Whilst there are no hard and fast rules for what must be included in the appraisal of an idea for a new business, some general guidelines might aid in the process.
Talk to Friends and Family First
Ideas in person’s head may sound better than they do when spoken out loud. Whether family and friends are business minded is not often important, their common sense will generally assists in the analysis of an idea or proposition.
In any case the person voicing the idea and methodology should have the required business and any technical knowledge necessary for the appraisal.
Discuss the Plans with People who know you
Another group of people who might be able aid with an assessment as to whether there will be light at the end of the tunnel are colleagues and business advisors.
A main point of consideration would be to weigh up the potential benefit of gaining valuable opinions against the risks of an unscrupulous person engaging in the business area as a result of hearing the ideas.
Do the Sums
A good idea is only the beginning of succeeding in business. Overall cash requirements as well as the timing of money flows are paramount to ensuring that a new business has a reasonable chance of succeeding.
Cashflow forecasts can not only provide estimates of cash needs and money burn, they can also show the sensitivity of the flows and can be used to predict “what if” scenarios.