FEASIBILITY STUDY VS BUSINESS PLAN

Though similar in structure, content, operation and synonymous with the business world, their purposes and applications are different. Most of the time, there is the confusion in differentiating which should be applied to a particular situation. It could also be a daunting task to explain to clients on which to adopt, the demand is usually for a business plan. There is therefore a need to highlight the differences for clarity which I will try to do based on my own knowledge and experience.

From my interaction with some would be entrepreneurs, Small and Medium business owners, I’ll strongly suggest that you are fully involved in its conceptualization and execution. Your mission and business philosophy should be fully integrated in the study and in compiling the report.

Secondly, it would amount to share waste of resources and energy if the report becomes a mere academic exercise and left on one of the shelves to accumulate dust. It requires constant review to determine variations and deviations from the initial aspiration and philosophy, market conditions, etc.

FEASIBILITY STUDY

Wikipedia defined it as “an evaluation and analysis of the potential of a new business venture or proposed project which is based on extensive investigation and research to support the decision making process”. Feasibility Study analyses the viability of an idea or project with focus on determining if the idea (business or project) should be embarked upon. The study tends to answer the question “should I/we proceed?”

Focus is on a new or proposed venture/project and it helps to save time, resources, energy, man-hour, etc and to determine early if the idea is not viable. Viability in this wise could mean any of or a combination of the following:

Ø  Venture can generate sufficient cashflow and profitability over time

Ø  The venture can remain a going concern over a long term

Ø  Can withstand all challenges and risks while standing the test of time

Ø  Can meet the demand of all stakeholders

As a guide, the basic elements of a Feasibility Study are thus.

·        Executive summary: summary of the report and should be limited to 1 or 2 pages, where applicable

·        Brief introduction: justification, objective, scope and limitation of the study

·        Description of the product and/or services

·        Target audience/market you plan to serve: what, who, why, where and why

·        What are others players doing in the market, competitors

·        Financial Implications and requirements

·        Ownership/Promoters in terms of structure, capabilities, requirements, etc.

·        Economic impact (if required) and Legal requirement, status

·        Conclusion and recommendation

·        Appendixes

BUSINESS PLAN

Business Plan can be termed as the road map/guide that shows how a goal or aspirations will be achieved. It is a plan to show how your business is going to work and how you intend to make the business a success. Most companies have a vision of the type of future they want to achieve which necessitated the formulation of Vision Statement as a constant reminder of where the owners want to be.

It therefore serves as the Mission Statement that enumerates how a company plan to achieve its vision. It is vital for all business owners, be it new or otherwise, to help determine the company’s future outlook, direction, investment, expansion, take advantage of new opportunities, or address changes in the market or competition.

Business plan is a written description of your business’s future: what you want to do and how you want to do it. Wikipedia defined a Business Plan as “a formal statement of a set of business goals, the reason they are believed attainable and the plan for reaching those goals”.

As a guide, the basic elements of a Business Plan are thus.

·        Executive summary

·        Company overview and business description

·        Description of the product and services

·        Marketing Plan: what, why, who, where, economics of the sector or market

·        Technical ability and strategy to be employed

·        Operational Plan: staffing, location, techniques, legal framework, etc

·        Management and organization: management and ownership, who to manage, etc

·        Financial Plan: requirement, cashflow, profitability, breakeven analysis, funding, etc

·        Conclusion and recommendation

Every business plan should seek to answer: what, why, who, where, when, how and how much.

MAJOR DIFFERENCES

1.      Feasibility Study determines the viability of an idea, project, and business venture while a Business Plan identifies the strategy to achieving the desired result.

2.      Feasibility Study must be completed before Business Plan but it is also a component of the Business Plan

3.      Business Plan is prepared after the idea/project has been confirmed viable and contains more of tactics and strategies to be implemented.

4.      Feasibility Study is focus on viability and is prepared before funds, time, resources are invested in the new idea/project while Business Plan is viewed in terms of growth and sustainability

Please note that Feasibility report or a Business plan need not be bulky but must contain the basic information that can aid decision making. Business Plan must be reviewed and updated regularly to remain relevant in line with the current dispensation or risk it been stale and out-dated.

Professionals can be contacted based on their experience and competence. However, I need to reiterate that the owner should be fully involved fully from the start to the finish of the report or risk living the dreams and aspirations of others.

Please note that I cannot possibly address all the issues in detail at this point but should you have questions, clarifications or need assistance, send your request to Michael@bizadvisory.tk or call 08077191158.

Remember, do your research well and plan adequately, be versatile and adaptable to changes in your environment and most importantly, seek the advice and help of others. Nobody has monopoly of knowledge!