What is the Difference Between a Feasibility Study and a Business Plan?
Be sure you know what you want and what to expect when pursuing a new venture, business or project. A lot of time, resources and hard money can be saved in knowing what to do and the order in which to do it. A good rule of thumb is to never commission a business plan until a feasibility study has been completed first.
A feasibility study is normally less than 20% of the cost of a business plan and although a feasibility study will not be anywhere close to the in-depth “nuts and bolts” view of a business plan, it will do exactly what the name implies. It will show if a project is feasible before any other steps are taken or indeed paid for.
There are very big differences between a feasibility study and a business plan.
A feasibility study is designed to discover if a business or project is “feasible” or if it is not: (In short, does the business or project warrant further investment of time, money and further study or is it a non-starter). A feasibility study is a relatively inexpensive way to safeguard any wastage of further investment (will it work or won’t it).
If a project is seen to be feasible
from the results of the study, the next logical step is
to commission a full business plan.
Will the investment made in the
feasibility study itself then be wasted? No.. Because
the research and information uncovered in the study will
be of good use in the business planning stage and will
also reduce the research time and therefore the cost of
the business plan.
A business plan is designed
to “plan” in advance how a business or project will be
started, implemented and managed: (In short, a working
“blue print” of the entire operation of the business or
project). Business plans are commissioned for one of
three reasons: Reorganization, investment/funding or a
management blueprint for operation.
plans to fail, he only fails to plan!
FEASIBILITY STUDIES demonstrate to a prospective project owner or investor that a given concept is financially viable and whether further study and/or a business plan is warranted.
For a feasibility study, basic data is obtained from the client through a series of queries, questions and meetings, wherein the client provides some of the research and other data and facts need to be gained from a variety of sources.
The typical feasibility study contains, among other items, notes on financial projections, a general description of the business, general details describing how the company / project will be formed, managed and marketed, statements concerning the competition and a cash-flow projection based on averages. Further notes can be included as to general details of the project and revelations found during the research stage. The study will normally be completed quickly and in very general format compared to that of a business plan. A feasibility study should answer five questions.
BUSINESS PLANS A Business Plan is a detailed blueprint for building a given company. A business plan contains all that the Feasibility study has plus specific time-lines, detailed budgets with monthly and seasonal forecasts, letters of intent, resumes of staff, background, competition, strengths & weaknesses, work sheets and full notations, appendix and all related and required documents that will be referenced as the company is being developed.
A well-written business plan will
show exactly what revenues can be expected and when to
expect them, what overheads and expenses will need to be
paid and exactly when they will be due.
It will also show staffing levels and salaries along with costs of employment, sales levels with monthly and seasonal trends, setup costs, building/office costs, utility and telephone costs, legal, insurance and accounting costs, office furniture and supplies costs and a myriad of other costs and projections as well as legal requirements and conformation to regulations.
In addition to the projections and
costs, the business plan will feature sections on
demographics, sales and sales methods, objectives,
expansion plans, contingency exercises, product/services
market introductions, regulatory requirements, laws of
City, State and Federal government relating to the
business / project and much more.
A well-written business plan can help maximize potential and minimize overheads, liabilities and risk associated with any project.
plans to fail, he only fails to plan!
A feasibility study and a business
plan are totally separate documents and each do a very
specific job. The costs associated with each are also
What does a business plan Include?
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