One of the most frequently asked questions before undertaking any project or creating a company is what are the chances of success. The truth is that we do not have a crystal ball to know, but we can have a prior idea of the feasibility and profitability of our initiative. How? By using a viability plan, a tool that will serve as a roadmap to face the challenges of the business adventure.
In this post, we will talk about the advantages of the viability plan and the steps to follow to prepare it. Read on and learn how to create your own!
What is the viability plan and who should carry it out?
The viability plan is a strategic document that analyzes whether a new project will be sustainable and profitable, therefore, it is essential to implement it before undertaking any business idea. It is not limited only to financial aspects but rather draws a map of the state of the market, competition, possible risks and economic projections. Ultimately, with this plan you will be able to make informed decisions, you will be able to anticipate challenges and draw up strategies to take advantage of opportunities.
In this context, a professional specialized in financial analysis will be in charge of developing the viability plan. With his knowledge, you will be able to explain in detail the financial aspects of the business, make realistic projections, evaluate risks and offer a strategic approach. This document is then inserted into the business plan.
Why prepare a viability plan?
As we have commented so far, having a viability study is essential both for people who start a company and for workers in an organization who start new projects. Also if you are thinking about making an investment you have to take into account the advantages of developing a viability plan:
- It allows you to anticipate possible risks as you will have access to a strategic evaluation to understand the strengths and weaknesses of the project while providing you with tools to reduce uncertainties and apply preventive actions.
- You can work with financial clarity, which translates into realistic projections of costs, revenues and cash flows. This way you can make informed decisions. At the same time, it increases investor confidence by providing data on the potential return on investment and financial security of the project.
- It serves as an effective communication tool since the entire team will be oriented towards common objectives and will have a clear vision of the organizational structure, roles and responsibilities, optimizing the execution of the project.
- We are not talking about a static plan, but adjustments and adaptations can be made as market characteristics change.
Steps to create your viability plan
Now, let’s go on to detail the steps to follow to prepare your viability plan and those key points that cannot be missed. Take note!
Define the objectives and scope of the project
- Clearly establishes the short, medium and long-term objectives of the project.
- Define the scope of the project, where you want to go and the expected results. Remember that you must be realistic with what you propose, both in goals and in times. This way you avoid getting demotivated.
Conduct a market analysis
- Research the market, analyze the trends and the opportunities it offers to grow.
- Identify the potential client, their needs and how to reach them. In this sense, creating a buyer persona will help you guide the strategy to the client prototype that best fits your project.
- Evaluate the competitive environment and analyze direct and indirect competitors. Also review what can work in your business and what you will discard from the first moment.
Establish financial viability
- It includes initial costs, expected revenues, and cash flows.
- Also analyze the profitability margins.
- If you need it, look for financing sources and evaluate the profitability of the investment.
Design a detailed operational plan
- Make sure you have the human resources you need to promote your idea. Next, define the organizational structure and define the roles. Be clear from the beginning what the responsibilities of the project members or company workers will be, and maintain effective communication with them.
- Details the production or service provision plan, including suppliers and key processes. Don’t forget the systems and technologies necessary to launch and sustain the project.
- Also think about the marketing actions that you will need to implement to make the business known in the market.
Assess and overcome risks
- Take into account possible obstacles that could arise during the execution of the project. How are you going to overcome them?
- Evaluate the feasibility of the project under different scenarios and market conditions.
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