G

APPENDIX H

DIMENSIONS OF BUSINESS VIABILITY

ALAN THOMPSON
2005

APPENDIX H - DIMENSIONS OF BUSINESS VIABILITY

WHAT ARE DIMENSIONS OF BUSINESS VIABILITY
The Dimensions of Business Viability Model is a generic
framework that assists the entrepreneur in identifying individual
tasks (decisions) in validating the Business Concept. The model
also aligns the findings with functional processes of an enterprise
which an audience can easily understand. The Dimensions of
Business Viability Model is a decision weighting model that provides
a benchmark framework for measuring the Business Concepts
viability. The model allows the entrepreneur to weigh the overall
and segmented viability of the Business Concept (Thompson
2003a). The Dimensions of Business Viability Model will validate
the Business Concept by the core dimensions of:
Market Viability,
Business Model Viability,
Management Model Viability,
Economic and Financial Model Viability, and

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Exit Strategy Viability.

AND

The Business Feasibility Study findings will be assessed by

potential investors and stakeholders regarding their credibility and
depth of argument. At the core of the Business Feasibility Study
decision making process is a Business Viability Model assessment
which provides the necessary commercial decision making data.
Business viability for entrepreneurs not only reflects the likelihood
of the business venture succeeding, but also its ability to deliver
the entrepreneurial objectives such as creating wealth. In the art
of business start-ups survival and prosperity will be affected by
a wide range of commercial factors, many of which are linked
to the personal qualities of the entrepreneur. Determining
business viability is largely a subjective process and will vary for
each business venture under consideration (Thompson 2003a;
Thompson 2003c).

BUSINESS

WHY ARE THE DIMENSIONS OF BUSINESS VIABILITY

MODEL IMPORTANT

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Technical Viability,

DIMENSIONS OF BUSINESS VIABILITY

At the core of the business viability analysis process are a series
of questions that consider the viability of individual requirements
of the business itself and it is only from a cumulative contribution
of these decisions that the overall business can be determined
to be viable. Market Viability is the most important factor
affecting any business model and is traditionally more tangible
and quantifiable. It can be determined by measurable market
demand or market receptivity to the proposed product or services
within a target market (Hoagland & Williamson 2000; Baxter
2003; Thompson 2003b; Thompson 2003a).
The steps of a Business Viability Analysis are not rigid and
frequently need modification to best fit the business situation
being assessed. As previously discussed, entrepreneurs will
often operate within a defined industry whereby they can
develop innovative approaches that best fit the commercial
needs of that industry. Proactive planning through developing
a business viability model that best fits a given industry allows
the entrepreneur efficiently and cost effectively to evaluate a
number of Business Concepts before determining the best one.
A typical Business Viability Analysis requires from one to four
months for completion, depending on the size of the proposed
business venture, the complexity of the business model and the
availability of data.

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Business viability decision making is the study of identifying

and choosing alternatives business models based on the values
and preferences of the decision maker. Making a business
decision implies that there are alternative commercial factors
to be considered, and in such the entrepreneur seeks not only
to identify as many of these alternatives as possible, but to
choose the one that best fits with the business venture's goals
and entrepreneurial objectives.

AND

Firstly remember that the Dimensions of Business Viability

Model is a conceptual framework that has been designed to
provide entrepreneurs with a practical framework to develop and
articulate their business viability decision and weighting process
(Thompson 2003a). The model has also been designed to align
the business viability findings with the functional processes of an
enterprise which an audience can easily understand. So how
do we apply the model?

BUSINESS

HOW TO APPLY THE DIMENSIONS OF BUSINESS

VIABILITY MODEL

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ALAN THOMPSON
2005

APPENDIX H

DIMENSIONS OF BUSINESS VIABILITY

Business decision making is the process of sufficiently reducing

uncertainty and doubt about alternatives to allow a reasonable
choice to be made from among them. This process requires the
information gathering function of decision making to be weighted so
as to reduce the level of uncertainty. Very few business decisions are
made with absolute certainty, however the greater the alignment of
the decision making with the functional enterprise framework then
the greater the probability the decision made are correct (Zikmund
1994; Thompson 1995; Gofton 1997; Thompson 2003a).

COMPONENTS OF BUSINESS VIABILITY

Each dimension of the business viability model will contain
components which evaluate individual characteristics of the
enterprises business venture's viability. In developing the model to
best fit the business under examination the entrepreneur will need
to structure each dimension. The following represent a sample of
such components:

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BUSINESS

It is suggested that when the overall viability in the proposed

business venture is more than 80%, the decision made should
recommend the business as being commercially viable. However,
if individual dimensions of viability of the model fall below their
critical validation rating, then the overall model is not viable. A
recommendation in this case would be that the business model is
strong rather than viable. The viability assessment recommendation
should then draw attention to the limitations of the particular
dimension which is weak (Thompson 2003a).

AND

The Dimensions of Business Viability Model is relatively simple to

apply. Through applying a weighting against each dimension of
the model the entrepreneur can collectively asses the viability of the
business overall. More importantly they can discuss the strengths
and weaknesses of the business model by dimension. As previously
discussed the core dimensions of the model are: Market Viability,
Technical Viability, Business Model Viability, Management Model
Viability, Economic and Financial Model Viability and Exit Strategy
Viability.

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THE ART OF SUCCESSFUL BUSINESS START-UPS AND BUSINESS PLANNING

ENTREPRENEURSHIP AND BUSINESS INNOVATION

ALAN THOMPSON
2005

APPENDIX H

ALAN THOMPSON
2005

APPENDIX H

DIMENSIONS OF BUSINESS VIABILITY

MARKET VIABILITY
Market Environment e.g. size, sustainability,
potential market, target market, potential value
Competitors
Similar Products
Pricing
Packaging
Distribution to markets
Promotion/Advertising
TECHNICAL VIABILITY

Availability and quality of resources, inclusive

of raw materials, labour and professional
expertise
Supply chain implications

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Manufacturing process

Uniqueness of model in terms of competitive

advantage
Ability of competitor to duplicate
Ability to create value through priority knowledge
& process i.e. IP
Ability to create wealth
Ability to duplicate and delegate i.e. documentation
of tacit & explicit knowledge
MANAGEMENT MODEL VIABILITY
Application of knowledge & skills
Training

AND

BUSINESS MODEL VIABILITY

BUSINESS

Ability to apply IP

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Capacity

ALAN THOMPSON
2005

APPENDIX H

DIMENSIONS OF BUSINESS VIABILITY

Employee management and recruitment

Management of intellectual property
Management of risk
Ability to delegate to staff
Suitable organisational structure
Suitability of management and quality
protocols
Ability to measure business process
ECONOMIC AND FINANCIAL VIABILITY

Working capital
Operating costs
Raw material costs

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Overall return on investment

Overall profitability

Ability to generate economic value

EXIT STRATEGY VIABILITY
Ability to create wealth from exit strategy
Ability to define exit strategy
Ability to relate exit strategy to industry model
Ability to identify potential buyers and/or
strategies
Ability to create capital assets i.e. IP
Ability to schedule exit strategy

AND

Sustainability of market versus projected

revenue

BUSINESS

Break even point

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Start up costs

ALAN THOMPSON
2005

APPENDIX H

DIMENSIONS OF BUSINESS VIABILITY

DIMENSIONS OF BUSINESS VIABILITY MODEL TEMPLATE

Figure H.1 titled Dimensions of Business Viability Weighting
Process, which follows, provides an overview of the business
viability decisions making process and decision weighting process.
Note that the decision making criteria within the individual
dimensions and the assigned weightings are examples only and
the entrepreneur may need to vary them to best fit the chosen
business venture or industry.

AND

BUSINESS

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THOMPSON 2003

Figure H.2 titled Dimensions of Business Viability Template,

provides a template guide to support entrepreneurs in
developing a suitable business viability weighting framework.
The key characteristics of the template and their application
follow:

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Figure H.1 Dimensions of Business Viability Weighting

Process

DIMENSIONS OF BUSINESS VIABILITY

Column two, Measure of Viability, identifies the actual

measure (criteria) that will be examined.

Column three, Measuring Weighting, determines the

overall contribution of the individual measure to the
cumulative scoring of the dimension. For simplicity of
use this normally has cumulative scoring out of one
hundred.

Column four, Weighting Assessment, is used to record

the actual score that the researcher or entrepreneur has
assigned. For example a competitors analysis may have
a possible score of 30, but only 25 has been awarded
as there are no similar types of business in the area. This
would be described as a strong viability outcome.

Column five, Critical Validation, represents the outcome

of the overall scoring of the individual dimension. For
example an overall possible rating of 100 has been
assigned to the Marketing Dimension. There are five
individual measures (criteria) that have been used. Each
of the criteria were assigned possible ratings, namely
- competitors 30, similar products 20, pricing 30,
packaging 10, distribution to market 10. From research
and analysis the following scores where awarded:

Competitors
Similar Products
Pricing
Packaging

25
20
25
8

Distribution to Market
Total Score

8
86/100

The articulation of these findings is relatively simple. Acknowledging

that much of the weighting process is reliant on often anecdotal
and judgmental findings the viability of the Market Dimension in
the example can be described as being STRONG. In discussing the
outcomes of this dimension analysis strengths and weakness should
be raised and this can be determined in relation to what rating they
have been awarded. Although the entrepreneur may in fact not
quote the actual score awarded they will often raise questions why
the criterion (measure) was in fact considered strong or weak.

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BUSINESS

Column one, Dimensions of Viability, defines the core

dimension that the business is being assessed against as
well as its percentage contribution to the overall decision
making process.

AND

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THE ART OF SUCCESSFUL BUSINESS START-UPS AND BUSINESS PLANNING

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ALAN THOMPSON
2005

APPENDIX H

ENTREPRENEURSHIP

AND

BUSINESS

THE ART OF SUCCESSFUL BUSINESS START-UPS AND BUSINESS PLANNING

ENTREPRENEURSHIP AND BUSINESS INNOVATION

ALAN THOMPSON
2005

H
APPENDIX H

DIMENSIONS OF BUSINESS VIABILITY

Figure H.2 Dimensions of Business Viability

Template

182

ALAN THOMPSON
2005

APPENDIX H

DIMENSIONS OF BUSINESS VIABILITY

REFERENCES
Baxter, B. (2003). Evaluating the Feasibility of Business
Opportunities. Ontario, A Report by the Ministry of Agriculture
and Food.
Gofton, L. (1997). Business Market Research. London, Kogan
Page.
Hoagland, H. and Williamson, L. (2000). Feasibility Studies.
Kentucky, University of Kentucky.
Thompson, A. (2003a). Business Feasibility Studies: Dimensions
of Business Viability. Perth, Best Entrepreneur.

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BUSINESS

Zikmund, W. (1994). Business Research Methods. Orlando, FL,

The Dryden Press.

AND

Thompson, J. L. (1995). Strategy in Action. London, Chapman

& Hall.

ENTREPRENEURSHIP

THE ART OF SUCCESSFUL BUSINESS START-UPS AND BUSINESS PLANNING

ENTREPRENEURSHIP AND BUSINESS INNOVATION

Thompson, A. (2003b). Understanding the Proof of Business

Concept. Perth, Best Entrepreneur.