In fact, creating a business plan is not a guarantee of success, so you should always subject it to an in-depth business feasibility analysis.
For this assessment, several business plan viability indicators are used , which measure the sustainability and competitive capacity of your company.
In this article, learn about the main business plan viability indicators to consider and prepare yourself to face market challenges.
How important is it to assess the feasibility of a business plan?
From market analysis to financial projections, business plan feasibility indicators will help you identify risks and opportunities and make informed decisions. Furthermore, they will reveal not only gaps in your strategic planning but also the strengths of your business strategy.
On the contrary, ignoring the viability indicators in your business plan could have significant consequences for your company’s future, for example, due to a lack of prepared risk mitigation strategies.
In fact, a poorly founded business plan reveals a lack of preparation and professionalism towards potential partners, even jeopardizing the company’s sustainability.
Key business plan viability indicators
A risk assessment in the business plan significantly increases any company’s chances of success. In fact, undervaluing this crucial analysis process could even lead to failure before it even begins.
So, how do you evaluate a business plan? What business analysis tools should you use?
1. Market analysis
One of the first steps in assessing the viability of a business plan is a market study that verifies the viability of the product (or service) to be provided.
Therefore, it is essential to have a deep understanding of:
- The target audience (i.e. potential customers) and their consumption habits;
- Market size — through methodologies such as TAM ( Total Addressable Market ), SAM ( Serviceable Addressable Market ) and SOM ( Serviceable Obtainable Market );
- The competition (i.e., the most direct rivals, who already operate in the market) and their competitive advantages.
In short, remember: if there isn’t enough demand for the products or services you provide, your business won’t be viable.
2. Financial projections
Among the most important indicators of business plan viability, financial indicators undoubtedly stand out. After all, any potential investor or partner will be interested in understanding the economics behind your idea.
Appropriate financial projections therefore include estimates of:
- Revenues — dependent on pricing strategy and market analysis;
- include fixed costs (such as rent and salaries) and variable costs (such as the cost of advertising campaigns or raw materials);
- Profits — resulting from subtracting costs from revenue.
Additionally, you should add, in your assessment of financial viability, key performance indicators (KPIs), such as:
Return on investment (ROI) — shows that, when positive, the firm is financially viable;
The point at which revenues equal costs is known as the break-even point.
3. Required resources
A business feasibility analysis should also consider the necessary resources, especially financial ones. This includes, for example, economic indicators such as the initial capital required to cover investments in equipment, technology, marketing , and other expenses.
Once you’ve determined this initial capital, you can start thinking about other indicators of your business plan’s viability, such as the costs associated with hiring staff.
Additionally, you should also consider essential physical resources: facilities, office supplies, and even machinery, depending on the characteristics of your business.
4. Risks and opportunities
A viable and solid business plan also undeniably involves preparing the company for potential market challenges.
Some challenges—such as changes in economic cycles or new tax rules—become threats. However, others can represent opportunities—such as the emergence of new market segments with new customers.
For example, we can view the digital transition not only as a threat to traditional companies, but also as an opportunity to adopt new technologies and expand our customer base.
In short, each entrepreneur must carefully develop a contingency plan for adversity, always keeping an eye on the business landscape and seeking business opportunities.
5. Structure and business model
Finally, the last business plan feasibility indicator focuses on a general analysis of its structure. The business plan’s structure should be well-defined, clearly explaining the revenue generation model.
Furthermore, the structure must clarify the business expansion process and how it will maintain its relevance over time, demonstrating the company’s sustainability and scalability.
How to monitor business viability indicators?
When implementing processes, you should regularly monitor the business plan’s viability indicators, as this is the only way to ensure your company is on the right track.
With the help of financial management software , you can monitor relevant metrics (such as revenue and expenses). Other management tools, such as reports and dashboards , provide valuable insights , allowing you to visualize data and adapt your plan in real time.
Always prioritize these periodic reviews and maintain a strategic and flexible approach, as these are critical factors for business success.