A business plan and a feasibility study are not the same thing although quite often people assume they mean the same thing. From my experience in writing business plans and feasibility studies people oftentimes think they mean the same thing. While they have some similarities but the following pointers show us how different they are;
What is the Purpose of a Business Plan Versus Feasibility Study?
A feasibility study is designed to uncover the truth behind a business opportunity on whether or not it will work and if so how profitable will it be? With the answers to these questions you can now tell for sure whether you should be investing in that opportunity whereas business plan is designed to show how you intend to convert that business opportunity/idea into a profitable and self-sustaining business venture. If as an entrepreneur you desire to set up a new business which no other person has embarked on or an existing business from another environment/region/country in a new location then what you need is a feasibility study on whether it can work and what are the necessary factors that will ensure it succeeds, on the other if the business has been proven overtime to be viable, then what you need is a business plan to show how you intend to exploit that particular opportunity and future plans to make it sustain and grow itself.
Who it is meant for
A business plan is oftentimes written to attract investors, financiers (banks, development finance institutions etc) and technical/financial partners. A feasibility studies on the other hand serve as a working document to the entrepreneur who is interested in the business opportunity itself. So on one hand if you need a loan from a bank for a new business venture, what you should be showing them is a business plan but where you will be needing technical partners to set up let’s say a factory, processing mill etc a feasibility study is usually required instead.
Format and Sections in a Business Plan versus a feasibility Study
The business plan and the feasibility study both contain executive summaries but even the style and format of that section is different with each. Secondly the business plan tends to be more detailed in describing the business venture, its requirements and the financial implications. The feasibility study may touch the same sections but only sparsely and tends to focus more on necessary logistical challenges and requirements, risk factors and so on e.g distributorship arrangement, required minimum production capacity, recommended capacity utilization, risk assessments etc.
Duration and Technicality
Business plans generally take less time to prepare than feasibility studies. In a business plan the main constraints are industry data and accurate financial assumptions and once these are settled it could be ready in as few as 30 hours whereas a feasibility study requires on the spot assessment, field research, market survey and sometimes case studies to test whether the idea can work and this takes weeks sometimes even months to accomplish. The technicality of both write-ups is also more complex for feasibility study over business plan and so the former tends to be more expensive than the latter.
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