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Boom or Bust - Is your Business Idea Viable?

 

If you’ve been watching start your own business shows like Dragons’ Den or The Entrepreneurs, chances are that you’ve been inspired to think up some business ideas of your own.  It’s great to see so many people getting involved with starting their own businesses here in the UK, after all, SMEs are the backbone of the British economy, accounting for 99% of all businesses, providing employment for others in many cases.  However, having a great business idea is just the first step to launching a successful business and it’s often the case that an idea that you personally would think would be a winner may not even be a viable option in reality.  Today we’re going to take a look at some questions you need to ask yourself to check if your business idea has what it takes not just to get up and running, but to stay in business for long enough to make a difference to your life.

Can you make a profit?  While this may sound like a no-brainer, you’d be surprised at how many people launch a business that has no chance of ever making a profit.  For example, in theory, buying an item for 90p and selling it for £1 means you’re making a profit but you also need to consider the costs of being in business to work out your profit margins.  You need to make sure that what you do either has a great profit margin to start with or can benefit from economies of scale in the future (this means buying items cheaper in bulk because you can sell significant amounts of these items).  

If your plan is to launch your business now and worry about making a profit later, you’re taking a risky approach.  Businesses launched on passion alone rarely last and running a business takes a lot of time and energy.  If you’re working 70 hours a week (common for business owners) and not making any money, your passion for your business idea won’t last long.

Is it scalable?  This is particularly important for anybody providing a service or selling themselves.  While you may earn a tidy income from working on your own, the ability to scale your business up as demand grows could become a problem.  You may be brilliant at what you do, but finding staff who are just as brilliant (and just as willing to work hard) could be a real challenge in the future.  Any business that involves a person swapping their time for money will be difficult to scale up in this way.

Is it saleable?  Very few business owners consider this question when they launch their company.  As difficult as it may be to believe, there will come a point when you’ve had enough of your business and will want to either move onto something new or retire.  If you’ve invested 10 or 15 years into growing a successful business, what will you have to show for it at the end?  Can your business survive without you?  If not, it’s unlikely that you’ll be able to sell the business on.  Considering your exit strategy right at the start is an essential part of launching a business nowadays.