Feasibility study or business plan? - What opportunities do each offer
Business plan and feasibility study - truth be told, not everyone recognizes the differences between the two. However, they are crucial in creating any business. Whether you're a budding entrepreneur or a business shark, raising new funds is an essential step to growing your business. How do you accomplish this? There are various ways, but one of the most effective is to present potential investors with one of these documents. However, what is actually the difference between the two, and do we know exactly what is behind the words?
Business plan as an aid to enterprise development
What exactly is a business plan? In the simplest terms, it can be described as a planning tool for a company, defining its goals and the strategy it follows. We create it for the internal and external needs of the company in order to present our business. These include modifying the entity's management processes and methods of promoting our services, finding potential suppliers and customers. We can present it to potential investors, support our loan application with it, or plan our strategy based on it. It should consist of several very important elements, such as:
- Executive summary - it should be written in a way that is interesting to the investor and encourages him to read further into our business plan
- Company presentation - this is where we introduce our idea, basic information and define the company's mission to the reader
- Characteristics of products and services - this is nothing more than a detailed description of what our company offers to potential customers
- Market and marketing - here we answer questions such as: who is our potential customer? What is our competition? Where do we get our raw materials from? In doing so, we perform a competitive analysis, determine marketing and advertising activities and distribution channels
- Production capacity and staffing - include information on what equipment we have, how many employees we will employ and potential hours per week, and what the service delivery process will consist of
- Financial analysis - we determine the financial situation of the company, conduct ratio analysis, estimate potential future costs and revenues of the business
- SWOT analysis - which is nothing more than a study of the external and internal environment of the company, Want to learn more? Take a look at our article on the subject of
A good business plan could be said to answer 4 questions: Who is going to open the enterprise? What is the object of the enterprise? How will the plans be implemented? And the one that interests most, how much will it cost?
Feasibility study - indispensable for obtaining new investments
A feasibility study, according to many people, is an expanded version of a business plan with a technical feasibility analysis. The purpose of preparing a feasibility study is to verify the potential of an idea and its feasibility. After its completion, a positive or negative assessment of the project's feasibility is given. The implementation of the feasibility study is an essential step in the process of applying for funding from the European Union. It should consist of such elements as:
- Presentation of the project: data about the project, description of the current state (before the actions taken), description of the project status, location and analysis of public assistance,
- Definition of project objectives
- Project implementation schedule
- A wide range of analyses such as institutional, legal, sustainability, feasibility, demand, options i.e. alternatives, financial, cost-benefit, sensitivity and risk,
- Determine the planned progress - the measurable goal of the project
- Risk assessments of the feasibility of the planned goal
- Alternative options
Extremely useful in performing a feasibility study are analyses such as:
- Checking the legal aspects of the implementation of a given project
- PEST macro-environment analysis - comparing with each other the basic external factors of the organization namely: political, economic, socio-cultural and technological
- Porter's 5 forces - performed before entering a new market, analysis of sector attractiveness
- SWOT analysis
- Osterwalder model
How to make a choice?
Determining which document to create depends on many factors. First, it is necessary to determine what you want to achieve. A business plan mainly works well for smaller, purely service-based companies, relying on little-changing activities. A feasibility study focuses on other aspects, such as legal barriers and a thorough analysis of how best to circumvent them. We also identify the goals we want to achieve, the problems we may encounter in achieving them. Often it is time-consuming to do all the analysis, collect the relevant data and properly draw conclusions, and it requires the expertise that professional companies guarantee. They will also help make the document we created beforehand more attractive in the eyes of potential investors or the grant committee. So it is worthwhile to have them execute the variant of our choice, as it helps in making important decisions for the company, such as entering a new market, defining a new strategy. So don't delay and think about making a business plan or feasibility study today!