Is Your Business Viable?

"Is Your Business Viable?" by Sherese Duncan First let’s define understand what makes a business viable: It is a business that has sufficient profit margins, adequate cash flow and a sustainable, competitive advantage which will allows them to survive and grow.

One of the keys to being in business is recognizing that the product or service you offer is not the business. The business is all of the systems and structures that are built up to support whatever product or service you sell. You build the sales system, the human resource system, your employee system, your marketing system, etc. and those systems have value -- because they determine how easy and fast can you get (your offering) to market and what kind of profit margins they create. To determine the viability of your business; one must conduct a comprehensive analysis of the existing infrastructure. Once the evaluation is complete you must determine what needs updating or what needs to be created. Here are 8 evaluation areas to start with:

1. Is your business easy to operate and manage? Sometimes this can be hard to analyze because a lot of you may be solo-preneurs. The best way to determine this one is to take 2 full-days off from your business and see what happens. Does the business fall apart or have you implemented the right processes that can sustain the business even when you’re not there. Of course, many factors come into play like your industry, whether you sell a product or service, and how well you’ve implemented technology into your infrastructure. Just keep in mind the easier your business is to manage, the more viable your business becomes.

2. Are your products or services part of a growing market? This is crucial. If you want your business to grow and keep growing, then you need to be sure that the demand for your solution is going to increase and/or that you’re solution is upgradeable and you can sell a version 2, 3, 4 and so on so your customers keep coming back. If your demand is low then you may consider expanding your product/service line or targeting a different market. Otherwise you'll be constantly chasing your tail by re-inventing and re-vamping your business.

3. Does the owner/management have a proven track record of making money? Skill sets are important but the ability to hit the pavement and generate a sale or cash is crucial. This is the first skill you must master. Not only do you have to have the necessary background, education, experience and training to operate effectively but you have to know how to go out and make cash money! This'll separate the women from the girls and the men from the boys and will quickly reduce your failure rate.

4. Does the company offer a long-term income opportunity? In other words, is the infrastructure the company has in place designed to make those involved in the business money for the next 10, 20 or even 30 years? This is just what is says, have you created the right infrastructure to bring in the amount of income needed to survive in the long-term. There comes a time in your life where you have to stick with something and make it golden unless you have a wonderful trust fund just waiting on you.

5. The Biggy! Are you operating at a profit? At the very least, for your business to grow and last, you must be able to produce and deliver your product or service at a profit. This means that the cost of producing and delivering your solution is below the price you will charge your customers. Surprisingly, a lot of entrepreneurs forget this piece of the analysis because they only focus on the passion! Here’s the basic equation: Sales Price - Your Cost = Profit If "Profit" above is negative for more than 3 years in a row, you lose and it is called a "loss"! Make a reasonable estimate of your profits now, so that you can begin selling your solution at a profit.

6. Another Biggy! Do you have CASH in the bank? Cash flow is so important for a business and it definitely increases the viability factor—when you have cash in the bank anything is possible! I think I can end this one on that note.

7. Do you keep orderly books, records, and data? If you can’t clearly see how your business is doing at the click of a few buttons, chances are you'll become discouraged and quit if your efforts aren't rewarded in a timely manner. For instance, I started a new program last year and did not put much effort into organizing the financial forecast and measurement tools to determine its success. As a result, I stopped the program after just 2 months because I couldn’t feel the results. Sometimes you can’t feel the results immediately, but you can see the results as they grow. Make sure to keep orderly books, records, and data so you can track your progress and make good business decisions.

8. Can you earn money while you sleep? Ah... the freedom factor of any business! Making money while you sleep (or passive income), is an income that you earn whether you work or not. I’m not only talking about selling products online, but also creating an ongoing program that you get monthly payments from or selling something that garners a commission. There are creative ways to create passive income; you just need to explore your options. Sometimes you just need to get out of your world and into someone else’s. Passive income is what sets you financially free! Just make sure that your passive income exceeds your expenses.

What Now?

There are many different kinds of small businesses and different structures or approaches to small business. The type of small business you have will impact your range of choices about business viability. After checking your infrastructure against the areas above, look for ways you can bridge any gaps.

If you’re not sure where to begin, consider doing a Strategy Session with us, or find a resource that has strong skills in the area or areas you would most like to enhance.

The resource you decide to work with does not have to be the end all end all, what matters most is the resource’s ability to get the right infrastructure in place for your particular business that drives the viability of your business. © Effició, Inc. Sherese Duncan

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