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Business Planning Tips Welcome to the Business Planning Tips page. If you are considering development of an income generating business venture, the first thing you need to do is a feasibility test. Here's some information to help you get started with this evaluation: The Preliminary Feasibility Test Organizations often first perform a preliminary feasibility test on several of their venture ideas, as a screen before making the investment of time to do a full feasibility study. Typically, nonprofits will run three to five venture ideas through the pre-feasibility test, and, based on those results, select one or at most two to receive the more thorough full feasibility study. Since a pre-feasibility test requires only about 10-20% as much time, it has proven to be a very efficient way to initially assess a venture with a minimal investment of staff time. The fundamental purpose of the pre-feasibility test is to gather sufficient external, market-based data to make some preliminary judgments on each venture idea, and to see how it stacks up against the others. To that end, a typical time budget for doing each pre-feasibility test is ten to twenty hours of staff time, spread out across several weeks to account for the realities of collecting data and setting up interviews. Since multiple pre-feasibility tests can be done concurrently, I'd suggest setting out to complete your work on all of them (if you're doing more than one) in no more than four to six weeks. The basic approach is to gather information from two sources: (1) written material from newspaper articles, trade press, government/private statistics, and so on, that provide insight into the propose opportunity, (2) oral comments from industry participants or observers who can shed light on the proposed product and market. At first blush, it may seem difficult to know where to start, but in practice it's not hard to locate those sources. Assuming that your ideas build in some capacity upon your organization's core competencies, you will find that many of the sources are already known to you or others in your organization. The Internet is also an excellent source of much but not all of this information. The research performed during the pre-feasibility test leads to a brief summary report -- two pages if possible. Based on this analysis, a decision can be on whether to initiate a full feasibility study, to reject it as impractical, or to modify and then retest the idea based on new information. In some cases, it makes sense to proceed directly to launching the venture following the pre-feasibility study, if it appears that the costs and risks to start the venture would be minimal, and the nonprofit already has considerable experience with and knowledge of this product and the target market. Presented below are typical questions to be answered during this test. How to do a Pre-feasibility test The PCAM model is a four-part technique for performing the pre-feasibility test:
The following worksheet provides more specific questions for each of the elements of the PCAM model. Finding the answers to these questions will form the basis for completion of the pre-feasibility test. Worksheet -- Pre-feasibility Test Product or Service
Customers and Markets
Advantage
Business Model
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