What is business viability?

At some stage in the life of your small business, these thoughts may well have crossed your mind “Is my business profitable?’ ‘Is my business getting ahead or falling behind?’ ‘Are there ways I can improve my business and keep trading?’ ‘Should I sell, or close, my business?’

The reasons for asking these questions can be numerous.

Whatever the reasons, it’s good to have clarity around your business position and whether your business is viable. Knowing this will help you make decisions about what is best for you and your business. 

But what is business viability and how do you know if your business is viable?

Viability is defined as the ability to survive. In a business sense, that ability to survive is ultimately linked to financial performance and position.

A business is viable where it:

  • is making a profit that is enough to provide a return to the business owner while also meeting its commitments to business creditors, or
  • has enough cash resources to sustain itself through a period when it’s not returning a profit.