What is the difference between Feasibility Study and a Business Plan?

The question is a simple one and deserves a clear snapshot that would give the writer a clear idea of what is the structural difference between a Business Plan and a Feasibility Study. It will be followed by a detailed analysis of the subject. I have done a research on the subject and found a very excellent source from Murdoch University that covers the points that should be included in the Feasibility Study. Based upon those points, I have done a mapping of what should be included in a Business Plan and what should be covered in a Feasibility Study. The Feasibility study coverage should include all the sections that are mapped in the table while the business plan coverage should have lesser coverage. So irrespective of whether you are planning to write a feasibility study of a car rental business or a piggery business feasibility study the key index points mentioned in the Tables below should be covered.

I have segregated the sections into 3 different parts for ease of reading and understanding. The 3 tables are Table 1, 2 and 3(a) and 3 (b) and there is an explanation for each table.

                                            Table 1

In Table 1 above, we have covered the 4 key sections that are Executive Summary, Product or Service, Technology and Intended Market. The key points that we can deduce from this table are:

·         For the Product or services section, the business plan does not require from where the product components are being sourced or how you are going step-by-step in developing the product. The investor, for whom the business plan is intended will not be interested in such details in the first step. If they want it they can call for it in later stages of the discussion.

·         Product testing details are not required in a business plan. The investor will be interested in seeing a minimum viable product. Deep technology detail is also not appreciated in a Business Plan, unless it is specifically asked for and also if your product is not focused on deep technology such as Ai, ML etc.

·         When discussing the market, details about when a product is bought by the customer, replacement timeframes and purchasing details are not important in a business plan.

In brief, a business plan gives an overview of the business, products and market but it should not be that detailed so that the investor loses interest in the plan itself. Now we come to the next set of Index point coverage. 

                                        Table 2

In Table 2, the index points covered are competition, industry description, business model and Marketing and sales strategy. The key points that we have taken out from table 2 are:

·         There is no requirement for a detailed mapping of the competition in terms of market share, product focus, goals etc. A brief overview of the competition and the product that they offer should be enough to give the investors an idea of the competition. Also, it is not required to provide details about the competition response to a new product launch.

·         A business plan should cover details about the industry in which the company operates but it does not need to go in details about the industry trends, regulations and other related details. Remember, we are writing a business plan and not doing a research on the industry in which the business will operate.

·         Marketing and Sales strategies should be captured in details in the business plan as well, but it need not get into the details about the distribution agreements that you may have and the payment terms and conditions.

                                                   Table 3 (a)

Table 3 (b)

Table 3 (a) and Table 3 (b), covers quite a few index points covering Production and Operation requirements, Management, IPR, Regulations and Environment, Critical risk factors, startup schedule, projections and final recommendations. The analysis of the coverage about each of these points is given below.

·         There is no need to put the details of the production and operation plan in a Business Plan document. It is definitely required in a Feasibility Study but not so much in a Business Plan. In certain cases of manufacturing plans the client may ask for the production details but then that document skews towards a feasibility study and should be billed accordingly. 

·          The Management team details and the staff required for running the business is required in a Business Plan.

·         The Intellectual Property section should describe about any product patent, trademarks etc. that the company may have but it does not need to get into license agreements for using a technology, term of the license agreement etc.

·         Regulations and Environmental Issues and Critical Risk aspects can be clubbed together in the Critical risk segment. The external factors that may impact the business is an essential section of the business plan.

·         Every Investor will need to understand that how soon they can recover their investment. So, the milestones need to be clearly articulated in the business plan.

·         The financial forecasts is one of the most important section of the business plan. This one should cover the details as mentioned in Table 3 (b).

It is important to note that a Feasibility Study is an assessment while a Business plan gives an overview of the business. The differences between feasibility study and business plan writing as mentioned in the tables should help you to make the judgment easily.

Many times clients do not have a clear idea between a Business Plan and a Feasibility study. What starts as a Business Plan spills over to a Feasibility study. Therefore, it is important that we understand what we want as the final output of a Feasibility Study or a Business Plan exercise right from the start.