Testing your business idea

Use the checklist below to help you test your business idea. This is by no means a complete source of information, and in some cases, you’ll need to seek professional business and legal advice.

Good ideas don’t always make good businesses. You should keep in mind that most new businesses fail in the first three years of operation, mainly due to poor planning, management and cash flow.

In nearly all situations, you’ll benefit from testing the viability of your ideas. In a business sense, viability means your ability to plan, start and run a legal operation that can sustain itself or grow. Testing your idea will help you decide to abandon your idea, further develop it, or proceed and invest more time, effort, and money.

Your research can also form the basis of your business plan, marketing plan, emergency plan and succession plan.

Viability checklist

  Technical viability - Can your idea:
Be developed using existing or novel materials, processes or logistics?
Do what it’s supposed to do? You and your customers need to be confident your product or service is going to deliver what you promise.
  Legal viability - Does your idea:
Have significant safety or wellbeing risks involving production, delivery, storage or use?
Need to comply with local, national or international laws, rules, regulations, or standards?
Need liability insurances and/or guarantees?
Breach existing copyrights, trademarks, registered designs, or patents?
Need protection through trademarks, registered designs, or patents?
Need a suitable legal business structure?
  Market viability - Do you know:
Your key customers, their key needs and wants, and how much they’d pay for your idea?
Your key competitors, where they’re located, and what they do better?
Your bigger picture issues, and how these could impact your idea?
  Operational viability - Does your idea need:
Specialised premises and locations?
Specific power, water, and waste services?
Technical and physical equipment?
Expertise, staffing and recruiting?
Key suppliers or related products and services?
Management, business systems, quality protocols, and performance measures?
Banking and payment systems?
Marketing, promotion and advertising?
Training and development?
Health and safety protocols?
Business advisory, mentoring, legal and/or accounting services?
Plans to help during and after emergencies, hazards, and disasters?
  Financial viability - Do you know your:
Start-up costs, operational costs and operational timeframes?
Break-even point, cash flow forecast, and profit or loss margins?
Market sustainability versus projected revenues?
Process for getting paid and paying suppliers on time?
Finance needs and sources of funding?
  Exit viability - Do you know:
How to prepare a realistic exit plan? Will you sell, close, or transfer ownership?
Your legal requirements when exiting?
How to maximise the value of your business to help meet future needs?

 

Planning templates

Use these free planning templates and guides to help you better plan, prepare, manage, and exit a business. Investing time into proper research and planning can help turn your ideas into reality, and prepare you for what’s to come.

Business plan

A business plan works as a guide when your business is operating; how you operate, planning the future and preparing for risks. It is also often a required document for finance applications.

Marketing plan

An effective marketing plan can help you set clear, realistic and measurable marketing objectives for your business. It can boost your customer base increasing your bottom line.

Emergency plan

Your business is critical to your financial wellbeing, so you’ll want to protect it as much as you can against emergencies and disasters.

Succession plan

Planning for the day you leave your business is a valuable investment.