization. Staffing requirements, including management and labor alignment are studied. How many workers are needed for how long? What other resources will be needed?

4. Financial Controls It is important to formalize an opening day balance sheet. In this step, first efforts at projected revenues and expenses are attempted.

5. Points of Vulnerability Factors that are internal to the project and represent vulnerability to the project’s short-term or long-term steps should be reviewed and analyzed. These points then can be controlled or otherwise eliminated.

6. Results and Conclusions The conclusions of the feasibility study should outline in-depth the various scenarios examined. The project leaders need to carefully examine the feasibility study and challenge its underlying assumptions. This is the time to be skeptical.

Don’t expect one alternative to "jump off the page" as being the best scenario. Feasibility studies do not suddenly become positive or negative. As you accumulate information and investigate alternatives, neither a positive nor negative outcome may emerge. The decision of whether to proceed is often not clear cut. Major stumbling blocks may emerge that negate the project. Sometimes these weaknesses can be overcome. Rarely does the analysis come out overwhelmingly positive. The study will help you assess the trade-off between the risks and rewards of moving forward with the business project.

Remember, it is not the purpose of the feasibility study or the role of the consultant to decide whether or not to proceed with a business plan. It is the role of the project leaders to make this decision, using information from the feasibility study and input from consultants.

7. Go/No-Go Decision The go/no-go decision is one of the most critical in business development. It is the point of no return. Once you have definitely decided to pursue a business scenario, there is usually no turning back. The feasibility study will be a major information source in making this decision. This indicates the importance of a properly developed feasibility study.

Feasibility Study vs. Business Plan

A feasibility study is not a business plan . The separate roles of the feasibility study and the business plan are frequently misunderstood. The feasibility study provides an investigating function. It addresses the question of "Is this a viable business venture?" The business plan provides a planning function. The business plan outlines the actions needed to take the proposal from "idea" to "reality." Information File C5-68, Writing a Business Plan , offers more discussion of the drafting a business plan.

The feasibility study outlines and analyzes several alternatives or methods of achieving business success. The feasibility study helps to narrow the scope of the project to identify the best business scenario(s). The business plan deals with only one alternative or scenario. The feasibility study helps to narrow the scope of the project to identify and define two or three scenarios or alternatives. The person or business conducting the feasibility study may work with the group to identify the "best" alternative for their situation. This becomes the basis for the business plan.

The feasibility study is conducted before the business plan. A business plan is prepared only after the business venture has been deemed to be feasible. If a proposed business venture is considered to be feasible, a business plan is usually constructed next that provides a "road-map" of how the business will be created and developed. The business plan provides the “blueprint” for project implementation. If the venture is deemed not to be feasible, efforts may be made to correct its deficiencies, other alternatives may be explored, or the idea is dropped.

Reasons to Do or Not to Do a Feasibility Study

Project leaders may find themselves under pressure to skip the "feasibility analysis" step and go directly to building a business. Individuals from within and outside of the project may push to skip this step. Reasons given for not doing a feasibility analysis include:

• We know it’s feasible.  An existing business is already doing it.
• Why do another feasibility study when one was done just a few years ago?
• Feasibility studies are just a way for consultants to make money.
• The market analysis has already been done by the business that is going to sell us the equipment.
• Why not just hire a general manager who can do the study?
• Feasibility studies are a waste of time.  We need to buy the building, tie up the site and bid on the equipment.

The reasons given above should not dissuade you from conducting a meaningful and accurate feasibility study. Once decisions have been made about proceeding with a proposed business, they are often very difficult to change. You may need to live with these decisions for a long time.

Conducting a feasibility study is a good business practice. If you examine successful businesses, you will find that they did not go into a new business venture without first thoroughly examining all of the issues and assessing the probability of business success.

Below are other reasons to conduct a feasibility study.

• Gives focus to the project and outline alternatives.
• Narrows business alternatives
• Identifies new opportunities through the investigative process.
• Identifies reasons not to proceed.
• Enhances the probability of success by addressing and mitigating factors early on that could affect the project. 
• Provides quality information for decision making.
• Provides documentation that the business venture was thoroughly investigated.
• Helps in securing funding from lending institutions and other monetary sources.
• Helps to attract equity investment.

For more information, see Information File C5-64, When to Do and How to Use a Feasibility Study which offers further discussion into the decision to do or not do a feasibility study.

The feasibility study is a critical step in the business assessment process. If properly conducted, it may be the best investment you ever made.

For more information on feasibility and business plans, visit the Ag Decision Maker website .

Reviewed by Gary Wright, extension farm management specialist, 712-223-1574, [email protected] Original authors: Don Hofstrand, retired extension agricultural business specialist, [email protected] Mary Holz-Clause, former co-director, Ag Marketing Resource Center , former associate vice president for ISU Extension and Outreach

Gary Wright

Extension farm management specialist 712-223-1574 view more from this author, don hofstrand, retired extension agricultural business specialist view more from this author, mary holz-clause, former co-director, ag marketing resource center former associate vice president for isu extension and outreach view more from this author.