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Is my startup idea good? How to evaluate it with a startup viability calculation

Starting a business often begins with a simple question: “Is my startup idea good?” This question can lead to countless sleepless nights, second-guessing, and lots of brainstorming. But how do you really know if your idea is worth pursuing? To help you figure this out, it’s essential to look at three key factors: desirability, feasibility, and viability. In this blog, we’ll focus on viability, breaking down what it means and how you can assess if your idea has the potential to be profitable in the long run.

What is startup viability?

Startup viability definition

Viability, in simple terms, means whether your business can make money. The core question here is: Will we be able to turn a profit at some point in time? To simplify this, think of the basic equation for profitability:

Money in – Money out > 0

If your “money in” is greater than your “money out,” you’re profitable. While this sounds simple, achieving profitability is one of the toughest parts of running a business. In the early stages, most startups spend more than they earn, and that’s normal. But how long can you sustain that before running out of resources? That’s the challenge.

Startup viability is about a repeatible profitable business model

Viability isn’t just about if your idea can make money; it’s about when and how. Every startup is different. While one business might break even in six months, another may take a year or more. Some startups never reach profitability.

How to prove “Is my startup idea good?” with numbers

In the early stages of a startup, you don’t need complex calculations. What you do need is a basic understanding of how your business will make money. You can start with simple assumptions and gradually build on them. There are plenty of online tools and calculators designed to help new business owners estimate profits. You can use these to get a rough idea of how your startup might perform financially.

One thing to keep in mind: don’t get lost in the details too early. Focus on the big picture and prove to yourself and others that your idea has the potential to be viable.

Step-by-step startup viability calculation example

The example focuses on a startup that wants to sell chairs. The startup has set a revenue target of 20k per month.

Step 1: Startup viability calculation – Assumptions

Startup viability assumptions

The first step of a startup viability calculation is to form the mathematical assumptions. The example uses the following assumptions:

  1. Cost per chair to produce: €50
  2. Selling price per chair: €100 (ex vat)
  3. Monthly fixed costs (rent, utilities, etc.): €2,000
  4. Monthly marketing and sales expenses: €4,500
  5. Target monthly profit: €20,000

Step 2: Startup viability calculation – Start

Now it’s time to do the math:

1. Variable costs and profit

Each chair costs you €50 to produce, and you sell them for €100. That means you make €50 profit per chair sold.

2. Fixed costs

In addition to the cost of producing the chairs, you also have fixed monthly expenses like rent and marketing. In this example, those fixed costs total €6,500 per month.

3: Calculation

To calculate how many chairs you need to sell, first add your fixed costs to your profit goal.

€20,000+€6,500=€26,500

Each chair gives €50 profit.

So €26,500/€50= 530 chairs

Step 3: Startup viability calculation – Conduct market research

The next step is to conduct market research and enrich your calculation with this data.

  • Research the size of the market by performing the basic steps of a TAM SAM SOM calculation
  • Scan competitors’ prices and check if your sales prices are realistic
  • Check if the businessmodel can be viable for the long term. Will there be enough customers in the future to sustain my business?

Update and do a reality check based on the research.

Step 4: Startup viability calculation – Create different scenario’s

Startup viability calculation scenario's

Create different scenarios. The following scenarios are recommended to work out:

  • 0- scenario: Do ​​nothing. What does this mean for yourself or your company? What risks does this pose?
  • Worst case: Depressing scenario. What if everything turns out less positive than expected?
  • Middle case: Realistic scenario
  • Best case: Optimistic scenario

Common mistakes startups make when assessing viability

Let’s take a look at some of the most common mistakes early-stage startups make when it comes to assessing their idea’s viability:

Startup viability mistake 1: Ignoring the numbers

One of the most frequent mistakes new entrepreneurs make is avoiding the financial side of things. Phrases like “I’m just not a numbers person” are a red flag. Even if you’re more of a creative thinker, understanding basic financial metrics is essential. It’s not enough to say that your business will make money—you need to back that up with concrete numbers.

Startup viability mistake 2: Assuming a business model will work without evidence

Many startups start with a specific business model in mind, like advertising or subscription-based revenue. However, just because you choose a model doesn’t mean it will work. It’s important to test your business model with real data and customer feedback. For example, if you plan to generate revenue through ads, you need enough users on your platform to make it viable. Don’t just assume it will work—get proof.

Startup viability mistake 3: Relying on friends and family for sales

It’s common for new startups to rely on friends and family to make their first sales. While it’s a great way to get started, it doesn’t give you a true sense of the market. Your friends and family may buy from you because they want to support you, not because they need your product. To truly test your idea’s viability, you need to reach customers outside of your inner circle.

Startup viability mistake 4: Underpricing your product

Many startups fall into the trap of pricing their products or services too low. This can hurt your business in the long run, as it reduces your potential profit margins. Pricing is tricky, but it’s essential to find the right balance. Consider the value your product offers, and don’t be afraid to charge what it’s worth.

Startup viability mistake 5: Forgetting about sales costs

When calculating profitability, it’s easy to forget about the costs associated with making a sale. For example, if you spend €25 on online ads to sell a chair that earns you €50 in profit, your actual profit is only €25. It’s important to factor in all the costs of acquiring customers, including marketing, sales, and distribution.

Startup viability mistake 6: Listing unnecessary expenses

When creating your financial model, be careful not to include expenses that aren’t relevant to your business. For example, many entrepreneurs include costs like office space or software subscriptions that they don’t actually need. Start lean and only add expenses that are crucial to your business’s success.

Is my startup idea good? There are 2 more aspects to assess

When evaluating whether your startup idea is good, it’s crucial to consider not just its viability—how well it can generate profit—but also its desirability and feasibility.

Desirability feasibility viability
  • Desirability ensures there is genuine demand for your product or service
  • Feasibility assesses whether you can realistically bring your idea to life with the resources you have.

Together, these three aspects—viability, desirability, and feasibility—form a comprehensive framework to determine the true potential of your startup idea. If you have researched those 3 components you are able to answer the question: ”Is my startup idea good?”.

Ready to create better startup concepts?

I hope this article on startup viability inspired you. Do you want to learn how to create better startup concepts? Discover the book Business Model Hacking. It’s a powerfull approach to develop great business model ideas. It consists of +200 Business Model Hacks and has a lot inspiring examples.

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