This is a question that gets asked often in the world of business – what is the purpose of each, and how can you use them to give your business that much-needed boost? The confusion arises often because the process involved in creating the two might appear somewhat similar, but as we will soon see, the two have very different functions.
- According to Rochester, 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.” The feasibility study comes before the business plan: the feasibility study is what you do to ascertain the workability and profitability of a business venture. This happens before any of the investments have taken place. Once you ensure than there exists a business opportunity here, then you can go ahead and do your business plan, to chart out how you’re going to set it up.
- The feasibility report is a report of opportunity, whereas the business plan is a report of strategy and tactics.
- A good feasibility report usually includes a study of the product or service, the technology, the market environment, the competition, the management and personnel requirements, the regulations and environmental issues, critical risk factors, as well as financial predictions including the Balance Sheet, Income Statement, Cash Flow Statement, Break Even Analysis, and Capital Requirements. And as Strategic Business Streamnotes, “a feasibility study can readily be converted to a business plan.”
- A feasibility study is about the viability of an idea, while the business plan answers questions about how to grow and sustain the business.
- The feasibility report is usually meant for the entrepreneur, but the business plan is useful for them to reach out to other investors to help raise capital.
The feasibility study can give entrepreneurs a birds’ eye view of market viability, technical viability, business model viability, management model viability, economic and financial model viability, and exit strategy viability. This can be useful while crafting the business plan.
Augment can help you make the right choices for your business. Give us a call today, because we can assure you that we can smooth the road for your entrepreneurship venture.