Business Viability Checklist

Posted in Business Management, Decision Making, Entrepreneurship, Marketing on Sep 21st, 2014 | 0 comments

Business Viability Checklist for Entrepreneurs

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Hey Folks, here is a checklist for business viability or feasibility analysis, the fore-most step before starting a venture. Whether you are a dare devil driver yearning to embrace entrepreneurship as a result of your eternal frustration of saying” Yes-Boss” 24/7, or a first generation entrepreneur , this checklist will be of immense help in that it will reduce the elements of uncertainty and risk.

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Many businesses look at profit within quotes as ultimate viability. Even if the business is not currently profitable or undergoing a growth surge, or just going through a bad patch – there is an anticipation of being profitable at some future date.

This  hope of future profit warrants continued investment. We can also consider the social and environmental aspects of an organization adding value, if it satisfies  any social costs.

You need to know what is viability?

Viability is defined as the ability to survive or persist. In a business sense, that ability to survive is ultimately linked to financial performance and position. A business is viable where either:

• it is returning a profit that is sufficient to provide a return to the business owner while also meeting its commitments to business creditors
• it has sufficient cash resources to sustain itself through a period when it is not returning a profit.

ASK YOURSELF THE FOLLOWING QUESTIONS BEFORE STARTING-UP THE OPEARTIONS:

1. Why are some companies PROFITABLE  and some not?
2. Why do some companies CONTINUE TO EXIST and some not?
3. What does success and survival mean?
4. How ESSENTIAL  is profit?
5. How can a company survive when it is not  making a profit?
6. How can a company NOSE-DIVE  when it is making a large profit?
7. How VITAL  is growth?
8. Can a company become NON-VIABLE  simply because it fails to maintain its year-on-year growth?
9. How imperative  is CORPORATE  IMAGE?
10. Are these factors relevant to business viability?

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 Fundamentals of a Feasibility Plan

• Provide key  information needed by investors and bankers

• Reasons for its chance of success/failure

• Supporting Documents

• Explanation of the principal concept underlying your venture and what sets it apart from other businesses.

Infographic Courtesy : Entrepreneur.com

 SOME OF THE REASONS WHY NEW VENTURES FAIL

• Lack of Objective Evaluation

• No Real Insight into the Market

• Inadequate Understanding of Technical Requirements

• Poor Finance Understanding

• Lack of Unique Selling Proposition

• Ignorance of Legal Issues

Let us now look at some of the important dimensions of business viability:

• Market viability
• Technical viability
• Business Model viability
• Management model viability
• Economic and Financial Model viability

Market Viability:

Utilize Porter’s 5 Competitive Forces Model to understand market viability and industry position.

Technical Viability:

You do not have to incorporate specific financial information in the technical portion of your feasibility study, but all data  in this component must support your financial figures  represented elsewhere. Basic things that most businesses need to include in their technical feasibility study include:

• Materials
• Labor
• Transportation or Shipping
• Physical Location
• Technology

Business Model Viability:

P.E.S.T. Analysis

A PEST analysis is a business measurement tool. PEST is an acronym for Political, Economic, Social and Technological factors, which are used to assess the market for a business or organizational unit.

Management Model Viability:

• Decision making process
• Training and Cross-training
• Management Capability to effectively lead the organization in a sustainable growth mode
• Management Systems and processes, and
• General Leadership Capabilities are scrutinized.

Economic and Financial Mode Viability:

• Capital Structure
• Cash Management
• Profitability and Liquidity

are dealt with when it comes to the makeup of capital structure and financial capability.

Rules for Success:

1. Every morning write a list of things that need to be done that day.
2. Do them.