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Viability of a business idea

Date posted: 23.07.2014 | Author: Harry Bovensmann

Most people do not take kindly to it when somebody, whether a financier or business advisor, has to tell them that their business concept is not viable. Brilliant business ideas do not necessarily make a good business. It boils down to whether the ideas can be implemented with ease and can generate a lot of money. Usually, start-ups are where most of the problems lie.

How would you confirm that a business will be viable?

There are no past records to analyze and assess except for the business plan and the entrepreneur.  Assessing viability of a business concept is not so simple since one looks at it in terms of market, technical, organisational and financial issues. These are mainly covered by a feasibility study done before the business plan is compiled:

  • Market Viability: On assessing market viability one looks at the industry and market conditions at present, the growth potential and the level of competition
  • Technical Viability: On technical viability the assessment is on how intricate the process of producing a product or service is, how easily available are the raw materials and machinery (where applicable) and where they are going to be sourced from, at what prices, the technology to be used whether is new or obsolete and its lifespan, the expertise available in terms of production and servicing machinery, if raw materials and machinery will be imported the impact of the weak Rand on the business, what extent of technical compliance is required for the business and etc.
  • Financial Viability: The financial viability assessment brings all the above elements together and translate these into figures. This is where the final decision is made

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