To demonstrate the viability of your business, you should focus on key financial and operational metrics. This includes showing a strong gross profit margin, maintaining a healthy working capital position, and having positive cash flow projections. It’s also crucial to manage debtor and creditor relationships effectively and present clear financial forecasts. Demonstrating that your business can sustainably generate profits and meet its financial obligations is essential.

To assess the viability of a business, you can consider key performance indicators such as: 

  • Gross Profit Margin: Analyzing the trend and adequacy of the gross profit margin. 
  • EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortisation): Evaluating the business’s operating performance. 
  • Working Capital Position: Determining if there’s adequate working capital to meet debts as they become due. 
  • Debtor and Creditor Analysis: Looking at the aging and provisions of debtors and the terms and trends of creditors. 
  • Financial Forecasts: Assessing cash flow, financial performance, and position forecasts. 

These indicators provide a comprehensive analysis of a business’s financial health and can help determine its long-term survival and success.  

To improve business viability, you should focus on optimising your financial management, enhancing operational efficiency, and maintaining a strategic approach to growth. This involves regularly assessing and adjusting your business model, keeping a close eye on cash flow, reducing costs without compromising quality, and exploring new market opportunities. Staying adaptable and responsive to changes in the market and industry trends is also key.  

A quick viability checklist for a business can help you assess the feasibility of your business idea and its potential for success. Here’s a concise checklist to consider:

  1. Market Demand:
    • Is there a clear need or demand for your product or service in the market?
    • Have you identified your target audience and their preferences?
    •  Is the market large enough to support your business?
  2. Unique Value Proposition:
    • What sets your product or service apart from competitors?
    • Can you clearly articulate why customers should choose your offering?
  3. Competitive Landscape:
    • Who are your main competitors?
    • Have you analysed their strengths and weaknesses?
    • Is there room for your business to compete effectively?
  4. Business Model:
    • Have you defined your revenue streams and pricing strategy?
    • Is your business model sustainable and profitable?
    • Have you considered scalability and growth potential?
  5. Financial Viability:
    • Have you created a detailed financial forecast, including startup costs, operating expenses, and revenue projections?
    • Do you have access to the necessary funding or capital to start and run the business?
  6. Legal and Regulatory Considerations:
    • Have you researched and complied with all legal and regulatory requirements for your industry and location?
    • Do you have the necessary permits, licenses, and insurance in place?
  7. Marketing and Sales Strategy:
    • Do you have a clear marketing plan to reach and acquire customers?
    • Have you defined your sales channels and strategies?
  8. Team and Skills:
    • Do you have the skills or a team in place to execute your business plan?
    • Are there any gaps in expertise that need to be addressed?
  9. Operational Plan:
    • Have you outlined your day-to-day operations, including processes, logistics, and suppliers?
    • Do you have contingency plans in case of disruptions?
  10. Customer Feedback and Validation:
    • Have you gathered feedback from potential customers or conducted market research?
    • Have you tested your product or service with a small group of users to validate its appeal and functionality?
  11. Financial Risk Management:
    • Have you identified potential financial risks and developed mitigation strategies?
    • Are you prepared for unexpected expenses or economic downturns?
  12. Exit Strategy:
    • Have you thought about your long-term goals for the business, including an exit plan if applicable (e.g., selling the business, going public)?
  13. Sustainability and Ethical Considerations:
    • Have you considered the environmental and social impact of your business?
    • Are you committed to ethical and sustainable practices?
  14. Scalability and Growth Potential:
    • Can your business scale and grow over time, or is it limited in scope?
  15. Timing:
    • Is the timing right for launching your business, considering market trends and economic conditions?

This checklist is a starting point for evaluating your business idea’s viability. Be sure to conduct thorough research and seek advice from mentors, industry experts, or business advisors to refine your business plan and increase your chances of success.