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:
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:
- Product or Service
- Market Environment
- Business Model
- Market and Sales Strategy
- Production Operations Requirements
- Management and Personnel Requirements
- Regulations and Environmental Issues
- Critical Risk Factors
- Financial Projections
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
- Financial Projections
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.