Although feasibility studies and business planning may seem to be a singular task, they are in fact distinct. Feasibility study comes ahead of a venture and can form the foundation for a business plan. While a business plan focuses on sustainability and growth, a feasibility study deals with the viability of the business idea. Therefore, the feasibility study determines whether a business idea is viable and the business plan is created after an opportunity has been identified.
What is a feasibility study?
In the context of feasibility studies and business planning, a feasibility study will delve into whether the project is economically feasible and good enough to move ahead with the implementation of the project. This study will identify potential obstacles that the project can counter and evolve ways to overcome the obstacles. The objective of such a study is to help the project owners to understand the risks and opportunities, identify sources of income, calculate costs and potential profits, and see how they align with the overall objectives. This study is generally conducted in two stages with the first one being a preliminary study and the second one a more detailed study.
The preliminary study will address market description, general variables, cost estimation, and profit estimation.
The second stage will address Market study, financial study, technical study, legal study, social and environmental study.
After the feasibility study, a business plan is drawn out to explain how the project is implemented. This study will comprehensively describe the company including its marketing plan, financial plan, competition, market analysis, product specification, and company team. A business plan will also analyze the project duration consistent with the feasibility study and usually for a period of 3 or 5 years.
A feasibility study aims at establishing the profitability and viability of a business venture and comes ahead of investing in the proposed venture. The feasibility study contains various analyses, calculations, projected estimations, and similar details. A business plan on the other hand explains the strategies and tactics to be employed to grow and sustain the business. Together, Feasibility Studies and Business Planning will aid the business owner in deciding whether it is worthwhile to proceed with the plan and invest a significant amount of money.