What Is a Viable Business Plan?

by Victoria Duff - Updated September 26, 2017
A viable business plan explains how each element of the company fits together to produce profits.

The first thing any entrepreneur seeking money to start a company will hear is "send me your business plan." The next thing will be a comment about how viable it is.

Function

A business plan is a document that describes in detail the business idea, the industry, the target market, how the business will make money and how it will be built and what to expect in terms of its financial performance over the next three years, if it receives venture funding.

Considerations

The term "viable business plan" refers to the likelihood of success of the business model or idea described in the business plan document. What makes a business model viable is research into the commercial need and financial realities of the business idea and then planning the business model to succeed within those needs and realities.

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Features

Planning a viable business model includes identifying the most receptive and profitable target market, the most effective method of marketing to that target, several different revenue streams that can be developed to ensure the company has reliable revenues year round and in all economic situations and how best to compete successfully in the industry.

Misconceptions

An impressive professionally written business plan document can make it easier to have a venture considered for funding, but it cannot make a mediocre idea into a viable business model. Only careful planning can do that.

Significance

Whether a business plan is viable depends on who is judging its viability. A venture capital fund would only consider a company that could produce $100 million in revenues in three to five years, return 30 times the investment and be appropriate for an IPO or a merger. A private investor might consider a return of five or 10 times the investment and a potential revenue production of $20 million to $50 million in three to five years.

References

About the Author

Victoria Duff specializes in entrepreneurial subjects, drawing on her experience as an acclaimed start-up facilitator, venture catalyst and investor relations manager. Since 1995 she has written many articles for e-zines and was a regular columnist for "Digital Coast Reporter" and "Developments Magazine." She holds a Bachelor of Arts in public administration from the University of California at Berkeley.

Photo Credits

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