What does a feasibility plan look like?

There is no “set in stone” format for a feasibility plan. Good plans are on paper or digital – and some great plans have sketched out on the back of napkins (literally). Here are two suggested outlines of information you will need:

Outline #1:
1) State your idea in one to two sentences.
2) How is it different from others out there?
3) Where will you do business?
4) Who will be your direct customers? How many exist?
5) How will you market to your customers?
6) Who will sell your product/service? Will they work for you or someone else?
7) What is your pricing? How does it compare to competition?
8 ) How will you deliver to your customers?
9) What resources will you need to launch the business?

People: management team, contractors/freelancers, employees
Offices/storage
Knowledge and expertise needed (and how you will get it)
Technology needed
Cash needed for the first two years
Equipment
Etc.

10) Financial projections:

1) What is your start up cost?
2)Year 1, 2, 3 projections (top line) of revenue, costs, profits and cash flows (do year 1 by month). Make these “worst case” scenarios.

Outline #2:
One sentence description of business idea
Describe the industry: how big is it today? Is it growing or declining? How competitive is  it?
Describe business opportunity for the idea: why your idea is compelling
Describe target market, size of target market & growth rate over the past five and next five years
Describe management team
Describe required resources
Describe start-up timeline/milestones, year one and year two
Financial recap: summary income statement projections for start-up; year one and year two
What are upside opportunities?

A special note about resources

Every entrepreneur is known to ask this: how can I get this free? Who do I know to ask? Check with people you know and trust to get good information.

When drafting up financial estimates, remember that you may not need the fancy office to get your idea off the ground – often the first step in the start-up phase is to test the idea in the market before committing to a large outlay in cash.

Final note:

The goal of this study is to find the “market proof” the idea will fly – and a rough idea of the valuation if you do decide to court investors.

One way is to do a quick feasibility study to test the idea. Feasibility studies serve three key purposes:

1)  Evaluate good business ideas from bad by writing the idea on paper. This forces you to really begin thinking the idea through.

2)  Create the initial research on market sizing, industry stability/growth and answer the question: will it make money over time? How long until we get our investment back?

3)  Saves time and money by determining if an idea is good enough to spend the effort and expense of developing full blown plan and due diligence.

Time: how long will it take?

A feasibility study is meant as a “quick & dirty” vetting of a business idea. A good general rule of thumb is to spend no more than 16 hours on it.

Money: how much should I spend on a feasibility study?

For the entrepreneur – spending next to nothing is the ideal. Remember, the purpose is to test an idea. Most information for this top-line review is readily available through sources like the Internet, free white papers, industry trade journal articles, surveys (on line or real time). There may be an occasional report that makes sense to buy ($49+) if the information will provide you with the insights needed to make a decision to move forward or not. Generally speaking, a few dollars spent for good information is cheaper than moving forward with ignorance.

What does a feasibility plan look like?

There is no “set in stone” format for a feasibility plan. Good plans are on paper or digital – and some great plans have sketched out on the back of napkins (literally).

If the idea looks good, what is the next step?

A “yes” on the feasibility study leads to developing a more comprehensive business plan – with detailed financials, milestones, etc. Business plans usually take 80-100 hours in time, may require investment in information studies and include staffing, production, sales, distribution, marketing and finance plans.

This new post by Peter Shankman and Sarah Evans (both experts) nail the differences between those who claim to be experts and those who really are experts in social media. Social media is, of course, the hot marketing topic de jour, surrounded by tons of hype and more than a few charlatans. Peter and Sarah do a great job (as usual) of showing how to spot the posers.

Social media may not fit every organization’s goals and does require on-going attention. And the elements may vary from business to business. Not everyone needs to be on all of the “latest and greatest” platforms. Beware of anyone who makes a blanket claim to that effect.

Initial reports from Stat Counter claimed Bing exceeded Yahoo! traffic. Search engine land posted a great article Did Bing Leapfrog Yahoo? Not exactly. which compares tracking metrics for Bing’s performance compared to Google and Yahoo!.

In the world of online marketing, few things compare with a good search presence. Bing certainly adds a new face for the world of search. How it catches on, and how people use it, will affect a good SEO strategy in time to come.

I’ve noticed many people want to skip this part. Eager to get to the “fun” parts like graphic design, tag lines and soundtracks, they barrel ahead at full tilt – often in the wrong direction.

It’s irritating as sand sometimes. The market and competition seem more active during the homework phase, and business owners often feel they are wasting time and their money with little to show for it. But, like oysters, it takes time for the discovery process to yield the pearls. By doing the work up front and learning as much as possible, you can avoid costly mistakes and instead capture opportunities you may not have known existed.

How many times have people said that when they ask what I do, and I respond “Marketing.”

The truth is, many people, including some clients, view marketing as advertising. In their defense, it is a tangible part of marketing that they can see. But advertising is a small slice of marketing – one way to get the message out.

Marketing, on the other hand, encompasses everything from creating a new product or service, to the price points and distribution channels to PR/advertising/promotions and events. It encompasses a lot of behind-the-scenes-get-your-hands-dirty work and a great deal of strategy. For advertising to work, a strong marketing plan comes first.

Advertising is one tool in the toolkit, and considered part of a larger category called “promotion”. Other activities in promotion include publicity (PR), events, sweepstakes, coupons and many others. If a marketing firm sells itself as advertising only – beware.

Focus on opportunity, not doom

A client of mine recently said: “Now is not the time to retreat into a cave with no candles.” Customers need to know you are still here. This means having the confidence to invest in marketing your company. However, it may also mean marketing differently than before.

Now is a good time to step back and re-evaluate your plans. What looked good a few months ago may not be as effective today. The critical question is: are your dollars in the best place? Or: would a shift in your marketing mix make sense? The most likely answer to this is: yes.

Questions to consider for your company

1. The most important questions are: what is your core customer facing as a result of the changes in our economy? What matters most to them now? Is your company answering these needs? The answers should be the central driving force for your marketing mix.
2. Are your dollars directly producing ROI? Can you measure this?
3. Can your plans be changed quickly is the expected ROI is not occurring? Weigh heavily any decisions for long-term commitments with no escape – you may need to adjust quickly in this economy.
4. Can you test a small investment before committing to a large program?
5. Are your dollars heavily weighted to image advertising? If so, could you use them more effectively? A well-crafted promotion can support image and produce sales.
6. Are all the “arrows in alignment”? In other words, are all of your marketing dollars moving in the same direction, or are they allocated in a fragmented hodge-podge of promotions?
7. Does your message still make sense? Consider this: Oprah changed the tone of her “Favorite things for the holidays” episode to “Oprah’s favorite things for a thrifty holiday” this year, shifting the focus to less extravagant fare. To her great credit, she explained that it “was not appropriate” to focus on high-ticket items given the current economic scenario.

(see my related article on investing in marketing throughout tough times.)