New Venture Proposal - Checklists

Published: Apr 14, 2004

Application

The New Venture Proposal (NVP) Checklists can be in the form of a questionnaire or an outline. They are designed to prevent (a) acting on impulse, (b) proceeding with a half-baked idea, (c) disastrous outcomes and (d) exposing the fear that certain facts could spoil what may seem to be a great idea.

Whether adding a new product line, merging operations or considering any major proposal, it is costly and unwise to invest resources without first performing this check or a similar one.

There are two versions of NVP Checklists:

The Short Version
The Long Version

The Short Version is designed as a quick initial survey for checking the viability of a proposal.

Some managers like to name a short version, "##-point evaluation" as in, "21-point criteria for a new venture." This format can serve as an initial screening before continuing with more advanced examinations. The title reminds oneself to avoid skipping unpleasant considerations. The title serves notice to others that any major proposal must pass this initial screening device.

The manager is able to remain positive toward every new proposal presented by saying, "That's a great idea. Let's run it through the 21-point test."

Note, depending on your situation you may want to expand this short checklist by adding criteria from the Long Version.

The Long Version focuses on the implementation aspects of a new venture, for checking the feasibility of a proposal.

The checklist is not exhaustive. It's a guide for identifying your particular strengths, weaknesses, opportunities and threats (SWOT).

The phases listed in the extended version are arbitrary suggestions only. You can select from or expand the lists according to your situation. This is not intended to be a format for a Business Plan, although, it can be the basis for one. A thorough "QnA Business Plan" is planned for this section in the near future.

The Short Version

What is the concept proposed?
What is the source and reliability of the information supporting the proposal?
What is the reason for the proposal?
What needs are unfilled?
Is there a sustaining demand?
What are the foregone opportunities if this proposal is implemented?
What are the resulting threats and opportunities?
What is being disrupted if this proposal is implemented?
What is being replaced?
What additional financial resources are required?
What additional staffing resources are required?
What additional administration resources are required?
What additional supplies are required?
What additional facilities are required?
What additional equipment is required?
What are the financial outcomes (savings, profitability, spinoffs, etc.)?
Will there be greater economies of scale for the business?
Does the proposal require marketing? (Refer to Long Version for details)
Who is available to conduct a feasibility study?
Who is available to implement the proposal?
What are the anticipated start and completion dates for the startup or change? Are these realizable?

The Long Version

Phase 1 - The Concept

What is the concept proposed?
- If complex, can you list all the parts?
- Can these parts be introduced separately?
What is the source of the idea?
- Who, where, when and why?
What factors contribute to the viability of this concept?
What events precipitate this concept at this time?
What needs are unfilled?
- Can the needs be quantified or qualified?
Where and how can this idea be validated?
- Are specific measurements available?
Is time of the essence?
- What are the time frames for initiation and completion?
What are the current industry conditions?

Phase 2 - Existing Resources

How does it match existing functions and resources?
- Does it complement or compete?
How does it match existing image?
- Does it add to the mix of existing offerings?
Is there sufficient space available?
Does it require additional staff?
- Additional training required?
Does it add greater utilization of existing equipment?
Is there a need for additional equipment?
- Cost, financing and availability?
- What is the burden upon existing infrastructure, computer systems, etc.?
What additional supplies are required?
- Initial cost of stocking?
- Replenishment costs?
What is the overhead burden on administration?
- Does this include supervision?
- Is additional security required?
Are there additional transportation requirements?

Phase 3 - Financial Considerations

Has a pro-forma statement been prepared?
What is the anticipated gross revenue?
What are the anticipated profit margins?
What is the break even point?
Is there a need for additional financing?
Will the financing be provided by capital investment?
- Debt financing?
- Portion provided by operational revenues?
- What amount is realized in projected time periods?
What is the expected return on investment?
What is the expected payback (time investment is recovered) period?
What are the risk considerations?
- What is the estimated insurance cost?

Phase 4 - Operations

Fixed costs?
- Incremental increases?
- Variable by volume?
What are the quality considerations?
- Regulatory
- Industry standards
- Competitive

Phase 5 - Marketing

Does the new venture involve offering a product or service to the public? (If not, skip this phase.)
Has any marketing (strategies, industry conditions, economic conditions, etc.)research been conducted?
- What is the target audience?
- What is the positioning strategy?
Has any market (supply and demand, demographics, profiling, segmentation, etc.) research been conducted?
Is there a clear description of the product or service?
- What is the product differential?
Is there a set unit price or a range of prices?
- What determines the range?
- What are the price dimensions?
- Is the price competitive?
- Will the price provide the anticipated profit margin mentioned above?
What are the general place requirements?
- Will the product be delivered from one or more locations?
- What are the distribution channels?
- What are the distribution methods?
- What are the distribution costs?
How will the product be promoted?
- Who will prepare the message contents?
- How will the message be delivered?
  - What media selection is planned?
  - What is the planned media mix?
  - Is there a plan for reach, continuity, pulsing, frequency and other advertising techniques?
- Is there to be direct or indirect advertising or both?
What are the selling methods?
What are the sales forecasts for the short and long terms?
How will the competition respond?
Will public relations be used?

Phase 6 - Implementation

What are the requirement for raw materials?
What production facilities are required?
- What are the costs and availability?
What is the earliest and latest start date?
Is a critical path chart required?

Phase 7 - Evaluation, Decision Making, and Planning

Is there a plan for evaluating outcomes?
- Are there some benchmarks available?
- Do these benchmarks provide for reasonable ratio analysis?
- Will the results be measurable?
How will decisions be made?
- Is there a go/no-go decision point with well-defined criteria?
- Is there a pullout decision point or scenario?
Is there a business plan?
- Is the business plan weighted for essential, important and dispensable?
- Does the plan cover all the management functions applicable to the project and in a balanced manner?
  - Is there more emphasis given to some areas more than others? Why?
- What action plan is proposed?