What’s the Difference between Business Plan, Business Proposal and Feasibility Studies?
DIFFERENCE BETWEEN BUSINESS PLAN, BUSINESS PROPOSAL AND FEASIBILTY STUDY
In this article, we could be considering majorly the differences among a business plan, proposal and a feasibility study. But first we would talk briefly on the relationship that exists among the three.
The three are all analysis tool used for making of decisions by an individual or an organization. And the relationship is that they can be used alongside one another in decision making processes. However, they have their differences in which they seem to tackle and target different processes.
Now, we should have the definitions of the three terms as it’s important we understand them before we proceed to highlighting the differences.
Business Plan: A business plan is that document which gives a concise description of how a business is established. It is usually a five year plan of a business that is to be in operation and it portrays the company’s structure, market finding and analysis, market strategies, products and services and financial projections.
Business Proposal: This can be considered to a sales document, drafted to show how a particular project would be carried out, estimating the value of the project to the client and also seeking the client’s involvement in the business. A business is usually a document that an organization submits to another in order a business arrangement.
Feasibility Study: This also is a document drafted with the aim of finding out how viable and profitable a business venture will be. This is as important in any business as it what will determine if the business will be worth time, resources and efforts before any action is taken.
There are several differences among the three but we will be categorizing them into two; based on
- Purpose or reason of write up
- Element or structure of write up
In Terms of Purpose:
A Business Plan is used to document the vision of a business and steps to be taken in achieving the vision. A typical one will contain the financial projections and an estimation of the revenues that will be generated in the business. Its purpose is to give a concise and detailed explanation of the business to first, the potential investors, employees, suppliers, accountants, attorneys and any person or set of people that needs to know about the business routine and its ability to achieve success.
A Business Proposal is most times a response to the request of a potential client of the company or an unsolicited business idea presented to another business organization. The major reason of a business proposal is to request for a business opportunity and its scope is limited to a specific project.
A Feasibility Study is a process that is mostly carried out with the aim of finding out the workability and profitability of a business idea. This is a process unlike a business plan which involves calculations and estimated projections of a business idea or project.
In Terms of Structure:
A typical Business Plan consist of three major elements, namely; i) a detailed description of the business model ii) the marketing model and iii) the financial projection. Others include, the Executive Summary, Description of the Business, Marketing Model, Competitive Analysis, Financial Projections, Operations Plan, Financial Information and Projections.
A Business Proposal that is written as a response to a Request for Proposal (RFP) must follow the format that is requested in the RFP. The structure of the proposal will involve a description of the services your proposed company will render, that are relevant to the goals that are specified in the RFP. It will also comprise of answers to the specific questions that were asked in the RFP and also a quote on the materials, tools, labors, delivery and other to be incurred cost in the course of the project.
The activities of creating a Feasibility Study for a business venture are general and quite applicable to all kinds of businesses or projects irrespective of the technicalities involved in the operation of the project.
The basic elements of the study will contain:
- The scope of the project, which will be used to highlight the problems and opportunities of the business.
- The current analysis, used to understand the recent methodologies that will be utilized in implementing the project.
- The requirements of the projects; it depends on the object of the project’s attention.
- The approach; considered to be the prescribed solution given to satisfy the requirement. On the approach to be taken or used, several alternatives available can be considered and also detailed explanations on why the solution is preferred to other described or highlighted solutions.
- Evaluation will look into the cost efficiency of the specific and preferred approach. It begins with the estimated cost of the whole project.
- Review is lastly done to cluster all the elements into the feasibility study. It has two different purposes. Firstly, it is to initiate a project decision; which will be either to approve/reject the project or request that the project be revised again before making a final decision. Secondly, to ensure that the study is through and accurate.