How to Determine the Viability of a New Business?

Determining the viability of a new business is crucial for success, and we’ve gathered insights from various business professionals to help you make the right decision. From servicing an underserved niche to refining ideas and offering unique value, here are the top eight tips shared by owners, CEOs, and other experts on how to determine the viability of a new business venture.

• Service an Underserved Niche
• Conduct Unit Break-Even Analysis
• Create and Test a Minimum Viable Product
• Start Selling Early and Gather Feedback
• Perform a SWOT Analysis
• Conduct Thorough Market Research
• Focus On Solving Problems
• Refine Ideas and Offer Unique Value

Service an Underserved Niche

We all know that a business has to solve a problem, but does it offer something that people can’t already get? That’s the measure of business viability. It usually comes as servicing a niche that is underserved. 

We take on projects that other companies won’t touch because we’ve grown enough to protect ourselves from big liabilities. Everyone has to find their niche in the business world. If you’re an entrepreneur, rinse and repeat.

Rick Berres, Owner, Honey-Doers

Conduct Unit Break-Even Analysis

Unveiling the viability of a new business is like solving a complex puzzle. One of the easiest and most effective steps to unravel its secrets is conducting a unit break-even analysis. This analysis helps determine the number of units of a product or service you need to sell to cover costs and break even. 

It provides valuable insights into the business’s viability in simple operational terms. You can quickly look at any business opportunity by understanding the required sales volume and costs. With the knowledge gained from break-even analysis, you can discover the essence of any business opportunity in just a few steps.

Jordan Motzkin, Co-founder, Profit Decoder

Create and Test a Minimum Viable Product

The key to determining the viability of a new business is to focus on solving a problem and creating a minimum viable product (MVP). One tip I would suggest is to start by identifying a specific problem faced by your target market. Conduct thorough research and gather insights to understand your customer’s needs, interests, and behaviors. 

Once you clearly understand the problem, create an MVP that solves that problem in a simple, effective, and efficient manner. Test your MVP with your target audience and iterate based on their feedback. This approach can help you determine if your business idea is viable and has the potential for success.

Tarun Saha, Co-founder and CEO, StallionZo

Start Selling Early and Gather Feedback

The paramount step to gauge the viability of a new business? Start selling at the earliest. It might sound straightforward, but I’ve seen many founders, particularly those with a technical or product background, fixate on crafting the perfect product, often in isolation, devoid of customer feedback.

Months, sometimes years, are invested into building something that, in reality, the world might not want or need. The outcome? They’ve spent considerable time and resources on a product that doesn’t resonate with their target audience, simply because they haven’t attempted to connect or understand their audience’s needs.

To avoid this pitfall, the answer lies in feedback, not as customer interviews or surveys, but in actual sales. The proper measure of product success is when someone will part with their money for your offering. And to reach that point, there’s no shortcut. It takes multiple pivots, iterations, and adaptations based on the market response.

Rafael Sarim Özdemir, Founder and CEO, Zendog Labs

Perform a SWOT Analysis

Conduct a SWOT analysis. A SWOT analysis is a tool that can help you identify the strengths, weaknesses, opportunities, and threats facing your business. This information can be used to make informed decisions about whether to start your business and how to position it for success.

Brenton Thomas, CEO, Twibi

Conduct Thorough Market Research

 Our company specializes in providing comprehensive digital and online marketing solutions for franchisors, franchisees, and B2B professionals that cater to the unique needs of their businesses.

One essential step is conducting thorough market research. By analyzing the target market, competitors, and customer needs, you can assess the potential demand for your product or service. 

It also helps you understand the market dynamics, identify customer needs and preferences, and assess the demand for your product or service. It minimizes the risks of launching a product that lacks market demand and helps you identify and capitalize on market gaps, giving you a competitive edge.

Joseph Mohay, Chief Revenue Officer and Co-founder, Integrated Digital Strategies

Focus On Solving Problems

As a startup mentor, I’ve worked with hundreds of founders. The founders with the most viable businesses are the ones who are laser-focused on solving a problem for a specific audience; their businesses can be summarized with the statement “We solve X for Y.” 

The founders who flounder are those who focus on their innovative product (“We’re the Uber of X industry!”), not on the people who will actually buy the product. As they often find out too late, nobody wants to buy a product that doesn’t solve a problem in their lives.

Jyll Saskin Gales, Marketing Instructor, Jyll.ca

Refine Ideas and Offer Unique Value

Assessing the viability of a new business is an iterative process. It’s a continuous process to refine your ideas, gather feedback, and validate assumptions. It’s important to consider seeking advice from mentors and industry experts and conducting a small-scale pilot or market test to gather real-world feedback before committing substantial resources.

Determine what makes your business interesting and sets it apart from competitors. Ask why customers would choose your product or service. An interesting and unique value proposition will increase your chances of success over others in your industry.

Christopher Salem, Business Executive Coach, Corporate Trainer, and Business Acceleration Strategist, CRS Group Holdings LLC

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