How to Write a Feasibility Business Plan
Whether you are going to start a new business or launching a new product or service in an existing business, a feasibility plan is a part of a business plan that helps you and investors determine the viability of an idea. Before starting a business plan, you need to find out everything on how to write a feasibility study for a business. First, answer several questions about the future business venture. A feasibility plan is a study that considers the operational requirements, market environment and financial projections.
The reasons why a feasibility business plan is worth writing:
- Identifies and narrows alternatives for business
- Focuses on the project
- Identify new possibilities and opportunities
- Provides coherent information for making further decisions
- Identifies the factors that can affect the project
Tips for Writing a Feasibility Business Plan
- Describe the idea. Mark the key factors to success. Determine the competitive advantage of the product or service. This will determine if the feasibility plan is necessary.
- Estimate the target market feasibility. Analyze the market environment and the market size. List your potential customers and their needs.
- Explore environmental factors. The governmental regulations and laws or the cost of technologies may become an obstacle to the implementation of the idea. Also, describe the location of the business and the technologies you are going to use.
- Describe your competitive feasibility. Identify your competitors and their strengths and weaknesses. Explore the entry barriers and factors that can influence your entrance into the market.
- Demonstrate your technical feasibility. This research shows the present resources and their suitability to the project.
- Write the financial feasibility analysis. Make a financial projection for at least three years. Estimate the cost of the project, cash flow, profitability and repayment terms.
- Estimate the marketing potential. Typically, market research presents the potential sales, market capture rates and the project’s timing.
- In conclusion, state the feasibility of the business venture and show possible alternatives and possibilities. Propose the most feasible solutions to the issue.
Feasibility Business Plan Writing Steps
Mistakes to Avoid While Writing a Feasibility Business Plan
- Writing a feasibility business plan without doing research. Preliminary research shows the validity of the idea. Without it, the plan becomes a waste of time and money.
- Failing to define the key business points at the beginning of writing a plan. This will lead to wrong conclusions and forecasts.
- The feasibility plan is limited in scope. Be sure that all issues, such as legal, operational and financial are considered.
- The plan was made too fast. The main idea of creating a feasibility plan is to reduce risk and identify potential problems. Quick and hasty decisions may only lead to failure.
- Incorrect cost estimation. Cost estimates should be studied carefully. A detailed list of costs avoids over-estimation or under-estimation.
- Conducting research without expert assistance. How to write a business feasibility plan without a market research? It’s quite difficult. Don’t hesitate to use the services of professional consultants. It is prudent to conduct market research on sales, competition and price on your own.
A feasibility study determines which scenario or business model produces the most successful and viable business venture. A feasibility plan may include analysis and research of several alternatives or methods to achieving success that will be vetted and narrowed down to a few that appear to be the most viable.