While the proverb Nothing ventured, nothing gained provides guidance to would-be entrepreneurs, it does not tell the entire story, because any complete assessment of a new business proposal needs to include risks as well as potential gains. With this in mind, PharmaSeek, a Madison-area company that provides services to clinical drug trial sites, asked the Nicholas Center to perform a thorough evaluation of launching a new business that would take them into an adjacent space.
Relishing the challenge, the team of students delved into industry analysis to gain a better understanding of the potential gains. Conducting market research surveys that solicited responses from across the US, harvesting data from multiple industry sources, and performing numerous interviews with industry experts, the team was able to approximate the size of the opportunity for PharmaSeek’s new business.
Pivoting to risk analysis, the team highlighted potential pitfalls that might hinder the success of PharmaSeek’s new venture. For each risk the team identified, the team developed at least one mitigation strategy the company could take to shield itself. Since the team identified issues with branding as the greatest possible risk, the team consulted with the Wisconsin School of Business’ Center for Brand and Product Management and incorporated brand students’ advice into their assessment. Through their risk assessment, the Nicholas Center students created a go-to-market strategy for PharmaSeek, should the company decide to launch the new business.
Using the market information and risk analysis, the team created a highly dynamic financial model. By setting several key inputs as variables and employing @Risk software, the team performed Monte Carlo simulations to determine the likelihood of any particular NPV in the range of possible outcomes. This rigorous financial analysis formed the foundation upon which the team based recommendation to PharmaSeek.
The team grew in their understanding of branding, market research, Monte Carlo simulations, and risk analysis, while PharmaSeek received a careful analysis of its new business proposal.