What’s the Difference? Exploring Business Cases, Feasibility Studies & Business Plans

Carmen ReisFebruary 10, 2024

One of the things that always frustrated me as a consultant and that I spent a lot of time educating clients on, was understanding the nuances between a business case, business plan, and feasibility study. It never ceased to amaze me, that people would blindly ask for one (or all of these), interchangeably, without understanding what they actually needed or why.

These strategic tools serve unique purposes and are key to making informed decisions, securing funding, and ensuring long-term sustainability. Let’s break down these terms in simple language to understand their roles in the nonprofit world.

Business Case: The “Why” Behind Your Project

A business case is essentially your argument for a proposed project or initiative. It answers the “why” – why you should undertake a project, why it aligns with your nonprofit’s goals, and why it deserves the time, effort, and resources. It’s a narrative that includes:

• The problem or opportunity at hand
• The benefits of pursuing the project
• An analysis of the risks involved
• Potential alternatives and their outcomes
• The recommended solution and its justification

In the nonprofit sector, a business case can help you gain support from stakeholders by clearly presenting the social impact and value of your project. It’s not a full plan of action but rather a persuasive document that sets the stage for more detailed planning. This is by far the cheapest of the three.

Usually, these are done internally. Sometimes a consultant close to an organization will help develop it. It is not very long, but it is a useful tool that can be used for both boards, funders and stakeholders. It does not not however answer the deeper questions–which is why we need the other two.

The Feasibility Study: The “Should We Proceed?” Analysis

A feasibility study is an assessment tool that helps you determine whether your project idea is viable before committing significant resources. It involves a thorough analysis of all factors related to the project’s success, such as:

• Economic feasibility: Is there financial sustainability within the current funding landscape?
• Legal feasibility: Are there any regulatory issues or compliance matters to consider?
• Operational feasibility: Can your team effectively execute the project?
• Technical feasibility: Do you have the necessary technology or infrastructure?
• Schedule feasibility: Can you complete the project in a reasonable timeframe?

Nonprofits use feasibility studies to avoid unwarranted risks by evaluating projects’ practicality and potential impact before going all in. This step is critical because it ensures that resources are used responsibly and align with the organization’s capabilities.

Depending upon the type of project, a feasibility study can cost you anywhere from $20,000, all the way to the hundreds of thousands.

Why may you ask? In all honesty, this is perhaps the most difficult of the three to answer. It often requires high levels of technical knowledge, significant amounts of research and carries an enormous weight of responsibility for the individual conducting the feasibility study or assessment.

This individual is essentially recommending that you proceed with a given action and guaranteeing you an outcome, or range of outcomes. That carries with it extreme liability.

We would often have organizations ask for a “quick feasibility plan”, and we would have to say “No”. To do this properly, takes several months. It involves demographic analysis and much scenario building and financial forecasting. Not an easy thing to do, nor is it quick. The outcome of this study will answer the question, should we proceed? If so, under what conditions and what kind of outcomes can we expect.

The cost of conducting a feasibility study can indeed be higher than creating a business case or a business plan if the feasibility study involves complex market research, engagement of industry experts, advanced financial modeling, or technical evaluations. The costs can rise significantly if the study is for a large-scale project requiring extensive data collection, analysis, and expert insights to determine whether the project should proceed.

The Business Plan: Your Roadmap for Accomplishing Your Project

Moving from justification to action, a business plan is your roadmap and tool of choice. It outlines how your nonprofit will achieve its goals, detailing every aspect of your operational strategy. A comprehensive business plan includes:

• Executive Summary: A snapshot of your plan and its objectives
• Organization Description: Your mission, vision, and background
• Market Analysis: Insights into your target population and needs assessment
• Organizational Structure: How your nonprofit is organized internally
• Products or Services: What you offer to address community needs
• Marketing Plan: Strategies to promote your services and engage your audience
• Operational Plan: Day-to-day processes to deliver your services effectively
• Financial Plan: A detailed budget, funding sources, and financial projections

For nonprofits, a business plan is pivotal for both internal guidance and external communication. It’s used to show potential donors and grantmakers how you plan to make a difference efficiently and sustain. It can do some forecasting and provide insight and analysis, but at the end of the day, it cannot answer the questions of a feasibility plan.

While business plans are comprehensive, they may not always require the same level of specialized expertise or external consulting as a feasibility study. Business cases, being more focused on argument and justification, usually cost less than both a business plan and a feasibility study.

“…but at the end of the day, a business plan cannot answer the questions of a feasibility plan, nor should it. It is an action oriented document that should detail, some financial forecasting and projections, but really needs to answer the central question of “HOW” you will do something…

Asking for A when You Need B…

As a Consultant, I spent a lot of time making recommendations to clients as to what we believed they needed. Sometimes they listened, sometimes they had other agendas. Ultimately, there were times we turned down projects because the scope was just not clear, and/or put our firm in a liable position because the project was not budgeted according to what the deliverables were. I recommend you take time and sit with your teams before you “ask” or put together an RFP for any of these and understand what the real needs are. Then make sure you know what you are asking for.

Each tool – the business case, business plan, and feasibility study – serves its own purpose in guiding nonprofits toward making informed decisions. The business case persuades stakeholders of the value of an initiative; the business plan provides a detailed strategy for execution; and the feasibility study assesses whether it’s sensible to pursue an idea.

By understanding these differences and utilizing these tools effectively, nonprofits can enhance their operations, maximize their impact, and secure the necessary support to thrive in their mission-driven endeavors.