The Differences Between Feasibility Reports & Business Plans

A feasibility study is one element of a business plan -- it supports your business plan by providing data that shows you can start a viable business. Therefore, conducting a feasibility study always comes before constructing your business plan. Feasibility studies and business plans differ in the approach, purpose, information, development and presentation.

Approach

Feasibility studies determine whether it is possible to run a business based on your concept or idea. Assessing the viability of a business concept requires extensive research, hypothetical scenarios, market analysis and, in some instances, actual case studies of similar businesses. In other words, your approach to developing a feasibility study starts with one simple question that you will answer using a variety of methods, data and presumptions. Approaching the construction of a business may appear to be similar, because you assemble a wealth of information and data to demonstrate your business capabilities. However, your business plan is the final project, while the feasibility study is the step you take before you undertake writing a business plan.

Purpose

Feasibility studies and business plans do not share the same purpose. The conception of a business idea marks the beginning of a feasibility study. The outcome of your feasibility study or analysis determines whether you should move forward to construct a business plan. If your feasibility study concludes that it's impossible to form a business based on your concept, there's no reason to continue with a business plan. On the other hand, if your feasibility study turns up positive and encouraging, that's when you turn your attention to constructing a business plan. The purpose of a feasibility study is to determine whether to write a business plan. The purpose of a business plan is to garner interest in your concept and to obtain financing.

Information

Business plans contain several pieces of information that might seem unrelated; however, they are part of a total package that enables you to pitch the business idea to financial institutions and lenders, venture capital firms or individual investors. Business plans contain an executive summary, feasibility study, a resume, biography or professional statement about the owner's business experience, financial models and projections, operational details and a description of the organizational structure and quality control. Feasibility studies include data about the target customer, economic and market conditions, geographical location and accessibility, financial viability and demand for your product or service.

Development

Some business teams in their early stages engage the services of an expert, whose sole focus is to conduct the feasibility study and analysis. Although there are companies that will write business plans for prospective entrepreneurs, much of the information for the business plan comes from the team. Therefore, it's almost impossible to farm out the entire business plan to someone outside your circle. The development of a feasibility study is based on purely objective information, while it's more acceptable for your business plan to demonstrate passion about your business concept.

References

• Montana State University: Starting a Small Business: The Feasibility Analysis; Michael D. Reilly, Ph.D., et. al.; 1996
• Pearson Education: Chapter 4: Conducting a Feasibility Analysis and Crafting a Winning Business Plan; 2010
• "Inc."; Is Your Business Idea Feasible?: Timothy Faley, Ph.D.; October 2005
• University of North Carolina Wilmington: III. Feasibility Analysis
• Center for Nonprofit Excellence: Nonprofit Business Plan Outline

Resources

• U.S. Small Business Administration: Templates for Writing a Business Plan
• "Entrepreneur": Elements of a Business Plan
• Saint Louis University: Have a Business Plan/Feasibility Study Done
• South Dakota: Guidelines for Feasibility Studies and Business Plans