flowchart LR A[Market feasibility] --> B[Technical feasibility] B --> C[Financial feasibility] C --> D[Organisational feasibility] D --> E[Legal & regulatory feasibility] E --> F[GO / NO-GO decision]
93 Business Plan and Feasibility Analysis
A business plan is a written document that describes a venture’s opportunity, strategy, organisation, finances and risk in enough detail that an outside reader — investor, banker, partner, regulator — can evaluate it. Feasibility analysis is the prior step: a structured assessment of whether the proposed venture is possible — technically, commercially, financially, organisationally, and legally — before a full business plan is written. Together they constitute the bridge between an opportunity and an enterprise. Standard textbook references are Hisrich-Peters-Shepherd, Kuratko, Vasant Desai, Project Management by Prasanna Chandra, and the World Bank-UNIDO Manual for the Preparation of Industrial Feasibility Studies.
TipWorking definitions
| Term | Working definition |
|---|---|
| Business plan | A written document that comprehensively describes the proposed business — its market, product, operations, team, finance, risks — over a 3-5 year horizon. |
| Feasibility study | An evaluation of the practicality of a proposed project or system to determine whether it is worth carrying through to a business plan. |
| Project report | The detailed report — typically required by lenders — that operationalises the business plan with techno-economic projections. |
93.1 Purposes of a Business Plan
TipWhy a business plan?
| Purpose | Audience |
|---|---|
| Internal road-map for the founder team | Founders, employees |
| Pitch document for investors and lenders | VCs, banks, NBFCs |
| Compliance document for licences and registrations | Government departments, DGFT, MSME-DI |
| Document for strategic partners and suppliers | JV partners, vendors |
| Reference for performance monitoring | Board, mentors, accelerators |
93.2 Components of a Business Plan
The standard 10-section structure used by Hisrich and Peters and adopted by most accelerators:
TipStructure
| § | Section | Key content |
|---|---|---|
| 1 | Executive summary | One-page elevator version |
| 2 | Industry / market analysis | Size, growth, trends, regulation |
| 3 | Description of the venture | Vision, mission, products / services |
| 4 | Production / operations plan | Location, layout, capacity, suppliers |
| 5 | Marketing plan | Segmentation, positioning, 4 P’s |
| 6 | Organisational plan | Structure, roles, ownership |
| 7 | Financial plan | Income, balance sheet, cash flow projections; break-even, funding ask |
| 8 | Assessment of risk | Internal and external risks; mitigations |
| 9 | Implementation schedule | Gantt / PERT timelines |
| 10 | Appendix | CVs, market data, letters of intent |
93.3 Writing the Executive Summary
The executive summary is the first thing read and often the last thing written. A typical investor-grade summary fits on one page and answers: What is the problem? What is your solution? Who is the customer? What is the market size and segment? What is your business model? Who is the team? How much money are you raising and on what terms? What are the projected returns?
93.4 Feasibility Analysis — The Five Filters
Hisrich-Peters and Kuratko organise feasibility analysis into five filters, all of which must clear before a full plan is written:
TipFive filters of feasibility
| Filter | Question answered |
|---|---|
| Market feasibility | Is there demand at the proposed price and at sufficient scale? |
| Technical feasibility | Can the product be made with available technology, location, suppliers? |
| Financial feasibility | Will the venture earn at least the cost of capital? |
| Organisational feasibility | Does the team have the competence and capacity to deliver? |
| Legal & regulatory feasibility | Are licences, IP, environmental and contractual requirements satisfiable? |
The UNIDO Manual uses a slightly broader, fifteen-step pre-investment cycle including opportunity studies, pre-feasibility, feasibility, evaluation report, formalising what most Indian DPRs (Detailed Project Reports) follow.
93.5 Tools of Feasibility Analysis
TipTools by filter
| Filter | Tools |
|---|---|
| Market | Demand survey, market sizing (top-down, bottom-up), Porter’s five forces |
| Technical | BOM, plant layout, capacity balance, technology selection |
| Financial | NPV, IRR, payback, BEP, sensitivity, scenario analysis |
| Organisational | Skills audit, organisation design, competency mapping |
| Legal | Companies Act compliance, FEMA, environmental clearance, IPR diligence |
93.6 Project Cost and Means of Finance
A typical project report breaks project cost into the following heads, balanced against the means of finance:
TipProject cost & means of finance
| Project cost | Means of finance |
|---|---|
| Land and site development | Promoter’s contribution / equity |
| Buildings and civil works | Internal accruals |
| Plant and machinery | Term loan from banks / FIs |
| Miscellaneous fixed assets | Subsidy / grant |
| Pre-operative expenses | Public issue (IPO) |
| Contingency | Foreign currency loans, ECB |
| Margin money for working capital | Working-capital limits |
The classical debt-equity ratio for greenfield manufacturing is 2:1; for service ventures, 1:1; for early-stage technology start-ups, equity (often through angel and VC) typically dominates.
93.7 Financial Projections
Three statements are projected for at least three years (often five):
TipProjected statements
| Statement | Frequency | Purpose |
|---|---|---|
| Projected income statement | Monthly Y1, Quarterly Y2-3, Annual after | Profitability and tax position |
| Projected balance sheet | Year-end | Asset base, gearing, working capital |
| Projected cash flow | Monthly | Liquidity, runway, financing need |
The Break-Even Point is computed as Fixed Cost ÷ Contribution per Unit; NPV, IRR, Payback and Discounted Payback evaluate the investment economics; sensitivity analysis stress-tests the numbers.
93.8 Risk Assessment
Risks are typically categorised as market, technology, operational, financial, regulatory, and key-person. Mitigation tools include diversification, insurance, hedging, take-or-pay contracts, escrow accounts and contingency reserves. The Failure Mode and Effects Analysis (FMEA) and Monte Carlo simulation are common quantitative risk tools.
93.9 Lean Canvas and Business Model Canvas
For early-stage ventures, the full business plan is often condensed to a one-page Business Model Canvas (Osterwalder & Pigneur, 2010) with nine blocks — Customer Segments, Value Proposition, Channels, Customer Relationships, Revenue Streams, Key Resources, Key Activities, Key Partners, Cost Structure. Ash Maurya’s Lean Canvas (2010) replaces four blocks with Problem, Solution, Key Metrics, Unfair Advantage for start-up contexts.
93.10 Practice Questions
Q 01 Plan vs feasibility Easy
A feasibility study is normally conducted:
View solution
Correct Option: C
A feasibility study is the prior step that tests whether the venture is technically, commercially, and financially viable before resources are committed to a full plan.
Q 02 Plan structure Easy
The first formal section of a business plan is typically:
View solution
Correct Option: B
The Executive Summary, although written last, is placed first — it is the only section many busy investors will read.
Q 03 Feasibility filters Medium
Which of the following is NOT one of the standard five filters of feasibility analysis?
View solution
Correct Option: C
The five standard filters are market, technical, financial, organisational, legal/regulatory. “Cultural” is not part of the list.
Q 04 BMC Medium
The Business Model Canvas of Osterwalder and Pigneur has how many building blocks?
View solution
Correct Option: C
The BMC has nine blocks, often grouped as right-side (customer-facing) and left-side (efficiency-facing) with revenue and cost at the bottom.
Q 05 UNIDO Medium
The classic Manual for the Preparation of Industrial Feasibility Studies is published by:
View solution
Correct Option: B
The United Nations Industrial Development Organisation (UNIDO) issues the standard manual, often used as a reference template by lenders and DICs.
Q 06 Project cost Medium
Margin money for working capital appears under:
View solution
Correct Option: C
Margin money for working capital is one of the standard heads of project cost in a DPR; it is then funded from the means of finance.
Q 07 Lean Canvas Medium
Ash Maurya’s Lean Canvas adapts the Business Model Canvas by adding Problem, Solution, Key Metrics and:
View solution
Correct Option: A
Lean Canvas replaces Key Resources, Key Activities, Key Partners, Customer Relationships with Problem, Solution, Key Metrics, Unfair Advantage.
Q 08 Match the following Hard
Match the tool with the feasibility filter it primarily addresses:
| (P) Porter’s Five Forces | (1) Financial |
| (Q) NPV / IRR | (2) Technical |
| (R) Plant layout | (3) Legal |
| (S) Environmental clearance | (4) Market |
View solution
Correct Option: A
Porter’s Five Forces — market; NPV/IRR — financial; plant layout — technical; environmental clearance — legal/regulatory.
ImportantQuick recall
- 10-section business plan: ES → industry → venture → operations → marketing → organisation → finance → risk → schedule → appendix.
- 5 filters of feasibility: market, technical, financial, organisational, legal/regulatory.
- UNIDO manual is the global reference; Indian DPRs follow similar logic.
- BMC = 9 blocks (Osterwalder); Lean Canvas adds Problem, Solution, Key Metrics, Unfair Advantage.
- Project cost vs Means of finance; D/E typically 2:1 for manufacturing.