Are you thinking of starting a business? What should you do first: create a business plan or undertake a feasibility study? What is the difference?

A feasibility study can help you see if it is possible to implement your business. It could help you take a step back and look objectively at the strengths, weaknesses, opportunities and threats of your proposed business venture. Will your idea work? Is it a sound concept? Is your idea viable or will it need a few changes before you invest time and money into this business?

Once you establish that your business idea is feasible, then you could proceed with a market research. Much of the information that you have gathered for the feasibility study could be used for this. The business plan provides detailed financial forecasts, marketing strategies and information on how you will start and grow your business.

The difference? A feasibility study helps determine if your business idea will work and the business plan makes sure other people understand your business' potential.

Your feasibility study could cover these 3 areas:

  • Market analysis
  • Financial viability
  • Operational issues

Carry out before starting your business and analysis:

  • What is the size of your market?
  • What is the demand for your product or service?
  • What type of customers would be willing to pay for this product or service and where will you find them?
  • How much will your customers be willing to pay?
  • Is your industry sector in a growth or decline period?
  • Who are your competitors?

Assess your financial viability:

  • What are your profit projections?
  • How much money will you need for start-up costs? Will you need to borrow money (and how's your credit rating)?
  • How much will you need for working capital?
  • What are your sales forecasts?
  • Will you need a lawyer or an accountant? What are the costs for these services?

Investigate operational issues:

  • Who will be your suppliers? Where are they located?
  • Will your business be bricks and mortar, online only or both?
  • Will your space need repairs?
  • What type of equipment will you need?
  • What type of skills will your staff require and are there people with these skills in your region?
  • Will you require any licences or permits?

These are only a few sample questions to consider — there could be many more, depending on your circumstances.

Learn more about the steps to take business plan.