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Why need to have idea financial viability
Lot of business reach to critical conditions of either bleeding or shutting or losses not because of the market or product or service but its because of not having informed decisions on the financial viability of the business.
Many of business get started out the typical way of calculating the market size and satisfying themselves that they can create the wonder million dollar company as the number of market size even if a bit falls under them it will be big.
Till date it has not happened nor it will happen. The ignorance on financial viability actually kills a startup or business. The founder is ready to pump in funds but does show a blind eye for paying or spending time to get a financial viability written.
Financial viability plays critical role in providing the check on the investment and questioning every investment that goes to understand the impact of the investment and the benefit
The major areas where in financial viability plays role is understanding the minimum revenue that has to be generated in order to keep the business alive, which is completely forgotten by the founders in the process of doing the business.
The financial viability provides clarity even before you start a business to prepare your mindset that if this idea or business does not scale to a point in given specified time then its time to shut down the business which is called as FAIL FAST rather than bleeding which usually happens as founders fall in love with product or service of there business and not able to digest that the business is not working.
The founders always try to justify that tomorrow things will change but never look in to the reality aspect which ensures further deepening the woes and leading to problems.
Having financial viability also helps in understanding how much do you understand the market and the offerings you are providing, as during writing the financial viability you will come to point to understand the pricing and getting clients to generate revenue.
Though this document is hypothetical but has numbers in black and white, which shows you the mirror, as numbers don’t lie.