First you need to figure out what it’ll cost you to provide your product or service and what you’ll be selling it for. You also need to determine how long it’ll take to break even, and whether you’ve got enough money to last until you do.
It's all about the numbers
It makes sense to assess if your business idea is viable before you invest too much time and money in it.
When it comes to working out if your business idea is financially viable, it’s really about crunching the numbers. Market research, demand, your competitive advantage and unique selling point are all important, but they come later. The first thing to do is work out if you can actually make any money, just by looking at the numbers.
This business viability calculator (XLS, 43KB), opens in new window will help you determine those numbers by:
- working out your capacity
- working out your break-even point
- working out your set-up costs
- calculating your overheads
- calculating your potential revenue.
This will help you work out if the numbers add up. If they don’t, then all the rest is pointless, you may as well not waste your time. But remember that if the figures don’t come out the way you’d hoped, it’s not necessarily the end of your idea. There are options for reducing your start-up costs, increasing your product price or charge-out rate, in a way that makes your idea financially viable.
We can help you take another look at your numbers and see if there’s alternatives that will still let you launch your business.
Use our business viability calculator to help you work out if your business idea will be profitable.
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The information contained in this article is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, NAB recommends that you consider whether it is appropriate for your circumstances. NAB recommends that you seek independent legal, financial and taxation advice before acting on any information in this article.