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How to use a feasibility study in project management
It can be exciting to run a large, complex project that has a huge potential impact on your organization. On the one hand, you’re driving real change. On the other, failure is intimidating.
What is a feasibility study?
A feasibility study—sometimes called a feasibility analysis or feasibility report—is a way to evaluate whether or not a project plan could be successful. A feasibility study evaluates the practicality of your project plan in order to judge whether or not you’re able to move forward with the project.
It does so by answering two questions:
Does our team have the required tools or resources to complete this project?
Will there be a high enough return on investment to make the project worth pursuing?
Feasibility studies are important for projects that represent significant investments for your business. Projects that also have a large potential impact on your presence in the market may also require a feasibility study.
As the project manager , you may not be directly responsible for driving the feasibility study, but it’s important to know what these studies are. By understanding the different elements that go into a feasibility study, you can better support the team driving the feasibility study and ensure the best outcome for your project.
When should you conduct a feasibility study
A feasibility study should be conducted after the project has been pitched but before any work has actually started. The study is part of the project planning process. In fact, it’s often done in conjunction with a SWOT analysis or project risk assessment , depending on the specific project.
Feasibility studies help:
Confirm market opportunities before committing to a project
Narrow your business alternatives
Create documentation about the benefits and detriments of your proposed initiative
Provide more information before making a go/no go decision
You likely don’t need a feasibility study if:
You already know the project is feasible
You’ve run a similar project in the past
Your competitors are succeeding with a similar initiative in market
The project is small, straightforward, and has minimal long-term business impact
Your team ran a similar feasibility study within the past three years
One thing to keep in mind is that a feasibility study is not a project pitch. During a project pitch, you’re evaluating whether or not the project is a good idea for your company, and whether the goals of the project are in line with your overall strategic plan. Typically, once you’ve established that the project is a good idea, you’d then run a feasibility study to confirm the project is possible with the tools and resources you have at your disposal.
Feasibility study vs. project charter
A project charter is a relatively informal document to pitch your project to stakeholders. Think of the charter like an elevator pitch of your project objectives, scope, and responsibilities. Typically, your project sponsor or executive stakeholders reviews the charter before ratifying the project.
A feasibility study should be implemented after the project charter has been ratified. This isn’t a document to pitch whether or not the project is in line with your team’s goals—rather, it’s a way to ensure the project is something you and your team can accomplish.
Feasibility study vs. business case
A business case is a more formalized version of the project charter. While you’d typically create a project charter for small or straightforward initiatives, you should create a business case if you are pitching a large, complex initiative that will make a major impact on the business. This longer, more formal document will also include financial information, and typically involves more senior stakeholders.
After your business case is approved by relevant stakeholders, you’d then run a feasibility study to make sure the work is doable. If you find it isn’t, you might return to your executive stakeholders and request more resources, tools, or time in order to ensure your business case is feasible.
Feasibility study vs. business plan
A business plan is a formal document of your organization’s goals. You typically write a business plan when founding your company, or when your business is going through a significant shift. Your business plan informs a lot of other business decisions, including your three to five year strategic plan .
As you implement your business and strategic plan, you’ll invest in individual projects. A feasibility study is a way to evaluate the practicality of any given individual project or initiative.
4 elements of a feasibility analysis
There are four main elements that go into a feasibility study: technical feasibility, financial feasibility, market feasibility (or market fit), and operational feasibility. You may also see these referred to as the four types of feasibility studies, though most feasibility studies actually include a review of all four elements.
Technical feasibility
A technical feasibility study reviews the technical resources available for your project. This study determines if you have the right equipment, enough equipment, and the right technical knowledge to complete your project objectives . For example, if your project plan proposes creating 50,000 products per month, but you can only produce 30,000 products per month in your factories, this project isn’t technically feasible.
Financial feasibility
Financial feasibility describes whether or not your project is fiscally viable. A financial feasibility report includes a cost/benefit analysis of the project. It also forecasts an expected return on investment (ROI), as well as outlines any financial risks. The goal at the end of the financial feasibility study is to understand the economic benefits the project will drive.
Market feasibility
The market feasibility study is an evaluation of how your team expects the project’s deliverables to perform in the market. This part of the report includes a market analysis, market competition breakdown, and sales projections.
Operational feasibility
An operational feasibility study evaluates whether or not your organization is able to complete this project. This includes staffing requirements, organizational structure, and any applicable legal requirements. At the end of the operational feasibility study, your team will have a sense of whether or not you have the resources, skills, and competencies to complete this work.
Feasibility study checklist
Most feasibility studies are structured in a similar way. These documents serve as an assessment of the practicality of a proposed business idea. Creating a clear feasibility study helps project stakeholders during the decision making process.
A feasibility study contains:
An executive summary describing the project’s overall viability
A description of the product or service being developed during this project
Any technical considerations , including technology, equipment, or staffing
The market survey , including a study of the current market and the marketing strategy
The operational feasibility study , evaluating whether or not your team’s current organizational structure can support this initiative
The project timeline
Financial projections based on your financial feasibility report
6 steps to conduct a feasibility study
You likely won’t be conducting the feasibility study yourself, but you will probably be called on to provide insight and information. To conduct a feasibility study, hire a trained consultant or, if you have an in-house project management office (PMO) , ask if they take on this type of work. In general, here are the steps they’ll take to complete this work:
1. Run a preliminary analysis
Creating a feasibility study is a time-intensive process. Before diving into the feasibility study, it’s important to evaluate the project for any obvious and insurmountable roadblocks. For example, if the project requires significantly more budget than your organization has available, you likely won’t be able to complete it. Similarly, if the project deliverables need to be live and in market by a certain date, but they won’t be available for several months after the fact, the project likely isn’t feasible either. These types of large-scale obstacles make a feasibility study unnecessary, because it’s clear the project is not viable.
2. Evaluate financial feasibility
Think of the financial feasibility study as the projected income statement for the project. This part of the feasibility study clarifies the expected project income and outlines what your organization needs to invest—in terms of time and money—in order to hit the project objectives.
During the financial feasibility study, take into account whether or not the project will impact your business's cash flow. Depending on the complexity of the initiative, your internal PMO or external consultant may want to work with your financial team to run a cost-benefit analysis of the project.
3. Run a market assessment
The market assessment, or market feasibility study, is a chance to identify the demand in the market. This study offers a sense of expected revenue for the project, and any potential market risks you could run into.
The market assessment, more than any other part of the feasibility study, is a chance to evaluate whether or not there’s an opportunity in the market. During this study, it’s critical to evaluate your competitor’s positions and analyze demographics to get a sense of how the project will do.
4. Consider technical and operational feasibility
Even if the financials are looking good and the market is ready, this initiative may not be something your organization can support. To evaluate operational feasibility, consider any staffing or equipment requirements this project needs. What organizational resources—including time, money, and skills—are necessary in order for this project to succeed?
Depending on the project, it may also be necessary to consider the legal impact of the initiative. For example, if the project involves developing a new patent for your product, you will need to involve your legal team and incorporate that requirement into the project plan.
5. Review project points of vulnerability
At this stage, your internal PMO team or external consultant have looked at all four elements of your feasibility study—financials, market analysis, technical feasibility, and operational feasibility. Before running their recommendations by you and your stakeholders, they will review and analyze the data for any inconsistencies. This includes ensuring the income statement is in line with your market analysis. Similarly, now that they’ve run a technical feasibility study, are any liabilities too big of a red flag? (If so, create a contingency plan !)
Depending on the complexity of your project, there won’t always be a clear answer. A feasibility analysis doesn’t provide a black and white decision for a complex problem. Rather, it helps you come to the table with the right questions—and answers—so you can make the best decision for your project and for your team.
6. Propose a decision
The final step of the feasibility study is an executive summary touching on the main points and proposing a solution.
Depending on the complexity and scope of the project, your internal PMO or external consultant may share the feasibility study with stakeholders or present it to the group in order to field any questions live. Either way, with the study in hand, your team now has the information you need to make an informed decision.
Achieve project success with Asana
Done with your feasibility study? You’re ready to run a project! Set your project up for success by tracking your progress in a work management tool , like Asana. From the small stuff to the big picture, Asana organizes work so teams know what to do, why it matters, and how to get it done.
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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
Hope you enjoyed this post on feasibility study , let me know what you think in the comment section below.
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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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Feasibility Study
An assessment of the practicality of a proposed project/plan
What is a Feasibility Study?
A feasibility study, as the name suggests, is designed to reveal whether a project/plan is feasible. It is an assessment of the practicality of a proposed project/plan.
A feasibility study is part of the initial design stage of any project/plan. It is conducted in order to objectively uncover the strengths and weaknesses of a proposed project or an existing business. It can help to identify and assess the opportunities and threats present in the natural environment, the resources required for the project, and the prospects for success. It is conducted in order to find answers to the following questions:
- Does the company possess the required resources and technology?
- Will the company receive a sufficiently high return on its investment?
Steps in a Feasibility Study
Conducting a feasibility study involves the following steps:
- Conduct preliminary analyses.
- Prepare a projected income statement . What are the possible revenues that the project can generate?
- Conduct a market survey. Does the project create a good or service that is in demand in the market? What price are consumers willing to pay for the good or service?
- Plan the organizational structure of the new project. What are the staffing requirements? How many workers are needed? What other resources are needed?
- Prepare an opening day balance of projected expenses and revenue
- Review and analyze the points of vulnerability that are internal to the project and that can be controlled or eliminated.
- Decide whether to go on with the plan/project.
Contents of a Feasibility Report
A feasibility report should include the following sections:
- Executive Summary
- Description of the Product/Service
- Technology Considerations
- Product/ Service Marketplace
- Identification of the Specific Market
- Marketing Strategy
- Organizational Structure
- Financial Projections
Types of Feasibility Study
1. technical feasibility.
- Technical: Hardware and software
- Existing or new technology
- Site analysis
- Transportation
2. Financial feasibility
- Initial investment
- Resources to procure capital: Banks, investors, venture capitalists
- Return on investment
3. Market feasibility
- Type of industry
- Prevailing market
- Future market growth
- Competitors and potential customers
- Projection of sales
4. Organizational feasibility
- The organizational structure of the business
- Legal structure of the business or the specific project
- Management team’s competency, professional skills, and experience
The practice of companies blindly following available templates comes with enormous risks. Whether companies design or copy certain business models, it is necessary to conduct a feasibility study, using models, to reduce the risk of failure. A feasibility study of the business model should be centered on the organization’s value creation processes.
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11.3: Conducting a Feasibility Analysis
- Last updated
- Save as PDF
- Page ID 50688
- Michael Laverty and Chris Littel et al.
Learning Objectives
By the end of this section, you will be able to:
- Describe the purpose of a feasibility analysis
- Describe and develop the parts of a feasibility analysis
- Understand how to apply feasibility outcomes to a new venture
As the name suggests, a feasibility analysis is designed to assess whether your entrepreneurial endeavor is, in fact, feasible or possible. By evaluating your management team, assessing the market for your concept, estimating financial viability, and identifying potential pitfalls, you can make an informed choice about the achievability of your entrepreneurial endeavor. A feasibility analysis is largely numbers driven and can be far more in depth than a business plan (discussed in The Business Plan ). It ultimately tests the viability of an idea, a project, or a new business. A feasibility study may become the basis for the business plan, which outlines the action steps necessary to take a proposal from ideation to realization. A feasibility study allows a business to address where and how it will operate, its competition, possible hurdles, and the funding needed to begin. The business plan then provides a framework that sets out a map for following through and executing on the entrepreneurial vision.
Organizational Feasibility Analysis
Organizational feasibility aims to assess the prowess of management and sufficiency of resources to bring a product or idea to market Figure 11.12 . The company should evaluate the ability of its management team on areas of interest and execution. Typical measures of management prowess include assessing the founders’ passion for the business idea along with industry expertise, educational background, and professional experience. Founders should be honest in their self-assessment of ranking these areas.
Resource sufficiency pertains to nonfinancial resources that the venture will need to move forward successfully and aims to assess whether an entrepreneur has a sufficient amount of such resources. The organization should critically rank its abilities in six to twelve types of such critical nonfinancial resources, such as availability of office space, quality of the labor pool, possibility of obtaining intellectual property protections (if applicable), willingness of high-quality employees to join the company, and likelihood of forming favorable strategic partnerships. If the analysis reveals that critical resources are lacking, the venture may not be possible as currently planned. 47
Financial Feasibility Analysis
A financial analysis seeks to project revenue and expenses (forecasts come later in the full business plan); project a financial narrative; and estimate project costs, valuations, and cash flow projections Figure 11.13 .
The financial analysis may typically include these items:
- A twelve-month profit and loss projection
- A three- or four-year profit-and-loss projection
- A cash-flow projection
- A projected balance sheet
- A breakeven calculation
The financial analysis should estimate the sales or revenue that you expect the business to generate. A number of different formulas and methods are available for calculating sales estimates. You can use industry or association data to estimate the sales of your potential new business. You can search for similar businesses in similar locations to gauge how your business might perform compared with similar performances by competitors. One commonly used equation for a sales model multiplies the number of target customers by the average revenue per customer to establish a sales projection:
T×A=ST×A=S
Target(ed) Customers/Users×Average Revenue per Customer=Sales ProjectionTarget(ed) Customers/Users×Average Revenue per Customer=Sales Projection
Another critical part of planning for new business owners is to understand the breakeven point , which is the level of operations that results in exactly enough revenue to cover costs (see Entrepreneurial Finance and Accounting for an in-depth discussion on calculating breakeven points and the breakdown of cost types). It yields neither a profit nor a loss. To calculate the breakeven point, you must first understand the two types of costs: fixed and variable. Fixed costs are expenses that do not vary based on the amount of sales. Rent is one example, but most of a business’s other costs operate in this manner as well. While some costs vary from month to month, costs are described as variable only if they will increase if the company sells even one more item. Costs such as insurance, wages, and office supplies are typically considered fixed costs. Variable costs fluctuate with the level of sales revenue and include items such as raw materials, purchases to be sold, and direct labor. With this information, you can calculate your breakeven point—the sales level at which your business has neither a profit nor a loss. 48 Projections should be more than just numbers: include an explanation of the underlying assumptions used to estimate the venture’s income and expenses.
Projected cash flow outlines preliminary expenses, operating expenses, and reserves—in essence, how much you need before starting your company. You want to determine when you expect to receive cash and when you have to write a check for expenses. Your cash flow is designed to show if your working capital is adequate. A balance sheet shows assets and liabilities, necessary for reporting and financial management. When liabilities are subtracted from assets, the remainder is owners’ equity. The financial concepts and statements introduced here are discussed fully in Entrepreneurial Finance and Accounting .
Market Feasibility Analysis
A market analysis enables you to define competitors and quantify target customers and/or users in the market within your chosen industry by analyzing the overall interest in the product or service within the industry by its target market Figure 11.14 . You can define a market in terms of size, structure, growth prospects, trends, and sales potential. This information allows you to better position your company in competing for market share. After you’ve determined the overall size of the market, you can define your target market, which leads to a total available market (TAM) , that is, the number of potential users within your business’s sphere of influence. This market can be segmented by geography, customer attributes, or product-oriented segments. From the TAM, you can further distill the portion of that target market that will be attracted to your business. This market segment is known as a serviceable available market (SAM) .
Figure 11.14
Projecting market share can be a subjective estimate, based not only on an analysis of the market but also on pricing, promotional, and distribution strategies. As is the case for revenue, you will have a number of different forecasts and tools available at your disposal. Other items you may include in a market analysis are a complete competitive review, historical market performance, changes to supply and demand, and projected growth in demand over time.
ARE YOU READY?
You’ve been hired by a leading hotel chain to determine the market and financial potential for the development of a mixed-use property that will include a full-service hotel in downtown Orlando, located at 425 East Central Boulevard, in Orlando, Florida. The specific address is important so you can pinpoint existing competitors and overall suitability of the site. Using the information given, conduct a market analysis that can be part of a larger feasibility study.
WORK IT OUT
Location feasibility.
You’re considering opening a boutique clothing store in downtown Atlanta. You’ve read news reports about how downtown Atlanta and the city itself are growing and undergoing changes from previous decades. With new development taking place there, you’re not sure whether such a venture is viable. Outline what steps you would need to take to conduct a feasibility study to determine whether downtown Atlanta is the right location for your planned clothing store.
Applying Feasibility Outcomes
After conducting a feasibility analysis, you must determine whether to proceed with the venture. One technique that is commonly used in project management is known as a go-or-no-go decision . This tool allows a team to decide if criteria have been met to move forward on a project. Criteria on which to base a decision are established and tracked over time. You can develop criteria for each section of the feasibility analysis to determine whether to proceed and evaluate those criteria as either “go” or “no go,” using that assessment to make a final determination of the overall concept feasibility. Determine whether you are comfortable proceeding with the present management team, whether you can “go” forward with existing nonfinancial resources, whether the projected financial outlook is worth proceeding, and make a determination on the market and industry. If satisfied that enough “go” criteria are met, you would likely then proceed to developing your strategy in the form of a business plan.
WHAT CAN YOU DO?
Love beyond walls.
When Terence Lester saw a homeless man living behind an abandoned, dilapidated building, he asked the man if he could take him to a shelter. The man scoffed, replying that Lester should sleep in a shelter. So he did—and he saw the problem through the homeless man’s perspective. The shelter was crowded and smelly. You couldn’t get much sleep, because others would try to steal your meager belongings. The dilapidated building provided isolation away from others, but quiet and security in its own way that the shelter could not. This experience led Lester to voluntarily live as a homeless person for a few weeks. His journey led him to create Love Beyond Walls (www.lovebeyondwalls.org), an organization that aids the homeless, among other causes. Lester didn’t conduct a formal feasibility study, but he did so informally by walking in his intended customers’ shoes—literally. A feasibility study of homelessness in a particular area could yield surprising findings that might lead to social entrepreneurial pursuits.
- What is a social cause you think could benefit from a formal feasibility study around a potential entrepreneurial solution?
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What is a Feasibility Plan?
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Feasibility Plan
A feasibility plan is a professional analysis of a business or idea. A business plan writer can help you develop your feasibility plan so it can provide a well-defined outline and evaluation of your core concept. This can be in turn presented to investors to emphasize the potential for sales and profit.
The findings of a feasibility plan are often one of the final deciding factors as to whether or not a concept is financially worth developing. For this reason, it is vital to prepare yours properly and a business plan consultant can help!
- Feasibility Study
Your personal business plan consultant will help you construct a compelling feasibility plan that includes a mission statement , your step-by-step plan to ensure success, and a comprehensive summary.
Your feasibility plan should include a clear analysis of costs, pricing, probable expenses, and the potential profit margin, as well as a basic market analysis that covers market size and share as well as competing products or services in detail.
Pro Tip: Here is how to calculate your potential market size using TAM, TOM, SOM
How to Conduct a Feasibility Study
As feasibility plans are designed for immediate implementation upon approval. Your business plan writer can help ensure that everything is in order and that your proposal will be viewed favorably by the powers that be Whether your business includes only yourself or you have others who will be affected by success or failure, the responsible thing to do is to rely on professionals for the best outcome.
Your business plan writer is trained to analyze and prepare business plans on a quick turnaround schedule so you will be ready when called upon to present your reasons why a bank or group of investors should risk their money on you.
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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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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.
Comments are closed.
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Home » Business Plans
Feasibility Study vs Business Plan – What’s the Difference
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 ? Well, I will advice you read on to find the answers you seek. Now there seem to be a mix up between feasibility study and business plan. While some say they are the same, others argue they are not.
So I want to use this medium to draw a line between a feasibility report and a business plan. Though the process involved in developing a feasibility report and a business are similar, I will reveal to you some basic difference between conducting feasibility study and writing 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.
I hope this few words have been able to point out the key differences between feasibility study and business plan. I feel 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.
- Go to Chapter 3: U nderstanding the Difference Between a Business Plan and a Strategic Plan
- Go Back to Chapter 1: W hy Should You Develop a Business Plan ?
- Go Back to Introduction and Table of Content
More on Business Plans
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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managementhandout
Get best management handout here, chapter three: feasibility analysis and business plan preparation.
CHAPTER THREE
FEASIBILITY ANALYSIS AND BUSINESS PLAN PREPARATION
Introduction
The process of setting up a business is preceded by the decision to choose entrepreneurship as a career and identification of promising business ideas upon a careful examination of the entrepreneurial opportunities. Generation of ideas is not enough; the business ideas must stand the scrutiny from socio-economic, financial and legal perspectives. That is, after the initial screening of the ideas that do not seem promising, you should conduct an in-depth examination of the chosen three to four before settling for the one where you would like to exert your time, money and energy. You should prepare a business plan that will serve as the road map for effective venturing, whether you may require institutional funding (in which case it is necessary to do so) or not. Setting up of new business enterprise is a very challenging task; you are likely to encounter many problems in route. It’s advisable to be aware of these problems as to forewarn means to fore arm.
Plans are part of any business operation. Planning is a process that never ends for a business. It is extremely important in the early stages of any new venture when the entrepreneur will need to prepare a preliminary business plan. For any given organization, it is possible to find financial plans, marketing plans, human resource plans, production plans, and sales plans, to name a few.
Plans may be short term or long term, or they may be strategic or operational. Plans also differ in scope depending on the type of business or the anticipated size of the start up operation. In this regard, plans can be classified in to three types: strategic plans, tactical plans, and operational plans.Even though they may serve different functions, all these plans have one important purpose: to provide guidance and structure to management in a rapidly changing market environment.
3.1. Feasibility Analysis
Feasibility literally means whether some idea will work or not. It is necessary to know beforehand whether there exists a sizeable market for the proposed product/service, what would be the investment requirements and where to get the funding from, whether and wherefrom the necessary technical know-how to convert the idea into a tangible product may be available, and so on. In other words, feasibility study involves an examination of the operations, financial, HR and marketing aspects of a business before the venture comes into existence.
3.1.1 Market Analysis
A market, whether a place or not, is the arena for interaction among buyers and sellers. From seller’s point of view, market analysis is primarily concerned with the aggregate demand of the proposed product/service in future and the market share expected to be captured. Success of the proposed idea clearly pivots on the continuing support of the customers. However, it may be difficult to identify the market for one’s product/service. After all, the whole world cannot be your market. You have to carefully segment the market according to some criteria such as geographic scope, demographic and psychological profile of the potential customers. It is a study of knowing who are your customers; for this you require information on: consumption trends, past and present supply position, production possibilities and constraints, imports and exports competition, cost structure, elasticity of demand, consumer behavior, intentions, motivations, attitudes, preferences and requirements; distribution channels and marketing policies in use; administrative, technical and legal constraints impinging on the marketing of the product.
3.1.2 Financial Analysis
The objective of financial analysis is to ascertain whether the proposed project will be financially viable in the sense of being able to meet the burden of servicing debt and whether the proposed project will satisfy the return expectations of those who provide the capital. While conducting a financial appraisal certain aspects has to be looked into like: investment outlay and cost of the project; means of financing; projected profitability; break- even point; cash flows of the project; investment worthiness judged in terms of various criteria of merit; and projected financial position.
3.1.3 Technical Analysis
The issues involved in the assessment of technical analysis of the proposed project may be classified into those pertaining to inputs, process and outputs.
Input Analysis : Input analysis is mainly concerned with the identification, quantification and evaluation of project inputs, that is, machinery and materials. You have to ensure that the right kind and quality of inputs would be available at the right time and cost throughout the life of the project. You have to enter into long-term contracts with the potential suppliers; in many cases you have to cultivate your supply sources.
Process Analysis : It refers to the production/operations that you would perform on the inputs to add value. Usually, the inputs received would undergo a process of transformation in several stages of manufacture. Where to locate the facility, what would be the sequence, what would be the layout, what would be the quality control measures, etc. are the issues that you would learn in greater details in subsequent lessons.
Output Analysis : this involves product specification in terms of physical features- color, weight, length, breadth, height; functional features; chemical material properties; as well as standards to be complied with such as industry level standard and country level standard.
3.1.4 Economic Analysis
Economic analysis is the study of costs- and- benefits. In regard to the feasibility of the study the entrepreneur is concerned whether the total cost of the product is justifiable in comparison with the price at which it will sell at the market place. This cost-benefit analysis goes into financial calculations for profitability analysis that we discussed under financial analysis. At this stage it is also useful to distinguish between the economic and commercial feasibility; whereas economic feasibility leads one to the unit cost of the product, commercial feasibility informs whether enough units would sell.
3.1.5 Ecological Analysis
In recent years, environmental concerns have assumed a great deal of significance especially for projects, which have significant ecological implications like power plants and irrigation schemes, and for environment polluting industries (like bulk drugs, chemicals and leather processing). The concerns that are usually addressed include the following:
- What is the likely damage caused by the project to the environment?
- What is the cost of restoration measures required to ensure that the damage to the environment is contained within acceptable limits?
3.1.6. Legal and Administrative Analysis
The entrepreneur has to be sure of the administrative and legal issues involved in the business project which is going to be selected. These include, choice of the form of business ownership, registration and clearances and approvals from the diverse authorities.
- Project Report
The findings of the feasibility analysis may be compiled in a project report. These findings may be examined by the independent consultants/experts. Funding agencies have their own set-up for the appraisal of these reports. The idea is that the optimist entrepreneur may have overlooked certain aspects that may have a bearing on the ultimate feasibility of the proposed business idea. It is often felt that financial institutions tend to overemphasize the financial feasibility of the project and do not pay adequate attention to its commercial and economic viability.
- Registration
The first step for registration is to submit an application to the registrar in a prescribed form. In addition, the following documents should be lodged with the registrar of the business organization.
- The memorandum of association or the contract of partnership.
- A notice published in a news paper announcing the establishment of the business organization.
Where the applicant is a share company, the following additional documents are required to be submitted.
- A bank statement showing one quarter of the par-value of the shares or the capital raised by public subscription is deposited.
- A specimen of share certificates for each class of shares.
Where the shareholder is a legal person incorporated in Ethiopia, the following additional documents are required to be submitted.
- A copy of the company’s entry in the commercial register.
- A resolution of the appropriate body of the company agreeing to the company’s participation in the company to be formed.
Where the shareholder is a legal person incorporated abroad, the following additional documents are required to be submitted.
- A notarized copy of registration of the company in the country of origin.
- Copy of the memorandum and article of associations.
- An authenticated decision of the company’s board of directors or a similar authorized body to undertake business activities in Ethiopia. The decision should indicate the amount of capital allocated and the individual appointed by the company to act on its behalf.
- An authenticated power of attorney issued by an authorized organ of a company for the permanent representative in Ethiopia.
- Financial reference from the company’s bank.
- Business Plan
What Is A Business Plan?
It is a written document describing all relevant internal and external elements and strategies for starting a new venture.
It includes:
- functional plans such as research and development, manufacturing, marketing, finance, and human resources
- expected results
- critical risks
Business plan answers the questions: Where am I now? Where am I going? How will I get there?
Potential investors, lenders, suppliers, employees and customers require a business plan.
Who Should Write The Plan?
The business plan should be prepared by the entrepreneur. However, he or she may consult with many other sources in its preparation. Lawyers, accountants, marketing consultants, and engineers are useful in the preparation of the plan. Entrepreneurs may also hire or offer equity (partnership) to another person who might provide the appropriate expertise in preparing the business plan as well as become an important member of the management team.
The following skill assessment criteria are used for deciding in the preparation of business plan for it to be either by the entrepreneur or to make use of other resources depending on the entrepreneur’s assessment of his/her own strengths and weaknesses.
- Management – planning, organizing, supervising, directing, and controlling.
- Marketing – identifying customers, distribution channels, supply chain
- Financial – managing financial resources, accounting, budgeting
- Legal – organization form, risk management, privacy and security
- Administrative – people relations, advisory board relations
- Higher-order – learning, problem-solving
Scope and Value of the Business Plan-Who Reads the Plan?
The following parties may read a business plan and hence prior to its preparation the business plan should consider those parties who determine its scope and value.
- venture capitalists,
- Advisors and consultants.
Who is going to read the plan often affects the actual content and focus of the business plan. There are three very essential perspectives that should be considered in preparing the business plan . These are:
- The entrepreneur :
The entrepreneur should thoroughly understand what the venture is all about as well as the technology and creativity involved in the venture.
- The market :
You must also try to view your business through the eyes of the customers. Consider whether there are enough customers to buy the product or use the service.
- The investor : From an investor’s perspective, sound financial projections that indicate the feasibility of the venture is better be included in the business plan.
Generally, the depth and detail of the business plan depend on the size and scope of the proposed new venture.
Benefits of a Business Plan
The benefit of business plan is unquestionable in that many successful businesses start their operation once they have the necessary and feasible business plan. The plan can benefit various parties which will have stake the new venture. However, for the purpose of this course we are going to see the benefits of the plan for the entrepreneur, financial sources and customers.
- Specifically for the entrepreneur
The time, effort, research, and discipline needed to put together a formal business plan force the entrepreneur to view the venture critically and objectively. The competitive, economic, and financial analysis included in the business plan subject the entrepreneur to close scrutiny (analysis) of his or her assumptions about the venture’s success.
Since all aspects of the business venture must be addressed in the plan, the entrepreneur develops and examines operating strategies and expected results for outside evaluators. The business plan quantifies objectives, providing measurable benchmarks for comparing forecasts with actual results. The completed business plan provides the entrepreneur with a communication tool for outside financial sources as well as an operational tool for guiding the venture towards success.
- Specifically for the financial sources
Since different sources of finance like banks want to know the ability of their clients to pay back the money that the borrower is borrowed. One of the most relevant documents that can make them approve the ability of a client is the business plan. Hence, in this regard, business plans are highly reviewed and evaluated by the financial sources of businesses since they get the following information in the business plan.
- Details of the market potential and plans for securing a share of that market.
- The venture’s ability to service debt or provide an adequate return on equity.
- Critical risks and crucial events with a discussion of contingency plans.
- A clear, concise document that contains the necessary information for a thorough business and financial evaluation of the feasibility of the new venture.
Pitfalls to Avoid in Planning
Since business plan is important and used for variety of purposes, it needs careful and well managed preparation since absence of important consideration (pitfalls in business planning) can result in disastrous consequences. The pitfalls in planning are the following:
Pitfall 1: No Realistic Goals
Indicators : lack of attainable goals, time frame, priorities and action steps
Remedy : setting up a time table with specific steps to be accomplished during a specific period.
Pitfall 2: Failure to Anticipate Roadblocks
Indicators : no recognition of future problems, no admission of possible weaknesses of the plan, no contingency plans
Remedy : listing the expected obstacles and solutions
Pitfall 3: No Commitment or Dedication
Indicators : excessive procrastination, missed appointments, no desire to invest personal money
Remedy : acting quickly and follow professional appointments, show financial commitment.
Pitfall 4: Lack of Demonstrated Experience (Business or Technical)
Indicators : no experience in business, no experience in specific area of the venture, not understanding the industry.
Remedy : giving evidence of personal experience and background, build effective team.
Pitfall 5: No Market Segment
Indicators : uncertainty regarding who will buy, no proof of unsatisfied need
Remedy : having a specific target market, justify why and how your product will satisfy the need.
3.5 Developing a Well-Conceived Business Plan
There are many different business plan formats. The layout may vary depending on the type of the business, the purpose of the plan and the leadership. The following format can be amended to meet the needs of a business.
Complete Outline of a Business Plan
Section I: Executive Summary
This is a concise summary of the business opportunity; however it covers all important components of the plan. As a future-oriented, two page document, it demonstrates your knowledge of the business opportunity and proves that any investment in the future will yield a good return.
It is important to develop a concise description of your business to capture the interest and support of the readers like investors, partners, lenders or regulatory agencies.
Section II: Business Description
This part of the business plan includes the following components;
- General description of business
- Industry background-trends, analysis of competitors
- Company history or background
- Goals and potential of the business and milestones (if any)
- Uniqueness of product or service
The general description of the business refers
- Form of business
- Name of the business
- Business startup date
- Business operation- for instance, full time venture Monday to Friday, 7:00 AM to 6:00 PM
- Business type- e.g. supplier of high quality child care products
- Location- kebele, telephone, fax, E-mail
- Advisors: lawyers, accountants etc.
Section III: Research and analysis
Under this section of a business plan a thorough analysis of both direct and indirect competitors, Strengths and weaknesses of the competitors, the status of their business- steady, increasing or decreasing; and the difference of their product from your product are expected to be evaluated and presented. Hence, different information about the market concerning the following marketing components will be incorporated.
- Target market (customers) identified
- Market size and trends
- Competition
- Estimated market share
Regarding the Marketing plan, the four P’s will be considered and the result will be presented. It is mentioned in the following sections.
- Product or service
Product and/or services outputs and the whole activities of the business and the reasons why customers are coming to your organization from which your business gains revenues, knowing what products and services you produce are important. In this regard, the following questions might be asked and given reply to be competitive in the market.
- What are you selling?
- How your product or service will benefit the customer?
- Which product or services are in demand?
- What is different about the product or service your business is offering?
- Distribution
Here the following questions should be addressed:
- What are your location’s needs?
- Is the area accessible?
- How and where you plan to sell your product?
It should be noted here in that you must match your location and distribution strategy to the buying pattern preferences of your target market.
This part of the marketing plan is used to improve your overall competitiveness. This is due to the fact that price is the only element (among the four P’s) that is used to generate revenue while all the other elements let a business incur costs. Here the entrepreneur is expected to know different pricing strategies and try to decide a strategy that suits its objectives.
Hence, it is should be bore in mind here in that getting a feel for the pricing strategy of competitors is important to see the relationship of your price with the competitors and the industry average.
- Advertising and promotions
These are methods you choose to communicate to your target market to obtain your sales projections. A new business must create awareness about its products or services with an action plan to generate business. Hence, a well-defined plan of action includes the timing, costs and expected return of the chosen promotional methods which have impact on cash flow, both cash receipt and cash disbursements.
Section IV. Research, Design, and Development
Under this section the following technical and engineering parts of a business plan will be considered.
- Development and design
- Technical research results
- Research assistance needs
- Cost structure
Section V: Manufacturing
The manufacturing section of the business plan comprises of the following components.
- Location analysis
- Is the area desirable? The building desirable?
- Is it easily accessible? Is the public transportation available? Is street lighting adequate?
- Are market shifts or demographic shifts occurring?
- Production needs: facilities and equipment
- Suppliers/transportation cost
- Labor supply
- Manufacturing cost data
Section VI: Management
The intent of the Management Plan is to explain in detail who will run the business, what skills and credentials these people have, and how everyone will fit into the organization’s structure. While writing the Management Plan, it is essential to take into account how each person will affect the business’ bottom line as well, since a business plan is supposed to show a business’ potential profitability. So, the plan encompasses:
- Management team – key personnel
- Legal structure – stock agreements, employment agreements, ownership
- Board of directors, advisors, and consultants
Section VII: Critical Risks
Critical risks of a business may include:
- Potential Problems
Potential problems include: effect of unfavourable trend in the industry, design or manufacturing cost overruns, and longer lead times in material purchases, unplanned-for competition.
What-ifs are those conditions which may happen in the future but not yet to be known about their occurrence currently. Some of them might be competitors’ price cut, inaccurate sales projections, breaking up of management team.
- Obstacles and risks
- Alternative courses of action (i.e. contingency plans)
Section VIII: Financial
- Financial forecast
Under this section different information about financial conditions of the business will be considered using various financial statements.
- Profit and loss statement
Provides you with an overall profitability summary for a period of time and will determine your tax liability for the year as it is depicted below.
Income statement
___________________
Sales ___________________
Expenses ____________________
(Variable or fixed) ____________________
Profit/ loss ____________________
____________________
Tax owed ____________________
- Cash flow statement
This takes the predictions and estimates that you have determined in your business pan and transferred to a comprehensive financial statement. Preparing cash flow statement helps to determine whether or not the business is viable and if you will be able to draw funds from the business . It also Helps to know your monthly sales and expenses that will also help make good decisions such as when to purchase equipment or hire staff and if you need to obtain a line of credit. This part will be clearly shown in the sample business plan.
Additionally, the following financial instruments may also be included.
- c . Break-even analysis
- d . Cost controls
- e . Balance sheet
- Sources of finance and application of funds
There are different of sources financing a new venture and an already running business. Basically, the two major sources of finance are;
- Debt financing
- equity financing
Concerning the application of funds, budget plans and financing stages will be included in the business as part of the financial section of a business plan.
- Budgeting plans
A budget is a powerful tool you can use to help you take control of your money.
Some people say they can’t budget. They say it’s too complicated or they don’t know where to start. Or they think they’ve got enough money and don’t want to be restricted by a budget because it might mean going without.
The truth is, everybody who does a budget can see how it pays off. Basically, it helps you understand where your money goes so you can take control. A budget helps you decide what you want and plan how to achieve it.
- Financing stages
It is rarely possible for startups to raise sufficient capital to start their operations, launch products and break even. Although a “one-time investment” strategy is theoretically possible, it is hard to cite examples of any successful startup that has gone this route. Moreover, most angel investors and venture capitalists prefer to fund startups in steps. This practice helps investors assess the value of the company and minimize the startup risk. Therefore, entrepreneurs should articulate their investment requirements, while keeping in mind how investors like to fund startups.
Venture capitalists and angel investors categorize startups into stages based on a number of startup parameters including who makes up the management team, the value proposition, the risk, customers’ profiles and engagement, revenue, etc. and provide equity finance accordingly. Most startups are categorized into the following stages:
Early Stage
- First round
Expansion Stage
- Second round
- Third round
- Bridge loan
Liquidation Stage
- Merger & Acquisition round
- Initial Public Offering (IPO)
- Leveraged buyouts
Section IX: Milestone Schedule
This part of the business plan contains topics like:
- A . Timing and objectives
- Deadlines/milestones
- Relationship of events
Milestone scheduling : this is a step by step approach to illustrate accomplishments in a piece-meal fashion. Milestones should be related to such activities as:
- Product design and development.
- Establishing the management team
- Production and operations scheduling
- Market planning
- Incorporation of the business
- Completion of design and development
- Hiring of sales representatives
- Product display at trade shows
- Signing up distributors and dealers
- Ordering production quantities of materials
- Receipt of first orders
- First sales and first deliveries
- Payment of first account receivables (cash-in)
Section X: Appendix
This section of the business plan contains documents and other materials which have been used for preparing business plan. This can be financial, administrative, human resource or other related data.
Guidelines to Remember
The following key points are found to be pertinent that should be given due consideration while preparing a business plan.
- Keep the Plan Respectably Short
- Organize and Package the Plan Appropriately
- Orient the Plan Toward the Future
- Avoid Exaggeration
- Highlight Critical Risks
- Give Evidence of an Effective Entrepreneurial Team
- Do Not Over diversify
- Identify the Target Market
- Keep the Plan Written in the Third Person
- Capture the Reader’s Interest
3.4.6 Sample Business plan format
The business plan outlined below presents all necessary chapters in detail, including all necessary explanations in the context of Ethiopia.
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What Is a Feasibility Study? How to Conduct One for Your Project
Why is a feasibility study so important in project management? For one, the feasibility study or feasibility analysis, is the foundation upon which your project plan resides. That’s because the feasibility analysis determines the viability of your project. Now that we got your attention, read on to learn what you need to know about feasibility studies.
What Is a Feasibility Study?
A feasibility study is simply an assessment of the practicality of a proposed project plan or method. This is done by analyzing technical, economic, legal, operational and time feasibility factors. Just as the name implies, you’re asking, “Is this feasible?” For example, do you have or can you create the technology to do what you propose? Do you have the people, tools and the resources necessary? And, will the project get you the ROI you expect?
When should project managers do a feasibility study? It should be done during that point in the project management life cycle after the business case has been completed.
So, that’s the “what” and the “when” but how about the “why?” Meaning, why do you need a feasibility study? Well, it determines the factors that affect project feasibility, making it pretty important.
As you’re researching the feasibility study, project management software can help you keep track of all that information. ProjectManager does more than just collect items as with most to-do lists. Assign a team member to get the feasibility analysis data you need. See their progress in real time. They can attach supporting documents. You can even comment on the task any time, anywhere. If you need an answer to a question, tag anyone on the team and they’re alerted to the message by email and in-app notifications. Streamline the feasibility analysis process with ProjectManager. Try it free today.
What Is Included in a Feasibility Study Report?
The findings of your project feasibility study are compiled in a feasibility report that usually includes the following elements.
- Executive summary
- Description of product/service
- Technology considerations
- Product/service marketplace
- Marketing strategy
- Organization/staffing
- Financial projections
- Findings and recommendations
Types of Feasibility Study
- Technical Feasibility: Consists in determining if your organization has the technical resources and expertise to meet the project requirements .
- Economic Feasibility: You’ll need to do an assessment of the economic factors of your project to determine its financial viability. You can use a cost-benefit analysis to compare its financial costs against its projected benefits.
- Legal Feasibility: Your project must meet legal requirements. That includes laws and regulations that apply to all activities and deliverables in your project scope .
- Operational Feasibility: Operational feasibility refers to how well your project matches your organization’s capacity planning , resources, strategic goals and business objectives.
- Time Feasibility: Estimate the time that will take to execute the project and set deadlines. Then think how your project timeline fits with your current operations, such as your demand planning, production schedule, among many other things.
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Project Estimate Template
Use this free Project Estimate Template for Excel to manage your projects better.
7 Steps To Do a Feasibility Study
1. conduct a preliminary analysis.
Begin by outlining your project plan . You should focus on an unserved need, a market where the demand is greater than the supply, and whether the product or service has a distinct advantage. Then you need to determine if the feasibility factors are too high to clear (i.e. too expensive, unable to effectively market, etc.).
2. Prepare a Projected Income Statement
This step requires you to work backward. Start with what you expect the income from the project to be and then what project funding is needed to achieve that goal. This is the foundation of an income statement. Things to take into account here include what services are required and how much they’ll cost, any adjustments to revenues, such as reimbursements, etc.
Related: Free Project Management Templates
3. Conduct a Market Survey, or Perform Market Research
This step is key to the success of your feasibility study, so make your market analysis as thorough as possible. It’s so important that if your organization doesn’t have the resources to do a proper one, then it is advantageous to hire an outside firm to do so.
The market research is going to give you the clearest picture of the revenues and return on investment you can realistically expect from the project. Some things to consider are the geographic influence on the market, demographics, analyzing competitors, the value of the market and what your share will be and if the market is open to expansion (that is, response to your offer).
4. Plan Business Organization and Operations
Once the groundwork of the previous steps has been laid, it’s time to set up the organization and operations of the planned project to meet its technical, operational, economic and legal feasibility factors. This is not a superficial, broad-stroke endeavor. It should be thorough and include start-up costs, fixed investments and operating costs.
These costs address things such as equipment, merchandising methods, real estate, personnel, supply availability, overhead, etc.
5. Prepare an Opening Day Balance Sheet
This includes an estimate of the assets and liabilities, one that should be as accurate as possible. To do this, create a list that includes items, sources, costs and available financing. Liabilities to consider are such things as leasing or purchasing of land, buildings and equipment, financing for assets and accounts receivables.
6. Review and Analyze All Data
All these steps are important, but the review and analysis are especially important to make sure that everything is as it should be and that nothing requires changing or tweaking. So, take a moment to look over your work one last time.
Reexamine your previous steps, such as the income statement, and compare it with your expenses and liabilities. Is it still realistic? This is also the time to think about risk, analyze and manage, and come up with any contingency plans .
7. Make a Go/No-Go Decision
You’re now at the point to make a decision about whether the project is feasible or not. That sounds simple, but all the previous steps lead to this decision-making moment. A couple of other things to consider before making that binary choice is whether the commitment is worth the time, effort and money and is it aligned with the organization’s strategic goals and long-term aspirations.
Best Practices for a Feasibility Study
- Use project management software like ProjectManager to organize your data and work efficiently and effectively
- Use templates or any data and technology that gives you leverage
- Involve the appropriate stakeholders to get their feedback
- Use market research to further your data collection
- Do your homework and ask questions to make sure your data is solid
If your project is feasible then the real work begins. ProjectManager helps you plan more efficiently. Our online Gantt chart organizes tasks, sets deadlines, adds priority and links dependent tasks to avoid delays. But unlike other Gantt software, we calculate the critical path for you and set a baseline to measure project variance once you move into the execution phase.
Watch a Video on Feasibility Studies
There are many steps and aspects to a project feasibility study. If you want yours to be accurate and forecast correctly whether your project is doable or a dude, then you need to have a clear understanding of all its moving parts.
Jennifer Bridges, PMP, is an expert on all aspects of project management and leads this free training video to help you get a firm handle on the subject.
Here’s a screenshot for your reference!
Pro-Tip: When completing a feasibility study, it’s always good to have a contingency plan that you test to make sure it’s a viable alternative.
ProjectManager Improves Your Feasibility Study
A feasibility study is a project, so get yourself a project management software that can help you execute it. ProjectManager is an award-winning software that can help you manage your feasibility study through every phase.
Once you have a plan for your feasibility study, upload that task list to our software and all your work is populated in our online Gantt chart. Now you can assign tasks to team members, add costs, create timelines, collect all the market research and attach notes at the task level. This gives people a plan to work off of, and a collaborative platform to collect ideas and comments.
If you decide to implement the project, you already have it started in our software, which can now help you monitor and report on its progress. Try it for yourself with this free 30-day trial and get started on that feasibility study right away.
Transcription
Today we’re talking about How to Conduct A Feasibility Study, but first of all, I want to start with clarifying what a feasibility study is.
Feasibility Analysis Definition
Basically, it’s an assessment of the practicality of a proposed plan or method. Basically, we’ll want to want to know, is this feasible? Some of the questions that may generate this or we can hear people asking are, “Do we have or can we create the technology to do this? Do we have the people resource who can produce this and will we get our ROI, our Return On Investment?”
When to Do a Feasibility Study
So when do we do the feasibility study? So it’s done during a project lifecycle and it’s done after the business case because the business case outlines what we’re proposing. Is it a product or service that we’re proposing?
So why do we do this? The reason we do this is because we need to determine the factors that will make the business opportunity a success.
How to Conduct a Feasibility Study
Well, let’s talk about a few steps that we do in order to conduct the feasibility study.
Well, first of all, we conduct a preliminary analysis of what all’s involved in the business case and what we’re analyzing and what we’re trying to determine is feasible.
Then we prepare a projected income statement. We need to know what are the income streams, how are we gonna make money on this? Where’s the revenue coming from? We also need to conduct a market survey.
We need to know, is this a demand? Is there a market for this? Are customers willing to use this product or use this service?
The fourth one is, plan the business organization and the operations. Like, what is the structure, what kind of resources do we need? What kind of staffing requirements do we have?
We also want to prepare an opening day balance sheet. What are the…how again, what are the expenses, what’s the revenue and to ensure that being able to determine if we’re gonna make our ROI.
So we want to review and analyze all of the data that we have and with that, we’re going to determine, we’re going to make a go, no-go decision. Meaning, are we going to do this project or this business opportunity or not.
Well, here’s some of the best practices to use during your feasibility study.
One is, use templates, tools and surveys that exist today. The great news is, data is becoming more and more prevalent. There are all kinds of technologies. There are groups that they do nothing but research. Things that we can leverage today.
We want to involve the appropriate stakeholders to ensure that input is being considered from the different people involved.
We also want to use again the market research to ensure we’re bringing in good, reliable data.
We also…I mean do your homework, meaning act like is if this is your project, if it’s your money. So do your homework and do it well and make sure you give credible data.
What Is a Feasibility Report?
So ultimately in the end what we’re doing is, we’re producing and we’re providing a feasibility report. So in that report, think of this is like a template.
So what you’re gonna do is give it an executive summary of the business opportunity that you’re evaluating and the description of the product or the service.
You want to look at different technology considerations. Is it technology that you’re going to use? Are you going to build the technology?
What kind of product and service marketplace and being able again, to identify the specific market you’re going to be targeting. Also, what is the marketing strategy you’re going to use to target the marketplace?
And also what’s the organizational structure? What are the staffing requirements? What people do you need to deliver the product or service and even support it?
So also we want to know the schedule to be able to have the milestones to ensure that as we’re building things, that as we’re spending money that we’re beginning to bring in income to pay and knowing when we’re going to start recuperating some of the funding. Again, which also ties into the financial projections.
Ultimately in this report, you’re going to provide the findings and the recommendations.
Again, we’ll probably talk about technology. Are you going to build it? Are you going to buy it? What’s the marketing strategies for the specific marketplace organization? You may have some recommendations for whether you’re going to insource the staff, maybe you are going to outsource some staff and what that looks like and also financial recommendation.
So this is a little bit about the feasibility study, and if you need a tool that can help you with yours, then sign up for our software now at ProjectManager .
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Free Business Plan Templates in Excel
Smartsheet Contributor Joe Weller
September 27, 2020
In this article, we’ve rounded up an extensive list of free business plan templates and samples for organizations of all sizes. You can download all of the plans in Excel.
Included on this page, you’ll find business plan templates in Excel , business plan checklists in Excel , business plan financial templates in Excel , and more.
Business Plan Templates in Excel
These Excel business plan templates are designed to guide you through each step of a well-rounded strategy that supports your marketing, sales, financial, and operational goals.
Business Plan Template in Excel
This Excel business plan template has all the traditional components of a standard business plan, with each section divided into tabs. This template includes space to provide the executive summary, target audience characteristics, product or service offering details, marketing strategies, and more. The plan also offers built-in formulas to complete calculations for sales forecasting, financial statements, and key business ratios.
Download Business Plan Template
Excel | Smartsheet
One-Page Business Plan in Excel
To check the feasibility of your business concept, use this single-page business plan template. The template allows you to jot down the core details related to your idea. This template also includes room for you to provide concise information about what you do, how you do it, why you do it, who your idea serves, your competitive advantage, your marketing strategies, and your success factors. At the bottom of this one-page plan, you’ll find a table to conduct a SWOT (strengths, weaknesses, opportunities, and threats) analysis. Find more downloadable single-page plans and examples at “ One-Page Business Plan Templates with a Quick How-To Guide .”
Download One-Page Business Plan
Excel | Word | PDF | Smartsheet
Sample 30-60-90-Day Business Plan for Startup in Excel
This 90-day business plan is designed for startup companies to develop a 90-day action plan. This template gives you room to outline the following: main goals and deliverables for each 30-day increment; key business activities; task ownership; and deadlines. This template also includes a built-in Gantt chart that adjusts as you enter dates. Visit “ 30-60-90-Day Business Plan Templates and Samples ” to download more free plans.
Download 30-60-90-Day Business Plan for Startup
For more free business plans in a wider variety of formats, visit “ Simple Business Plan Templates .”
Business Plan Checklists in Excel
These business plan checklists are useful for freelancers, entrepreneurs, and business owners who want to organize and track the progress of key business activities.
Business Planning Checklist with Timeline in Excel
Use this checklist to keep your business planning efforts on track. This template enables you to add tasks according to each phase of your plan, assign an owner to each task, and enter the respective start and end dates. The checklist also enables you to create and color-code a visual timeline when you highlight the start and end dates for each task.
Download Business Planning Checklist with Timeline Template
Business Plan Checklist with SWOT Analysis in Excel
Use this business plan checklist to develop and organize your strategic plan. Add the name of the business activity, along with its status, due date, and pertinent notes. This template also includes a separate tab with a SWOT analysis matrix, so you can evaluate and prioritize your company’s strengths, weaknesses, opportunities, and threats.
Download Business Plan Checklist with SWOT Analysis - Excel
Business Startup Checklist in Excel
This checklist template is ideal for startup organizations. It allows you to list and categorize key tasks that you need to complete, including items related to research, strategic relationships, finance, development, and more. Check off each task upon completion to ensure you haven’t missed or overlooked any important business activities. Find additional resources by visiting “ Free Startup Plan, Budget & Cost Templates .”
Download Business Startup Checklist Template
Business Plan Financial Templates in Excel
Use these customizable templates to develop your organization’s financial plan.
Business Startup Costs Template in Excel
Use this template to estimate and track your startup and operational costs. This template gives you room to list line items for both funding and expenses; you can automatically calculate totals using the built-in formulas. To avoid overspending, compare budgeted amounts against actual amounts to determine where you can cut costs or find additional funding.
Download Business Startup Costs Template
Small-Business Budget Template in Excel
This simple business budget template is designed with small businesses in mind. The template helps you track the income and expenses that you accrue on a monthly and yearly basis. To log your cash balances and transactions for a given time frame, use the tab for cash flow recording.
Download Small-Business Budget Template - Excel
Startup Financial Statement Projections Template
This financial statement projections template includes a detailed profit and loss statement (or income statement), a balance sheet with business ratios, and a cash flow statement to analyze your company’s current and future financial position. This template also comes with built-in formulas, so you can calculate totals as you enter values and customize your statement to fit the needs of your business.
Download Startup Financial Statement Projections Template
For additional templates to help you produce a sound financial plan, visit “ Free Financial Templates for a Business Plan .”
Business Plan Marketing and Sales Templates in Excel
Use these downloadable templates to support and reinforce the marketing and sales objectives in your business plan.
Sales Forecast Template in Excel
This sales forecast template allows you to view the projected sales of your products or services at both individual and combined levels over a 12-month period. You can organize this template by department, product group, customer type, and other helpful categories. The template has built-in formulas to calculate monthly and yearly sales totals. For additional resources to project sales, visit “ Free Sales Forecasting Templates .”
Download Sales Forecast Template
Marketing Budget Plan in Excel
This marketing budget plan template helps you organize and plan your campaign costs for key marketing activities, such as market research, advertising, content marketing , and public relations. Enter the projected quantity and cost under each campaign category; the built-in formulas enable you to calculate projected subtotals automatically. This template also includes a graph that auto-populates as you enter values, so you can see where your marketing dollars are going.
Download Marketing Budget Plan Template
Other Business Plans in Excel
Use these business plan templates to conduct analyses and develop a plan of action that aligns your strategy with your main business objectives.
Business Action Plan Template in Excel
Use this basic action plan template to develop a roadmap for reaching your goals. Add a description of each action item, assign the responsible party, and list the required resources, potential hazards, key dates, and desired outcome. You can use this template to develop an action plan for marketing, sales, program development, and more.
Download Business Action Plan Template
Business Plan Rubric in Excel
Once you complete your business plan, use this rubric template to score each section to ensure you include all the essential information. You can customize this rubric to fit the needs of your organization and provide insight into the areas of your plan where you want to delve more deeply or remove unnecessary details. By following these steps, you can make certain that your final business plan is clear, concise, and thorough.
Download Simple Business Plan Rubric
Competitive Analysis Template in Excel
This template enables you to analyze the competitive landscape and industry for your business. By providing details related to your company and competitors, you can assess and compare all key areas, including the target market, marketing strategies, product or service offerings, distribution channels, and more.
Download Competitive Analysis Template
Excel | Smartsheet
For additional free templates for all aspects of your business, visit “ Free Business Templates for Organizations of All Sizes .”
Turbo-Charge Your Business Plans with Templates from Smartsheet
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When teams have clarity into the work getting done, there’s no telling how much more they can accomplish in the same amount of time. Try Smartsheet for free, today.
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How to Write a Feasibility Study Report For Small Business – Example
Feasibility study sample for small business, how to prepare a feasibility report example for small business, the executive summary, the statement of the problem (opportunity), the requirements of the business, analyzing available options, marketing plans, recommendation of findings, writing a conclusion, related posts:, leave a comment cancel reply.
How to Create a Feasibility Business Plan
by Editorial Team
Published on 26 Sep 2017
How to Create a Feasibility Business Plan. A feasibility business plan is a study conducted prior to initiating a business plan. Whether you're an established business launching a new product or an individual with a new idea, a feasibility plan is that part of a business plan that will help you and your investors determine if your idea will thrive.
Write a cover letter to potential investors outlining your product or idea. Show how you have researched and come to a conclusion that your product or idea is viable.
Sum up your analysis in an executive summary outlining the main points of your research. Provide information on your product, potential buyers and why you believe your venture is ideal.
Describe your product or idea in detail. List your potential customers and explain their views about your product or idea. Explain how customers will use the product.
Lay out the infrastructure. Indicate where you intend to house the business and if you intend to rent or buy. Describe the technology you will use.
Include information about the competition and their share of the market. Indicate their strengths and weaknesses and critical risks factors to your venture.
Show financial projections for at least 3 years. Estimate your rate of return.
Conclude with supporting statements why this idea or product is feasible. Credit the resources used to support your feasibility business plan.
You should write the executive summary last. Though you present it first, it highlights the findings of the entire report and is easier to write after you've completed the rest of your report.
Home » Business Plans
Feasibility Study vs Business Plan – What’s the Difference
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 ? Well, I will advice you read on to find the answers you seek. Now there seem to be a mix up between feasibility study and business plan. While some say they are the same, others argue they are not.
So I want to use this medium to draw a line between a feasibility report and a business plan. Though the process involved in developing a feasibility report and a business are similar, I will reveal to you some basic difference between conducting feasibility study and writing 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.
I hope this few words have been able to point out the key differences between feasibility study and business plan. I feel 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.
- Go to Chapter 3: U nderstanding the Difference Between a Business Plan and a Strategic Plan
- Go Back to Chapter 1: W hy Should You Develop a Business Plan ?
- Go Back to Introduction and Table of Content
More on Conduct Feasibility Study
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- Starting a business
- Starting or buying a business
Planning a new business
Feasibility analysis for new businesses.
- Business readiness health check
- Explore and research your business idea
- Key elements of starting a business
- Are you ready to be a business owner?
- Skills for running a business
- Writing a business plan
- Costs to start and run your business
- Managing risk when starting up
Feasibility analysis involves assessing your new business idea in detail to determine if it will be viable. This can build on any initial research you've already done.
A feasibility analysis helps you consider the costs and activities required to set up and run a business, and how to make an informed decision about whether to start a business and how to do it.
Most importantly, it will give you a picture of the costs involved that you'll need to consider and the revenue and profit you can realistically expect to generate.
On this page
To determine if your business idea is practical and achievable, there are areas you can investigate and study.
Ask yourself these practical questions and how they relate to your situation as a starting point.
- Is the business logistically achievable?
- Does current technology meet your needs?
- What are the risks?
- How will your products or service differ from what is on the market?
- What is the trajectory of the market?
- Do you have the finances to make the business achievable?
- Is there a time constraint for establishing the business?
How to analyse the feasibility of your business
To conduct a feasibility analysis, you will need a detailed understanding of:
- your business idea, product or service
- the nature of the market
- the needs of your customers
- the costs involved and the revenue you are forecasting
- your business model and plan
- the human resources and skills available to support the business.
A feasibility analysis – to provide details for a formal business plan – may be necessary when preparing a pitch to investors, lenders or potential partners for your business, and when applying for government funding.
Steps for feasibility analysis
Follow these steps to analyse the feasibility of your business.
- the financial feasibility of starting the business (read below)
- the legal requirements for operating it
- the operational capacity as outlined in your business plan .
- Research the industry, market, customers, business model and staffing – how will they affect the feasibility of your business?
- Review your research findings to determine if the business idea, product or service is viable.
Types of feasibility analysis
There are different types of feasibility analysis that you can use. Each type will focus on a specific part of your business operations.
Use this type of analysis to determine if your business has adequate economic resources to meet its goals (e.g. funding, capital, profit).
- What is the financial position of the business?
- Is the business able to access necessary funding?
- Can the business make a profit?
- Does the business have enough money to meet its obligations?
Use this type of analysis to determine if your business successfully meets the necessary legal requirements to operate (e.g. business registrations, permits and licences).
- Does the business have all relevant registrations, licences and permits in place?
- Does the business have access to legal advice as necessary?
Use this type of analysis to determine if your business has the operational resources it requires to be successful (e.g. business structure, premises, suppliers, human resources and equipment).
- Is the business structure confirmed?
- Are the business premises and location suitable?
- Does the business have access to a variety of suppliers?
- Does the business have the necessary staffing and equipment to operate?
Include feasibility analysis in your business plan
The business plan template contains an action checklist that you can use to help assess your business's financial, legal and operational feasibility.
Read more about writing a business plan .
Financial viability
Financial viability is your business's capacity to generate enough income to meet its operating costs while maintaining required service levels.
Make sure you've calculated the costs required to start your business and that you have funds to cover these.
To assess the financial viability of your business, consider if your business:
- is profitable
- can give you an income, salary or return on investment
- is meeting all business obligations
- has adequate cash resources
- could sustain operations through a phase of no profit.
Assessing your business's financial viability
You will need to:
- calculate key profit figures
- determine the break-event point of your business
- develop a cash flow statement and use it to estimate how long the business can survive without making profit
Your cash flow, key profit figures and budget will contribute to your business plan. You might choose to compile this financial information yourself or work with a financial adviser.
For more information, see:
- budgets and forecasts
- cash flow management
- working with accountants, bookkeepers and tax agents .
Starting lean
'Starting lean' describes the method for starting a business or introducing a product or service as efficiently as possible.
Starting lean can help you to determine the feasibility of your business while minimising costs, time commitment and resources.
Starting lean may involve:
- scheduling a research phase early in your start-up preparation before the business opens or new product launches
- starting with a concept or product that can be developed and tested quickly and at low cost – this will help you validate the level of demand in the market before making a larger financial commitment
- continuing the testing phase for as long as necessary – viability increases when you make improvements between a series of tests, as opposed to a one-off test.
When the business concept, idea or product is validated, you can proceed to establishing your business.
Product and service viability
Product and service viability is a type of analysis that looks specifically at considerations associated with business products and services, rather than the business itself.
Product viability refers to the potential that business products have to generate demand in the market and be profitable.
To help you determine if a product is viable, consider the following:
- Is the product safe?
- Will the product fit into the market?
- How quickly can we get the product into the market?
- Does the current product need to be improved?
- How will you manage the research and development?
- Can you partner with industry or research partners to innovate? Take the innovation readiness quiz .
- Do you have the time and money available to innovate?
- Is there a gap in the market for this product?
- Do you have the funding to develop the new product?
- How will you manage and protect intellectual property ?
Long-term viability of products and services
It can be beneficial to consider the long-term value of your business products or services when determining their viability and how much to invest in production or marketing.
Consider the following:
- Will your products and services be viable in 5–10 years or will trends diminish their value?
- Are the products and services dependent on other products and services (e.g. maintenance, parts, servicing requirements)? If so, will those still be available in 5–10 years?
- Can your products and services adapt to industry changes and meet market needs in new ways in the future (e.g. integrate with new technologies, such as renewables)?
- What capital requirements will be needed in the long term?
- Will the potential income be worth the capital investment?
Customer needs now and in the future
Customers are the end-users of your products and services. Considering both the current and future needs of your customers is key to determining if your business idea, product or service is feasible.
To help ensure that your customer needs are met, consider:
- conducting usability testing—the process of testing a product or design with a group of users that are representative of your target customers
- implementing universal design principles—used to ensure products and services are accessible to the widest range of customers.
Customer feasibility checklist
You can use the following checklist to help you consider if your business idea, product or service will be feasible.
- Will you conduct usability testing?
- Will you apply universal design principles?
- How will your pricing affect the size of the market?
- How will competitors affect your price position in the market?
- Will the customer need to purchase maintenance packages or pay for regular upgrades?
Business model considerations
A business model outlines the core attributes of a business. It defines the business products and services, target market and costs, and details a high-level strategy for how the business plans to make a profit.
You should consider the long-term operation of the business when assessing its feasibility – the business must be viable in the start-up phase and be able to maintain this viability into the future.
- The ownership structure of the business – is it fit for purpose? Could it be changed to better suit your business goals?
- The capital required from lenders or investors – what capital do you need to make your business profitable in the short and long term?
- The distribution channels available – do you have channels available to distribute your products and services efficiently?
- The potential to licence or sell products and services in the future – will you require specific licences to sell your products and services? Will you be able to meet the necessary requirements?
- The future export potential – will you export your products or services? If so, are they any existing or potential trade barriers?
Choosing the ideal team
Part of analysing a business's feasibility is analysing its human resources. You should consider the attributes people, within and outside the business, should have to help your business succeed.
- The owner or director is responsible for the business.
- Are they the right person to manage and lead the business now and in the future?
- Will they be the best person to help the business grow or will you need more people to provide support?
- What kind of capital does your business need?
- Equity partners might help you reach your business goals.
- Make sure you have identified the amount of equity you are prepared to give to others before engaging in partnership discussions.
- Your staff are vital to your business success.
- Both managers and general staff are needed to lead and operate the business.
- Think about the staff you have and the staff you may need in the future.
- Independent contractors can help you meet specialist needs in both the short and long term.
- Consider the potential skills gaps within your business and opportunities for outsourcing.
Other key people may benefit your business and help you build capacity for growth and improvement, such as:
- researchers
- financial advisers
- intellectual property specialists
- accountants
- bookkeepers
- IT specialists
- advertising and marketing managers.
Also consider...
- Learn about marketing and customer research .
- Understand the process of researching customers .
- Read customer stories from the Entrepreneurs’ Programme .
- Find out about Australian Government grants and programs .
- Read about the Advance Queensland initiative .
- Get export support .
- Learn about grants for innovation .
- Take the business readiness health check .
- Understand patents .
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9+ Business Feasibility Report Examples [ Project, Global, Products ]
Business feasibility report, 9+ business feasibility report examples, 1. manufacturing business feasibility report, 2. global business feasibility report, 3. business assessment feasibility report, 4. business communication feasibility report, 5. business project feasibility report, 6. business research feasibility report, 7. sanitary business feasibility report, 8. business development feasibility report, 9. business feasibility report in pdf, 10. feasibility study report business plan, what could be the steps in writing a feasibility report, what are some of the content requirements of feasibility report, do feasibility reports still require an executive summary.
What are Feasibility Reports?
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What Is a Feasibility Study?
Understanding a feasibility study, how to conduct a feasibility study.
- Feasibility Study FAQs
The Bottom Line
Business Essentials
Feasibility Study
Investopedia contributors come from a range of backgrounds, and over 24 years there have been thousands of expert writers and editors who have contributed.
:max_bytes(150000):strip_icc():format(webp)/Group1805-3b9f749674f0434184ef75020339bd35.jpg "business plan and feasibility")
Investopedia / Lara Antal
A feasibility study is a detailed analysis that considers all of the critical aspects of a proposed project in order to determine the likelihood of it succeeding.
Success in business may be defined primarily by return on investment , meaning that the project will generate enough profit to justify the investment. However, many other important factors may be identified on the plus or minus side, such as community reaction and environmental impact.
Although feasibility studies can help project managers determine the risk and return of pursuing a plan of action, several steps should be considered before moving forward.
Key Takeaways
- A company may conduct a feasibility study when it's considering launching a new business, adding a new product line, or acquiring a rival.
- A feasibility study assesses the potential for success of the proposed plan or project by defining its expected costs and projected benefits in detail.
- It's a good idea to have a contingency plan on hand in case the original project is found to be infeasible.
A feasibility study is an assessment of the practicality of a proposed plan or project. A feasibility study analyzes the viability of a project to determine whether the project or venture is likely to succeed. The study is also designed to identify potential issues and problems that could arise while pursuing the project.
As part of the feasibility study, project managers must determine whether they have enough of the right people, financial resources, and technology. The study must also determine the return on investment, whether this is measured as a financial gain or a benefit to society, as in the case of a nonprofit project.
The feasibility study might include a cash flow analysis, measuring the level of cash generated from revenue versus the project's operating costs . A risk assessment must also be completed to determine whether the return is enough to offset the risk of undergoing the venture.
When doing a feasibility study, it’s always good to have a contingency plan that is ready to test as a viable alternative if the first plan fails.
Benefits of a Feasibility Study
There are several benefits to feasibility studies, including helping project managers discern the pros and cons of undertaking a project before investing a significant amount of time and capital into it.
Feasibility studies can also provide a company's management team with crucial information that could prevent them from entering into a risky business venture.
Such studies help companies determine how they will grow. They will know more about how they will operate, what the potential obstacles are, who the competition is, and what the market is.
Feasibility studies also help convince investors and bankers that investing in a particular project or business is a wise choice.
The exact format of a feasibility study will depend on the type of organization that requires it. However, the same factors will be involved even if their weighting varies.
Preliminary Analysis
Although each project can have unique goals and needs, there are some best practices for conducting any feasibility study:
- Conduct a preliminary analysis, which involves getting feedback about the new concept from the appropriate stakeholders
- Analyze and ask questions about the data obtained in the early phase of the study to make sure that it's solid
- Conduct a market survey or market research to identify the market demand and opportunity for pursuing the project or business
- Write an organizational, operational, or business plan, including identifying the amount of labor needed, at what cost, and for how long
- Prepare a projected income statement, which includes revenue, operating costs, and profit
- Prepare an opening day balance sheet
- Identify obstacles and any potential vulnerabilities, as well as how to deal with them
- Make an initial "go" or "no-go" decision about moving ahead with the plan
Suggested Components
Once the initial due diligence has been completed, the real work begins. Components that are typically found in a feasibility study include the following:
- Executive summary : Formulate a narrative describing details of the project, product, service, plan, or business.
- Technological considerations : Ask what will it take. Do you have it? If not, can you get it? What will it cost?
- Existing marketplace : Examine the local and broader markets for the product, service, plan, or business.
- Marketing strategy : Describe it in detail.
- Required staffing : What are the human capital needs for this project? Draw up an organizational chart.
- Schedule and timeline : Include significant interim markers for the project's completion date.
- Project financials .
- Findings and recommendations : Break down into subsets of technology, marketing, organization, and financials.
Examples of a Feasibility Study
Below are two examples of a feasibility study. The first involves expansion plans for a university. The second is a real-world example conducted by the Washington State Department of Transportation with private contributions from Microsoft Inc.
A University Science Building
Officials at a university were concerned that the science building—built in the 1970s—was outdated. Considering the technological and scientific advances of the last 20 years, they wanted to explore the cost and benefits of upgrading and expanding the building. A feasibility study was conducted.
In the preliminary analysis, school officials explored several options, weighing the benefits and costs of expanding and updating the science building. Some school officials had concerns about the project, including the cost and possible community opposition. The new science building would be much larger, and the community board had earlier rejected similar proposals. The feasibility study would need to address these concerns and any potential legal or zoning issues.
The feasibility study also explored the technological needs of the new science facility, the benefits to the students, and the long-term viability of the college. A modernized science facility would expand the school's scientific research capabilities, improve its curriculum, and attract new students.
Financial projections showed the cost and scope of the project and how the school planned to raise the needed funds, which included issuing a bond to investors and tapping into the school's endowment . The projections also showed how the expanded facility would allow more students to be enrolled in the science programs, increasing revenue from tuition and fees.
The feasibility study demonstrated that the project was viable, paving the way to enacting the modernization and expansion plans of the science building.
Without conducting a feasibility study, the school administrators would never have known whether its expansion plans were viable.
A High-Speed Rail Project
The Washington State Department of Transportation decided to conduct a feasibility study on a proposal to construct a high-speed rail that would connect Vancouver, British Colombia, Seattle, Washington, and Portland, Oregon. The goal was to create an environmentally responsible transportation system to enhance the competitiveness and future prosperity of the Pacific Northwest.
The preliminary analysis outlined a governance framework for future decision-making. The study involved researching the most effective governance framework by interviewing experts and stakeholders, reviewing governance structures, and learning from existing high-speed rail projects in North America. As a result, governing and coordinating entities were developed to oversee and follow the project if it was approved by the state legislature.
A strategic engagement plan involved an equitable approach with the public, elected officials, federal agencies, business leaders, advocacy groups, and indigenous communities. The engagement plan was designed to be flexible, considering the size and scope of the project and how many cities and towns would be involved. A team of the executive committee members was formed and met to discuss strategies, lessons learned from previous projects and met with experts to create an outreach framework.
The financial component of the feasibility study outlined the strategy for securing the project's funding, which explored obtaining funds from federal, state, and private investments. The project's cost was estimated to be between $24 billion to $42 billion. The revenue generated from the high-speed rail system was estimated to be between $160 million and $250 million.
The report bifurcated the money sources between funding and financing. Funding referred to grants, appropriations from the local or state government, and revenue. Financing referred to bonds issued by the government, loans from financial institutions, and equity investments, which are essentially loans against future revenue that needs to be paid back with interest.
The sources for the capital needed were to vary as the project moved forward. In the early stages, most of the funding would come from the government, and as the project developed, funding would come from private contributions and financing measures. Private contributors included Microsoft Inc., which donated more than $570,000 to the project.
The benefits outlined in the feasibility report show that the region would experience enhanced interconnectivity, allowing for better management of the population and increasing regional economic growth by $355 billion. The new transportation system would provide people with access to better jobs and more affordable housing. The high-speed rail system would also relieve congested areas from automobile traffic.
The timeline for the study began in 2016 when an agreement was reached with British Columbia to work together on a new technology corridor that included high-speed rail transportation. The feasibility report was submitted to the Washington State land Legislature in December 2020.
What Is the Main Objective of a Feasibility Study?
A feasibility study is designed to help decision-makers determine whether or not a proposed project or investment is likely to be successful. It identifies both the known costs and the expected benefits.
In business, "successful" means that the financial return exceeds the cost. In a nonprofit, success may be measured in other ways. A project's benefit to the community it serves may be worth the cost.
What Are the Steps in a Feasibility Study?
A feasibility study starts with a preliminary analysis. Stakeholders are interviewed, market research is conducted, and a business plan is prepared. All of this information is analyzed to make an initial "go" or "no-go" decision.
If it's a go, the real study can begin. This includes listing the technological considerations, studying the marketplace, describing the marketing strategy, and outlining the necessary human capital, project schedule, and financing requirements.
Who Conducts a Feasibility Study?
A feasibility study may be conducted by a team of the organization's senior managers. If they lack the expertise or time to do the work internally it may be outsourced to a consultant.
What Are the 4 Types of Feasibility?
The study considers the feasibility of four aspects of a project:
Technical: A list of the hardware and software needed, and the skilled labor required to make them work.
Financial: An estimate of the cost of the overall project and its expected return.
Market: An analysis of the market for the product or service, the industry, competition, consumer demand, sales forecasts, and growth projections
Organizational: An outline of the business structure and the management team that will be needed.
Feasibility studies help project managers determine the viability of a project or business venture by identifying the factors that can lead to its success. The study also shows the potential return on investment and any risks to the success of the venture.
A feasibility study contains a detailed analysis of what's needed to complete the proposed project. The report may include a description of the new product or venture, a market analysis, the technology and labor needed, as well as the sources of financing and capital. The report will also include financial projections, the likelihood of success, and ultimately, a go-or-no-go decision.
Washington State Department of Transportation. " Ultra-High-Speed Ground Transportation Study ."
GeekWire. " Microsoft donates $223K to finish Seattle-Vancouver high-speed rail feasibility study by 2020 ."
StartRunGrow. " Who Conducts Feasibility? "
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- 1. The Business Plan: Feasibility The Business Plan: Feasibility Mohammad Tawfik #WikiCourses http://WikiCourses.WikiSpaces.com
- 2. Product Feasibility The Business Plan: Feasibility Mohammad Tawfik #WikiCourses http://WikiCourses.WikiSpaces.com
- 3. Can the product be delivered profitably in an ongoing manner? The Business Plan: Feasibility Mohammad Tawfik #WikiCourses http://WikiCourses.WikiSpaces.com
- 4. Is there sufficient customers? The Business Plan: Feasibility Mohammad Tawfik #WikiCourses http://WikiCourses.WikiSpaces.com
- 5. Research The Business Plan: Feasibility Mohammad Tawfik #WikiCourses http://WikiCourses.WikiSpaces.com
- 6. Primary research – collect data firsthand and analyze it The Business Plan: Feasibility Mohammad Tawfik #WikiCourses http://WikiCourses.WikiSpaces.com
- 7. Customer surveys and questionnaires The Business Plan: Feasibility Mohammad Tawfik #WikiCourses http://WikiCourses.WikiSpaces.com
- 8. Focus groups The Business Plan: Feasibility Mohammad Tawfik #WikiCourses http://WikiCourses.WikiSpaces.com
- 9. Secondary research – gather data that already has been compiled and analyze it The Business Plan: Feasibility Mohammad Tawfik #WikiCourses http://WikiCourses.WikiSpaces.com
- 10. Prototypes The Business Plan: Feasibility Mohammad Tawfik #WikiCourses http://WikiCourses.WikiSpaces.com
- 11. In-Home trials The Business Plan: Feasibility Mohammad Tawfik #WikiCourses http://WikiCourses.WikiSpaces.com
- 12. The Business Plan: Feasibility Mohammad Tawfik #WikiCourses http://WikiCourses.WikiSpaces.com
- 13. Market Feasibility The Business Plan: Feasibility Mohammad Tawfik #WikiCourses http://WikiCourses.WikiSpaces.com
- 14. How attractive is the opportunity? The Business Plan: Feasibility Mohammad Tawfik #WikiCourses http://WikiCourses.WikiSpaces.com
- 15. Is there any strategic niche? The Business Plan: Feasibility Mohammad Tawfik #WikiCourses http://WikiCourses.WikiSpaces.com
- 16. Porter’s Five Forces Analysis The Business Plan: Feasibility Mohammad Tawfik #WikiCourses http://WikiCourses.WikiSpaces.com
- 17. Porter’s Five Forces Analysis The Business Plan: Feasibility Mohammad Tawfik #WikiCourses http://WikiCourses.WikiSpaces.com
- 18. Threats of new entrants The Business Plan: Feasibility Mohammad Tawfik #WikiCourses http://WikiCourses.WikiSpaces.com
- 19. Industry is more attractive when: ● Advantages of economies of scale are absent The Business Plan: Feasibility Mohammad Tawfik #WikiCourses http://WikiCourses.WikiSpaces.com
- 20. Industry is more attractive when: ● Capital requirements to enter are low The Business Plan: Feasibility Mohammad Tawfik #WikiCourses http://WikiCourses.WikiSpaces.com
- 21. Industry is more attractive when: ● Cost advantages are not related to company size The Business Plan: Feasibility Mohammad Tawfik #WikiCourses http://WikiCourses.WikiSpaces.com
- 22. Industry is more attractive when: ● Buyers are not loyal to existing brands The Business Plan: Feasibility Mohammad Tawfik #WikiCourses http://WikiCourses.WikiSpaces.com
- 23. The Business Plan: Feasibility Mohammad Tawfik #WikiCourses http://WikiCourses.WikiSpaces.com
- 24. The Business Plan: Feasibility Mohammad Tawfik #WikiCourses http://WikiCourses.WikiSpaces.com
- 25. Industry is more attractive when: ● Government does not restrict the entrance of new companies The Business Plan: Feasibility Mohammad Tawfik #WikiCourses http://WikiCourses.WikiSpaces.com
- 26. Threats of substitute products The Business Plan: Feasibility Mohammad Tawfik #WikiCourses http://WikiCourses.WikiSpaces.com
- 27. Industry is more attractive when: ● Quality substitutes are not readily available The Business Plan: Feasibility Mohammad Tawfik #WikiCourses http://WikiCourses.WikiSpaces.com
- 28. Industry is more attractive when: ● Prices of substitute products are not significantly lower than those of the industry’s products The Business Plan: Feasibility Mohammad Tawfik #WikiCourses http://WikiCourses.WikiSpaces.com
- 29. Industry is more attractive when: ● Buyers’ switching costs are high The Business Plan: Feasibility Mohammad Tawfik #WikiCourses http://WikiCourses.WikiSpaces.com
- 30. The Business Plan: Feasibility Mohammad Tawfik #WikiCourses http://WikiCourses.WikiSpaces.com
- 31. Bargaining power of customers The Business Plan: Feasibility Mohammad Tawfik #WikiCourses http://WikiCourses.WikiSpaces.com
- 32. Industry is more attractive when: ● Customers’ switching costs are high The Business Plan: Feasibility Mohammad Tawfik #WikiCourses http://WikiCourses.WikiSpaces.com
- 33. Industry is more attractive when: ● Number of buyers is large The Business Plan: Feasibility Mohammad Tawfik #WikiCourses http://WikiCourses.WikiSpaces.com
- 34. Industry is more attractive when: ● Customers want differentiated products The Business Plan: Feasibility Mohammad Tawfik #WikiCourses http://WikiCourses.WikiSpaces.com
- 35. Industry is more attractive when: ● Customers find it difficult to collect information for comparing suppliers The Business Plan: Feasibility Mohammad Tawfik #WikiCourses http://WikiCourses.WikiSpaces.com
- 36. Bargaining power of suppliers The Business Plan: Feasibility Mohammad Tawfik #WikiCourses http://WikiCourses.WikiSpaces.com
- 37. Industry is more attractive when: ● Many suppliers sell a commodity product The Business Plan: Feasibility Mohammad Tawfik #WikiCourses http://WikiCourses.WikiSpaces.com
- 38. Industry is more attractive when: ● Substitutes are available The Business Plan: Feasibility Mohammad Tawfik #WikiCourses http://WikiCourses.WikiSpaces.com
- 39. Industry is more attractive when: ● Switching costs are low The Business Plan: Feasibility Mohammad Tawfik #WikiCourses http://WikiCourses.WikiSpaces.com
- 40. Existing competition The Business Plan: Feasibility Mohammad Tawfik #WikiCourses http://WikiCourses.WikiSpaces.com
- 41. Industry is more attractive when: ● Number of competitors is large, or, at the other extreme, quite small The Business Plan: Feasibility Mohammad Tawfik #WikiCourses http://WikiCourses.WikiSpaces.com
- 42. Industry is more attractive when: ● Number of competitors is large, or, at the other extreme, quite small The Business Plan: Feasibility Mohammad Tawfik #WikiCourses http://WikiCourses.WikiSpaces.com
- 43. Industry is more attractive when: ● Competitors are not similar in size or capacity The Business Plan: Feasibility Mohammad Tawfik #WikiCourses http://WikiCourses.WikiSpaces.com
- 44. Industry is more attractive when: ● Industry is growing fast The Business Plan: Feasibility Mohammad Tawfik #WikiCourses http://WikiCourses.WikiSpaces.com
- 45. Industry is more attractive when: ● Opportunity to sell a differentiated product or service exists The Business Plan: Feasibility Mohammad Tawfik #WikiCourses http://WikiCourses.WikiSpaces.com
- 46. Financial Feasibility The Business Plan: Feasibility Mohammad Tawfik #WikiCourses http://WikiCourses.WikiSpaces.com
- 47. Capital needed to enter the market The Business Plan: Feasibility Mohammad Tawfik #WikiCourses http://WikiCourses.WikiSpaces.com
- 48. Expected revenue The Business Plan: Feasibility Mohammad Tawfik #WikiCourses http://WikiCourses.WikiSpaces.com
- 49. Expected costs The Business Plan: Feasibility Mohammad Tawfik #WikiCourses http://WikiCourses.WikiSpaces.com
- 50. Assignment! ● ● ● ● Perform a feasibility study for your project! Use a focus group of at least other 4 of your colleagues to provides customer research Create an electronic survey to collect responses from at least 50 of your colleagues regarding your business Use educated speculations for the creation of the rest of your study. The Business Plan: Feasibility Mohammad Tawfik #WikiCourses http://WikiCourses.WikiSpaces.com
- 51. References ● ● Entrepreneurship and Small Business Management, 1/e, Steve Mariotti and Caroline Glackin, 2012, Pearson Education Effective Small Business Management, 10/e, Norman M. Scarborough, Prentice Hall, 2011 The Business Plan: Feasibility Mohammad Tawfik #WikiCourses http://WikiCourses.WikiSpaces.com
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Differences Between Business Plan and Feasibility Study
Most Entrepreneurs face challenges when creating a new venture especially because they do not know that there are differences between a Business Plan and a Feasibility Study. Although a business plan is one of the well-known documents in business, the feasibility study may be just as important. Most people even use them interchangeably.
Before an entrepreneur can seek funding for the business, he or she must demonstrate that the business idea is truly a good one. This he can do by knowing the difference and preparing a good business plan and feasibility report.
We have taken an overview of a Business Plan and a Feasibility Study but before we delve into the details of their differences you should check out the Difference Between a Business Plan and a Business Proposal .
What is a Business Plan and a Feasibility Study?
Both Business plans and Feasibility studies are vital tools for business analysis. They aid the Entrepreneurs in making major decisions in a business. A business plan is not the same as a feasibility study and should not be confused as such.
A feasibility study gives a recommendation or conclusion while a plan makes use of some of the contents of the feasibility study to augment its details.
A feasibility study is done to ascertain if a proposed business has a high probability of success before it can be undertaken. Feasibility studies are carried out to find out how viable a business is before the entrepreneur can venture into it.
A feasibility study is always done before any entrepreneur or company can invest in a business or launch a new product. This is to weigh the capital investment with the Return Of Investment (ROI).
Rochester.edu defined a feasibility study 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 .”
Businesspersons use the feasibility study to find out if they should launch a new product in their existing industry or to forge into another market. Feasibility studies are regarded as cost and benefit analyses because the estimated costs of the project are weighed against the expected benefits.
To create a feasibility study, entrepreneurs have to define the dimensions of business viability like market viability, business model viability, technical viability, management model viability, exit strategy viability, and economic and financial model viability.
Business plans are blueprints used to map out the implementation actions that have been deemed feasible by the organization. A business plan is like a road map to the goals of a business and how those set goals are to be achieved.
Business plans give the directions that a company may consider taking to maximize their revenue and reach their profit objectives in the future. It contains an agglomeration of the different decisions that have been reached by the company management on how the organization would be run. A Business Plan and a Feasibility Study are done sequentially; the business plan comes after the feasibility studies.
If a feasibility study returns negative, then the entrepreneur cannot proceed with writing a business plan. On the other hand, if the feasibility study returns positive, then a business plan that will map out the plans and strategies of the business will be developed.
Some of the Business goals that a business plan seeks to achieve include: Market penetration, Revenue Generation, Customer Acquisition, Sales, Marketing, Branding, and Advertising, amongst others.
A business plan can be used both internally and externally. By internal use, a business plan is for the use of the management, staff, and board members of the business. By external use, the business plan is used by the Investors, shareholders, to give out bank loans and to meet the demands of the customers.
The Main Purpose Of a Business Plan and a Feasibility Study
To describe a Business Plan and a Feasibility Study briefly; a feasibility study is a conclusion reached from researching a business while a business plan gives the road map for entering into the business.
A feasibility study helps an entrepreneur find out if a business or idea is viable. By extension, a feasibility study is done even before a dime is spent on the business.
You cannot start meeting with investors on a project without first taking a feasibility study on the business or project. The investors or stakeholders need to be convinced that the business where they would be putting their money would be viable and yield profits in the long run. Therefore, a feasibility study is a recommendation for a business plan.
A business plan on the other hand outlines the strategies that can be used to achieve success in a business. You would need a business plan before you can meet with investors for business support or loan leases.
Some investors ask for both the feasibility study and business for the project or enterprise.
Outline Of a Business Plan and a Feasibility Study
A good outline for a feasibility study includes:.
1. Introduction
2. Product or Service
3. Technology
4. Market Environment
5. Competition
6. Industry
7. Business Model
8. Market and Sales Strategy
9. Production Operations Requirements
10. Management and Personnel Requirements
11. Regulations and Environmental Issues
12. Critical Risk Factors
13. Financial Predictions Including Balance Sheet, Cash Flow Statement, Income Statement, Break Even Analysis, and Capital Requirements. Want to learn how to write a business plan? Read it here: How to Write an Effective Business Plan .
A Good Outline For A Business Plan includes:
1. Executive Summary
2. Business/Company Overview
3. Products/Services
4. Market/Industry Analysis
5. Strategy
6. Operation Plan
7. Management/Personal Plan
8. Sales Forecast
9. Financial Plan
10. Appendices and Exhibits
Challenges Of A Business Plan And A Feasibility Study
Both the Feasibility study and business plan attempt to predict the future outcomes of a business using assumptions. These assumptions are grounded on what may happen in the Business and the business environment like Government Policies, Competitions, The Market, Risks, etc.
A feasibility study that is poorly done may affect the overall outcome of a business. For instance, a business that would not have been viable may be said to be viable from a poorly handled feasibility study. This will lead to a failed business and its operations, and loss of the capital invested in the business.
A poorly written business plan which is evident in the business models, analysis, strategies, poor projections, environmental factors among others can be adjusted easily in the course of the business. However, this is not the same for the feasibility study, as a poorly handled feasibility study affects the foundations of a business.
A feasibility study is not the same as a business plan. The feasibility study is completed before the plan. The feasibility study helps ascertain whether a business is a viable option. A business plan is developed after a business opportunity is created.
StrategicBusinessTeam.com related that “ A feasibility study is carried out to find 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 they may seem similar, it is important to note that the feasibility study is developed before the venture.
And as StrategicBusinessStream explained, “ a feasibility study can readily be converted to a business plan. ” It is necessary to think of a business plan relatively with the growth and sustainability of the business, while the feasibility study is in terms of the viability of the idea.
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As you implement your business and strategic plan, you'll invest in individual projects. A feasibility study is a way to evaluate the practicality of any given individual project or initiative. Read: New to strategic planning? Start here. 4 elements of a feasibility analysis
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.
Types of Feasibility Study 1. Technical feasibility Technical: Hardware and software Existing or new technology Manpower Site analysis Transportation 2. Financial feasibility Initial investment Resources to procure capital: Banks, investors, venture capitalists Return on investment 3. Market feasibility Type of industry Prevailing market
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A feasibility plan determines the issues related to a business and helps decide if the business has the possibility of succeeding. Feasibility research is essential because you want to...
feasibility is not within the direct scope of this Feasibility Plan. Venture Description Provide a brief description of the business. What products or services are being offered? Where is it located? You should not assume that the reader is familiar with your product/service, so be sure to explain and describe it carefully. Opportunity/Need 1.
A feasibility plan is a professional analysis of a business or idea. A business plan writer can help you develop your feasibility plan so it can provide a well-defined outline and evaluation of your core concept. This can be in turn presented to investors to emphasize the potential for sales and profit.
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 ...
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.
Methodology: Essentially, feasibility studies are research projects, whereas business plans are projections for the future. Risks: Feasibility studies determine the risks associated with the...
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.
FEASIBILITY ANALYSIS AND BUSINESS PLAN PREPARATION. Introduction. The process of setting up a business is preceded by the decision to choose entrepreneurship as a career and identification of promising business ideas upon a careful examination of the entrepreneurial opportunities. Generation of ideas is not enough; the business ideas must stand ...
7 Steps To Do a Feasibility Study 1. Conduct a Preliminary Analysis Begin by outlining your project plan. You should focus on an unserved need, a market where the demand is greater than the supply, and whether the product or service has a distinct advantage.
WHAT MAKES BUSINESS PLAN DIFFERENT FROM FEASIBILITY STUDY? The feasibility study determines whether the idea/project of a good or service is viable. A feasibility study includes financial analysis. The business plan is formalized, after the business opportunity is created. A business plan focuses more on implementing well-thought out tactics ...
This 90-day business plan is designed for startup companies to develop a 90-day action plan. This template gives you room to outline the following: main goals and deliverables for each 30-day increment; key business activities; task ownership; and deadlines. This template also includes a built-in Gantt chart that adjusts as you enter dates.
The Executive Summary. In writing a business feasibility report, the executive summary should come first. This should contain basic information that should include a summary of the information relating to the business that is to be considered. In other words, it should capture the problems as well as opportunities under review.
A feasibility business plan is a study conducted prior to initiating a business plan. Whether you're an established business launching a new product or an individual with a new idea, a feasibility plan is that part of a business plan that will help you and your investors determine if your idea will thrive. Step 1.
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.
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
A feasibility analysis - to provide details for a formal business plan - may be necessary when preparing a pitch to investors, lenders or potential partners for your business, and when applying for government funding. Steps for feasibility analysis Follow these steps to analyse the feasibility of your business.
9+ Business Feasibility Report Examples 1. Manufacturing Business Feasibility Report cmich.edu Details File Format PDF Size: 311 KB Download 2. Global Business Feasibility Report ilo.org Details File Format PDF Size: 616 KB Download 3. Business Assessment Feasibility Report publications.iwmi.org Details File Format PDF Size: 2 MB Download 4.
A company may conduct a feasibility study when it's considering launching a new business, adding a new product line, or acquiring a rival. A feasibility study assesses the potential for...
Use a focus group of at least other 4 of your colleagues to provides customer research Create an electronic survey to collect responses from at least 50 of your colleagues regarding your business Use educated speculations for the creation of the rest of your study.
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 they may seem similar, it is important to note that the feasibility study is developed before the venture.
A feasibility study can help you identify the necessary expenses, such as equipment, rent, marketing, and staffing costs. By developing a detailed financial plan, you can determine the amount of ...
Feasibility Planning for Public Health Business Plans 5 Parts of a Feasibility Plan Each part of the feasibility plan provides a backdrop for your final business plan. The feasibility plan is a guide for assessing a specific need and how to meet that need with the resources in your community. Let's work through each section