In fact some well done feasibility studies can actually be submitted as business plans

Conducting a Feasibility Study

Simply put, a feasibility study is a way to analyze and appraise a planned project to determine if it is technically possible, reasonably within a projected cost, and sufficiently profitable. When investing a large amount of money on a project or a business venture, conducting a feasibility study becomes essential, and must always be done before writing a business plan.

Unlike a business plan, a feasibility study is carried out to aid all those involved in the project or business venture in making a decision that will be beneficial to all concerned. It is essential that the study be conducted without any bias so as to provide truthful information upon which a sound decision (whether or not to push through with the project) can be made.

A feasibility study is full of (sometimes overly) comprehensive data that covers the potential trade, operational, financial and environmental (etc.) impact of the proposed project on its' target market, investors, and the general public. It must include the advantages and disadvantages of the project before a decision can be made to go ahead and write a full business plan.

Though it may look daunting, conducting a feasibility study need not be complicated. In fact, there are many websites that offer feasibility and business plan templates that will guide you in conducting your feasibility study. 

If you are conducting a feasibility study to enter into a business venture, a simple way to go about it would be to answer the following questions:

• What are your personal goals for making a feasibility study? 
• What skills and/or experience do you (and/or your team) possess that will aid you in this project?
• What are your financial resources?
• What products or services do you intend to market?
• Who is your target market?
• Who are your competitors?
• How will you sell and market your products or services? What is your unique selling proposition?
• How will your products or services be distributed?
• What will you need (technology, equipment, software, infrastructure, etc.) to manage your company?
• Who will you hire (manpower and management) to help you run your company?
• How much do you think you will sell (forecast) in the next one, two or three years?
• How much do you need to start (start-up costs) your business?
• What will your 12-month operating budget look like?
• How will your company be taxed?

After answering those questions (which could take some research), you can evaluate your business feasibility study.  As a rule, if the potential revenues exceed the potential costs by a margin (%) that you and/or your investors have determined as feasible (usually between 15% to 30% per annum; depending on the type of product or service you are selling) within a specific period of time (usually from 3 to 5 years) that you and/or your investors have also determined, then you can push through with your business plan.

Writing a business plan at this point should be easy since most of the information is already in the feasibility study. In fact, some well done feasibility studies can actually be submitted as business plans. This is probably where all the confusion between business plans and feasibility studies comes from.

Below is an outline you can use to structure your feasibility study:

Project Description – Here, we identify and explore the different business scenarios and aspects of your project as well as the relationship your project has to the surrounding geographical area.

Market Feasibility – Here, we determine if the market is ripe or too saturated for your products or services. Just because you have a good idea, it doesn't mean that others haven't already thought of it nor done it; or it might be that the market may not yet be ready for your kind of innovation. Here are the things you need to research:

1. Industry description
2. Competitor audit
3. Market potential
4. Access to market channels
5. Sales forecast

Technical Feasibility – Here, we identify what we need, in terms of equipment, technology, office space, site, facilities, fixtures, furniture, supplies, stocks, raw materials, etc., to run the business efficiently. 

Manpower Feasibility – Here, we determine our Human Capital Resources. You need to be able to identify your various manpower requirements and when to hire each. You also need to determine which positions can be considered "permanent" positions and which jobs you can outsource. Here are the reports you have to generate:

1. Table of organization
2. Manpower forecast
3. Incorporator/Partnership structure

Financial Feasibility – Here, you need to estimate and compute for:

1. Your total capital expenditure requirements
2. Your operating expenses for the next 3 to 5 years
3. Your equity and credit needs 
4. Your 12-month and 3-year profit or loss statement
5. Your break even analysis 
6. Your forecasted cash-flow for 1 to 5 years
7. Your internal rate of return
8. Your net present value after 3 or 5 years

Conclusions and Recommendations – After the data has been gathered and categorized, they must be studied carefully; and the conclusions and underlying assumptions must be analyzed. Here, you have to:

1. Identify and illustrate the various optional business scenarios and models you can apply
2. Evaluate the different scenarios based on your goals
3. Create standards for decision making among the different scenarios
4. Evaluate the results of the study
5. Make recommendations based on the results

It is important to choose the most viable business model and develop an effective business plan before you create and operate your business. You may also have to identify secondary scenarios for the study to be dynamic and adaptable to outside change.

Should you decide that the project is not a viable business opportunity, it is not enough to simply put an end to the concept. You may recommend other courses of action that may have sprung forth from your research. Remember that no idea hits a dead end. It may be that you just need to take a detour.