Project Everest

Experiment Results

[FEB 19] BMC Experiment (BMC) Experiment results

Reference To The Experiment Design Post:

Assumption: It is viable for PEV to run a Microfinance Business in Fiji.

Results Data


Results Spreadsheet (PNL):

SoCon II Results Spreadsheet:


Original success metric; % of profit margin delivered by the PNL statement.


A BMC was produced in order to create a Minimal Viable Product (MVP) and accrue the expenses and revenue streams required to distribute it.  Based on the MVP a Profit and Loss (PNL) statement was created to determine the viability of the business. This PNL consists of revenue streams and cost structures (expenses).


To select the MVP best suited and attractive to our customer segment, we used experiment data from SoCon I and SoCon II and made a series of estimations and assumptions in order to create and develop our ‘business’ in such a short time frame. As an example, fees were estimated by looking at all the FI’s that we empathised with by analysing which fees were best suited to our business model.


Refer to our Justification document in which each validated section of our BMC has in-depth overview of how we made those conclusions and further research/evidence in how we confirmed our final BMC. Link:



Our revenue streams represented effectively our ‘product’ which was based heavily around the results found by Socon II’s problem and customer segment surveying, with the results found here:


The revenue streams entered into the PNL included:

  • FJD$1000 because it was recorded by SoCon II as the most popular loan option.
  • An 18% interest rate because this undercuts our closest competitor SPBD (South Pacific Business Development) and helps compensate for loaning to typically riskier customers.
  • 12 monthly repayments because the PNL is designed on a yearly basis.  
  • The PNL takes 20% from the expected revenue this is in line with the average 20% default rate discovered from interviewing FI’s.
  • 15% of revenue is added back on assuming a financial return from the collateral acquired if the loan were to default, taking into account the variable value of collateral.
  • The PNL models 50, 500, and 1000 sales to calculate a profit margin for each, further reinforcing if a MF business in Fiji is viable and scalable. These figures were chosen to accommodate the early adopters and early majority to the MVP.

The next section of the PNL required a collation of all the costs incurred during operation, all costs can be found in the cost structure section of the BMC (see link above). The expenses section of the PNL is split into each element of the BMC as it shows the costs of operating in such a way. It should be noted that not all costs will be fixed, some are variable and increase with sales, this is accounted for in the PNL.

Key costs include:

  • Registration fees to operate in Fiji as a separate business: FJ $11,225.
  • Key Partner costs: $401 annually for a business bank account.
  • Key Activities: Marketing and Logistical costs range from FJ $3960-$9264.
  • Key Resources: Wages and Software costs range from FJ $225- $42,861.
  • Customer Relations: A premium Hubspot service is needed and costs FJ $1239 annually

Once all the revenue and costs have been accounted for a net profit margin can be calculated. This margin is the success metric and will determine the viability of PEV operating as an FI in Fiji.

Assuming our MVP is a FJ $1000 loan with an 18% interest rate and paid monthly over 12 months, PEV will achieve a profit margin of 19.31% when 500 loans are sold and then paid off (Net Profit of FJ $128,838).


Validated Learning:

Our resulting profit margin of 19.31%  means we have achieved an orange light, as we are below the success point of a 30% net profit margin, but above the failure point of 10%. It is important to consider that the BMC and therefore the cost analysis is based on primary and secondary research. Consequently, the assumptive nature of these incurred costs could vary when SoCon begins operation as a MFI in Fiji.


Furthermore, the Revenue Stream is based on a $1000 loan product with an 18% interest rate and three basic types of fees. This was developed off a basic structure of a microfinance institution in order to minimise the complex financial models associated with including additional services or add ons. This also resulted in our inability to include additional sources of revenue to cover costs sufficient enough to reach a profit margin of 30%. The fee values we utilised in our PNL were based on those identified by financial institutions with similar business models. Thus, we may have under or overestimated the amount that is appropriate for our BMC. Despite the results giving a substantial profit margin of 19.31%, the cost structure and revenue streams in the PNL still needs further investigation.


Next Move:  

As we have achieved an orange light it is clear that an alteration of the experiment is needed to ensure we can prove viability for this service in Fiji.  

The figures that have been placed into the PNL need to be reassessed. These figures are assumptive because they were based on data gathered from speaking with FI’s, SME’s, Individuals in our customer segment and secondary research. Due to their assumptive nature particular figures will need to be confirmed or disproved, these include:

  • cost of wages (specifically how many employees you may need in order to service the amount of loans we will be giving)
  • travel logistics costs
  • marketing expenses and the default rate to amount of collateral returned.

Optimisation of the product needs to occur to achieve a higher profit margin. This could include changing the amount loaned to the customer or altering the interest rate on our product. Another form of product optimisation that is recommended is the addition of another revenue stream, based on the feedback Socon II received from our customer segments who are in need of more support around this concept of non-financial capital. The potential revenue of additional consultancy services needs investigation. These revenue streams would have to be tested in an experiment to ensure that the added stream is viable and the demand exists among our target market.


edited on 25th February 2019, 04:02 by Jamie Butler

Rose Martin 8 months ago

Status label added: Experiment Results

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