Kurt: Here is a brief summary of the items that go into a business plan:
- Project description
- Management's background
- Description of the sources of funds, (i.e. whether a senior loan or equity).
Marge, how frequently are you provided a feasibility study as an aid to drafting the business plan and how important is it?
Marge: I probably see a feasibility study about 80% of the time if not more, and I think its very important to the business plan.
Not every developer wants to pay the cost for a feasibility study, but I think it adds a great deal of credibility to both the numbers you're trying to support in the business plan, as well as on the marketing side.
Using a company such as PKF Consulting or Colliers International, or another firm with brand presence adds credibility, both to the project and to the projections themselves.
Kurt: As I see it, without a feasibility study, you've got two problems. On the one hand, you could be underestimating your inputs, which means you aren't counting as many potential jobs in your business plan as you could and alternatively, you could be overestimating your inputs, which is probably going to be the bigger problem in the long run.