The Feasibility Study vs. the Business Plan

Groups often confuse the role of two of the tools used by groups in the project development 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 the information developed in the feasibility study will be incorporated into the business plan. The business plan also contains aspects that were not included in the feasibility study. It would, therefore, be useful to clarify the differences between the two.

The feasibility study is conducted during the deliberation phase of the project development cycle prior to obtaining project financing. It is an analytical tool that includes several scenarios for the decision-makers of the group to utilize in determining if they should continue the project. If, after completion of the feasibility study, the group decides to not proceed, there is no need to undertake the process of creating a business plan.

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

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

The business plan is created later in the development process than the feasibility study. By this time project details, which required assumptions for the feasibility study, have been decided. Standard business plans include details such as key management personnel, business location, the financial package, 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 group typically develops their business plan internally. The group may revise the plan with input from bankers and investors, as the financial situation of the project becomes clearer.

Another difference between the two, although not as important for project development considerations, is that while the feasibility study is only applicable for the developmental stage of a project, businesses continue to use, and revise their business plans after a project has been implemented.

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

Last Revised: September 5, 2001

Home Page    What We Do    Accomplishments    Awards    Cooperative News    Upcoming Events    Helpful Links    Board of Directors    Return to Co-op Info