Feasibility analysis involves evaluating the relative strength of one or more earned income ideas, and then determining whether your organization is likely to be successful at achieving its goals if you were to pursue a specific venture idea.

These are the criteria often used for feasibility analysis:
• Strategic Alignment — do we want to do it?
• Operational — can we do it?
• Marketing — will customers buy from us?
• Financial — will we achieve our profitability goals?

Your evaluation should proceed through the following steps only as far as is necessary to determine if and how you should proceed with a given earned income idea — but no farther.

Four Increasingly-Rigorous Levels of Assessment
1. Judgment
2. Feasibility Screening
3. Quick Feasibility Test (QFT)
4. Full Feasibility Study

Our previous article January 2005 SER: Fast Track or Back Burner?, explains how to use judgment and feasibility screening to narrow a long list of ideas down to two or three that are worthy of the more thorough Quick Feasibility Test (QFT).Almost all new ventures should undergo a QFT; exceptions are very low-cost, low-risk opportunities, for which the best feasibility testing is often simply to start doing it.

When to Use a QFT
A QFT involves gathering internal and external data to answer an expanded list of 23 feasibility questions (see “Download the QFT” at the end of this article).This step often takes 20–30 hours of work for each earned income idea, usually over a period of 4–6 weeks. In our experience, both as nonprofit managers and as consultants, the QFT is sufficient for assessing the feasibility of most earned income ideas.

The QFT is a research-based, datadriven process — unlike a Feasibility Screen, which relies on your judgment and readily available information. It is contrasted with a Full Feasibility Study which, while also a research-based process, is much more comprehensive, and is generally reserved for higher risk ventures.

Social entrepreneurs who skip the QFT and go straight to the business plan do so at their own peril. Errors in their reasoning and untested assumptions can quickly be caught by the QFT and radically improve the venture’s chances for success (or the QFT can uncover fatal flaws in the venture).

Conversely, entrepreneurs who automatically go prematurely into a full feasibility study risk over-analyzing an idea that could have been green-lighted by a QFT — and wasting precious time and resources.

A Team Effort
Completing a QFT is ideally a team effort. While the QFT may be the project of the venture champion, the effort works best with the support of at least three other people. Participants typically include a board representative on the strategic alignment questions, program staff on operational capability questions, and your accountant or board treasurer on the financial questions.

Occasionally, outside experts can be brought in to assist you with the marketing questions. A number of excellent books can guide you through answering the marketing feasibility questions — Market Research Made Easy by Self-Counsel Press for example.

In our next article, we’ll introduce the Quick Business Plan — a planning tool you can use to develop your QFT-validated earned income ideas.