Feasibility study VS Business plan
If you are new to investing, you may find yourself facing an infinite number of specialized investment terms that may seem strange to you somewhat. This may be a very usual at the beginning, but what is not normal is the permanent confusion by many novice and experienced investors between the project feasibility study and business plan and the difference between these two terms. Although both business plans and feasibility studies are analysis and decision-making tools used by companies, feasibility studies are used to determine whether the proposed procedure has a high probability enough to succeed. As for business plans, they are blueprints for the implementation of procedures that the company’s management has already considered effective, and that is why we at “Mashrook” for feasibility studies prepare this edited excerpt in order to eliminate this ambiguity through reliable and simple information that we hope to provide sufficient support, and let’s begin:
- Many decisions VS one decision
Business plans serve as the road map for the investment journey in order to determine the direction the company intends to follow to achieve the goals and generate revenue and profits in the future. In other words, it is a set of several decisions taken by the board of directors on how to manage the company, where the project feasibility study is a document designed to provide guidance for a one decision.
Feasibility study of projects:
Feasibility studies are often conducted to determine whether a business should proceed or not; whether the prospect of success is high enough to make the investment worthwhile even with financial risks along the way. It can also be used to make decisions about whether to launch new product in an existing company or entering a new market; any activity where there is a question about whether the company should take action or not. Feasibility studies are sometimes called cost / benefit analyzes because the expected costs of the project are compared with the expected benefits to achieve the result.
- Digest content
Although the content and scope of business plans focus varies by the company and industry, all plans have many common elements in terms of describing the products or services that the company intends to sell, and why do customers need these products or services? And search about who are the target customers? What are their buying tendencies? How does the company intend to reach them through its marketing strategy? In addition to incorporating the background and capabilities of the management team; and the potential risk factors the company faces. Business plans also include information about expected revenue and profits; in addition, it contains these specific elements that have been accomplished to read and comprehended by the investors or any other persons outside the company. Those individuals want to see very specific information about the plan.
Feasibility study of projects:
Feasibility studies may comprise some or many of the same elements contained in the business plan including a description of the required human resources and the financial expectations, but all information is detailed extensively and all of them is dedicated to reach a conclusion or recommendation or to move forward with the procedure, idea or project in question or under investigation.
- Points of difference
The business plan is based on the foundation that the business will inevitably succeed and then begin to provide the necessary steps in order to achieve this success. The business plan is conducted in order to maintain the investment position of the institution and maximize its returns and expand the market share in the sense that the primary purpose of the business plan is to employ all the resources, efforts and times already exist, each in the right quorum in order to get the most benefit, avoid wasted efforts and resources, and save the extra expenses that are wasted in lost efforts.
Feasibility study of projects
As for the feasibility study, it is to determine whether it will achieve success for a project or not if it is implemented on the real world. Therefore, it must be as accurate and objective as possible, that is, there is no room for whims or personal visions but rather to investigate and conduct research; present facts based on the scientific foundations; formulate the final opinion- upon the basis the investor will make a decision either to start implementation or abandon the idea once and for all- mentioned in the study. If the result of the study implies that the project can be applicable, all the conducted researches will be included in the company business plan, such as the expectation of market size.
Both business plans and feasibility studies try to predict future results and form future visions of the coming events and its consequences by relying on a set of assumptions about what might happen in the business environment – the economy and company competition, but given that this environment is in permanent change. This means that in the event that only certain assumptions are based upon or the scope of the assumptions and proposed solutions has been narrowed; then, the matter may be somewhat ideal even that markets and industries have nothing to do with the idea of being ideal. In turn, the achieved results by means of studying the expectations of aims and revenues are incorrect. Companies find that some of the strategies in their plan are not functioning to the extent the employer expects, thus, they must be modified. As for feasibility studies, reaching false conclusions could be quite harmful and costly as launching a project that gas a very little chance of survival therefore, agreeing for such project lead to a loss of financial and human resources of the company. For this, your business- whether conducting feasibility studies or making a business plan-should be attributed to a professional entity that relies on scientific foundations and adopt the principles of accuracy and objectivity.