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The Feasibility Study vs. the Business Plan

Groups often confuse the role of two of the tools used by groups in the projectdevelopment process; the feasibility study and the business plan. Various

components are common to both the feasibility study and the business plan.Assuming positive feasibility study results, some but not all of theinformation developed in the feasibility study will be incorporated into thebusiness plan. The business plan also contains aspects that were not includedin the feasibility study. It would, therefore, be useful to clarify the differencesbetween the two.

The feasibility study is conducted during the deliberation phase of the projectdevelopment cycle prior to obtaining project financing. It is an analytical tool

that includes several scenarios for the decision-makers of the group to utilizein determining if they should continue the project. If, after completion of thefeasibility study, the group decides to not proceed, there is no need toundertake the process of creating a business plan.

If the group decides to proceed, they construct a business plan. The businessplan is the design for project implementation and, as its name implies,presents the guideline for the project plan. Its purpose is to serve as ablueprint for the group's responses during project operations.

Usually, the business plan contains less emphasis on differing scenarios thanthe feasibility study. Typically, it elaborates the scenario shown by thefeasibility study to be most promising. Since the concept has been shown to beviablein the feasibility study, the business plan is much more focused onwhat action steps will be taken during and after project implementation.

The business plan is created later in the development process than thefeasibility study. By this time project details, which required assumptions forthe feasibility study, have been decided. Standard business plans include

details such as key management personnel, business location, the financialpackage, product flow, and possible customers.

Since the feasibility study presents an independent review of the project,persons from outside of the group normally complete it. In contrast, he grouptypically develops their business plan internally. The group may revise the

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plan with input from bankers and investors, as the financial situation of theproject becomes clearer.

Another difference between the two, although not as important for project

development considerations, is that while the feasibility study is onlyapplicable for the developmental stage of a project, businesses continue touse, and revise their business plans after a project has been implemented.

To summarize, a business plan shows the group's intended response to thecritical issues revealed in the feasibility study. As the feasibility study refinesthe group's initial ideas, the business plan uses information from the study tofurther prepare the project for operation.