Not everyone can stand running a business and make profits out of it. Tons of challenges come an entrepreneur’s way, and they need to be calm and think critically to make their venture a success. A business requires lots of documents, and there are times when owners get confused. In this article, we’ll discuss the difference between a business plan and a feasibility study. We’ll also throw some light on how one can choose between the two.
What is a Feasibility Study?
A feasibility study is a detailed document that describes whether a proposed business idea is flourishing or not. It aims to scrutinize the concept, find its strength and weaknesses and see if the idea is good enough to invest time and resources to generate expected revenue. It is done to understand the workability and profitability of the business. This study is conducted way before starting the company to understand its scalability and analyze the Return on Investment.
What is a Business Plan?
A business plan is a blueprint of how you’ll run your business. It is a formal report that contains the objectives, time allotted for each goal, an action plan to go forward, and how you see your business in the next 5 years. It is like a roadmap that guides you throughout your entrepreneurial journey and chalks out your way to success. It is filled with strategic plans and all the tactics you can use to scale and outgrow your competitors.
There’s no denying that a business plan and a feasibility anaysis are almost similar, but there’s a fine line that differentiates the purpose.
Did You Know?
A business plan creates 30% greater chance of growth and a chance to double the business.
How is a Business Plan different from a Feasibility Study?
A business plan sets the tone for the future of the company, whereas a feasibility study highlights if the idea behind the business is doable or not. A feasibility analysis clears the air and defines if there’s a scope of growth for the organization. On the other hand, when an entrepreneur develops a business plan, they assume that the business idea is already feasible and focus totally on its scalability and plan how they can earn profits and take it to the next level.
How to Decide What Your Business Needs — a Business Plan or Feasibility Study?
With such a minor difference, one may get confused between the two; mix the two things, and eventually land a poor feasibility study or business plan.
A business needs to conduct a feasibility analysis when it’s in phase 0. You can develop a feasibility study to check if your idea is worth your time and resources or not. It is also a good way to understand the scope of the work, its growth scale, and how you shall proceed further.
One can go for a business plan when you’re completely sure about the thought, and you’re all set to take those ideas to new heights. Having a clear business plan in place can be beneficial in many ways. A business plan is like a guide on which an entrepreneur can rely to go further.
The Bottom Line:
With all the explanations and examining the points, both the business plan and a feasibility study is indeed crucial for a business. As a business owner, one needs to understand the purpose behind the idea, how it can be beneficial for the owner, and if it is worth working on them. Without having the basics clear no one can go further and taste success in the business world.
It is always recommended to go for a feasibility study first and then the business plan to be clear on the process. Going step-by-step and following the hierarchy can give unexpected results.
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