When you plan to start a business, there are so many things that are to be kept in the mind, some are simple, straightened out within seconds, some are quite elaborate, and are sure to give sleepless nights, but once you are done with these two things, it is said you are halfway there!
In simple terms, we need to check with the practical scenario. What if we have overestimated certain things? What if the idea in our head is actually not possible to execute? We need to know if an idea is a viable option, and exactly how. According to Rochester.edu,” it is 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”. Entrepreneurs need to establish the basic outlines of several factors of business viability like:
- market scenario
- competition
- Business model
- Cost and finances
- Production scenario (both requirements and threats)
- Risk factors
And certain other ‘if’s and ‘but’s, and ‘how exactly’s. Feasibility study for a business is always done before moving on to the detailed business plan.
What is a business plan?
Now, this can be assumed as the most important part of any business venture. It comprises of sketching out a proper plan with detailed steps, strategies, and tactics that will be required to run the business, or later take it to its apex position. This is done to chalk out the “path” of the business and increase its possible outcome or growth after it has been deemed ‘feasible’.
In simple terms, a business plan guides a business to its goals and describing all the intermediary elements like:
- Leadership and staffing
- Financing
- Operations model
- How the business will earn money (or possibly increase it), etc.
Differences and similarities
If the business plan is probably the most important thing for a thriving business, a feasibility study is also nothing less. It must be taken into account very seriously, before starting a new business. A strong and promising feasibility study draws in the investors and makes them believe in the possibility of the business idea. Only then can a business plan be drawn out.
A feasibility study goes through all the bulk work, like collecting data, calculations, and analyzing the interpretations whereas the business plan is filled with the smart ideas and suave strategies that define the business curriculum. Most companies have a business plan outlined for the first five years or so.
In all, the feasibility study is like laying the groundwork before starting a business, researching and analyzing the entire profit potential of a business idea, and the business plan is like a road map, which determines the way ahead, dodging all the hurdles.