There are a variety of documents that can be used in the planning process for a venture. While most companies can benefit from developing any of these documents the stage of growth your business is in often times determines which document your business would benefit the most from. For example, ideation-stage startups should focus on the business model canvas or lean startup canvas and then develop a pitch deck that tells the story of their idea. Whereas more established businesses benefit from developing business plans. However, both can benefit from a well-researched feasibility study.
How are a Feasibility Study and Business Plan different?
From my experience business plans can be used for a few distinct purposes. In fact, I’ll be talking about that on Wednesday’s post.
For now, know that a business plan is a document intended to explain the company’s business model to either internal or external stakeholders. It covers things such as the product or service you will be offering, the industry the business is operating in, who the competitors are, and how the business will market its solutions.
A feasibility study covers many of the same types of information. In fact, since a feasibility study is often prepared before a business plan because it helps determine the viability of the business/product/service, much of the information uncovered in a feasibility study can be used in the subsequent business plan.
The easiest way to distinguish between the two documents is that the feasibility study answers the question of “if” and then the business plan explains “how”.
Should you prepare your own Feasibility Study?
I am a fan of the business owner being engaged in any process that involves planning and researching the viability of a new idea or product or service. The challenge with someone from within the business performing the research is that there is bond to be some level of bias that creeps into the process.
Even if that person is from an entirely separate division of the company it is hard to stay neutral.
So, I always recommend having an outside firm complete the study for you. That will cost you some money, for example my firm performs them for $650, but that cost is going to be much less than the amount of money you will waste on pursuing an ill-fated business.
In the queue
If you are looking for a template for a feasibility study try this Google search.
Next up I will be talking about business plans and the two main purposes of a business plan.
P.S. If you looking for tips on how to meet investors, what they look for in a startup, and more check out our Funding Power Pack.