Business viability refers to the ability of a business to sustain its operations and generate profits over the long term. It is a measure of whether a business idea, product, or venture has the potential to be successful and financially sustainable.
Creating a viable business is a two-part process. First, it means creating a marketing strategy by knowing who you are, who you are selling to, and who else is selling to them. Second, it means having a good understanding of your finances and how you will maintain regular income to cover costs and build over time and secure assets for the future.
To create a marketing strategy that will make your business viable, you’ll need to have this information:
- Unique selling proposition: This is a critical factor in having a viable business. It is a unique benefit exhibited by a company, service, product or brand that enables it to stand out from competitors. The unique selling proposition must be a feature that highlights product benefits that are meaningful to consumers. Being unique keeps your business out in front of the competition.
- Stable customer base: To be viable, you must know who is going to buy your product or service. That means researching to find out who these people are.
- Competitive advantage: Even if your product is unique and you know who you’re selling to, you must always consider the competition. Find out who your competitors are and keep them in mind as you create your marketing strategy.
In addition to your marketing strategy, a continuing focus on your business’ financial status will help create a viable business. This includes:
- Cash stability: The most important factor that makes a business viable is that it has enough assets (cash and other reserve funds) for day-to-day operations and to weather the ups and downs that all businesses experience. Getting to cash stability doesn’t happen overnight. It means being frugal, not over-spending in anticipation of sales, and not taking too much out of the business.
- Continuing attention to your financial status: Having a viable business means always knowing where your business is financially. Get good financial software, input all your business information regularly, and analyse it against your goals for cash stability and other factors.
Assessing business viability involves evaluating a range of factors in this process, including:
- Market Demand: Is there a sufficient and sustainable demand for the products or services the business offers? Understanding the target market and its needs is crucial.
- Financial Sustainability: Can the business generate enough revenue to cover its expenses, repay any loans or investments, and still make a profit? Financial projections and cash flow analysis are often used to assess this aspect.
- Competitive Landscape: How does the business stack up against competitors? Is there a unique value proposition or a competitive advantage that sets it apart?
- Operational Efficiency: Can the business operate efficiently and effectively? Are there processes in place to minimize costs and maximize productivity?
- Scalability: Is the business model scalable? Can it grow to meet increased demand without a proportionate increase in costs?
- Regulatory and Legal Considerations: Are there any regulatory or legal barriers that could affect the business’s ability to operate or expand?
- Management Team: Does the management team have the skills and experience necessary to run the business successfully?
- Capital Requirements: What are the startup and ongoing capital requirements? Can the business secure the necessary funding to get started and continue operations?
- Risk Assessment: What are the potential risks and challenges the business may face, and does it have strategies in place to mitigate them?
- Return on Investment (ROI): Investors and stakeholders often assess business viability in terms of the potential return on their investment. They want to know if the business can provide a satisfactory return on the capital they put into it.
Assessing business viability is a critical step in the planning and decision-making process for entrepreneurs and investors. It helps them determine whether it is worth pursuing a particular business idea or if adjustments are needed to improve its chances of success. Keep in mind that the criteria for assessing viability can vary depending on the industry, market, and specific circumstances of the business in question.
If you need help to do this, then ABS Institute offers several programs that will guide you to a successful outcome. Please review our website for further information or Submit an Application for a Business Advice Session as a starting point to get assistance in choosing the right direction for you.