Economic Viability

Another important assessment criterion is economic viability. Simply stated it means does the proposal make sense? Will it be profitable? One way this is determined is by examining the projected financial statements. How realistic are the sales projections and what are they based on. Was primary or secondary research conducted? How do the projected sales figures compare with industry standards?

Not only do the sales figures have to be realistic, so do the associated costs. It's been said those if you want to test the viability of your proposed venture, cut your projected sales in half and double your expenses. If it is still profitable then proceed. While this is somewhat of an exaggeration, I think it gets the point across. The bottom line here is be realistic. Unlikely sales volumes or large sales increases in short time periods are hard to substantiate and cast a shadow of doubt over your entire proposal.

Other areas examined in determining economic viability are the expertise of the applicants in the particular field of business being proposed. If your going to open a restaurant, you better know something about the industry, if you don't, you better surround yourself with people who do by hiring the expertise or by establishing an advisory board for example.

The financial background of an applicant is usually examined as well. How deep are your pockets? It is assumed that if an individual is in financial difficulty personally they may drain the business of its equity and leave it cash strapped, thereby impairing its viability. For this reason many government department and agencies conduct credit checks on applicants.

Sustainable Employment

Closely related to economic viability is the criterion of sustainable employment. Governments are involved in economic development for one reason, to create jobs. Sustainable jobs. That means jobs that continue following their involvement. Therefore your proposal should demonstrate how you would generate enough revenue to maintain the projected employment levels. Once again the financial statements are usually the best indication of sustainability. If you will not be generating enough revenue to eventually maintain the positions on your own, then the jobs to be created will not be permanent and will not have a significant enough impact on the local economy to warrant an investment of taxpayers dollars. This is one reason applicants are often asked for three year projections.

Next issue I will conclude my examination of assessment criteria. If you have a question or comment on anything contained in one of my articles, just send me an email @ info@businessguide.net. I'd love to know if you find the information beneficial.

Page 1: Canadian Government grants and loans
Page 2: First Impressions Count
Page 3: Determining the Assessment Criteria
Page 4: Determining the Assessment Criteria (Part 2)
Page 5: More Assessment Criteria
Page 6: Know Your Environment

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