| Low | If your margins are lower than industry averages |
| Medium | If your margins are in line with industry averages |
| High | If your margins are higher than industry averages |
If your margins are too low, then you should not go on with your start-up venture; unless you can justify this issue with high volume sales. If margins are low for your existing business then you must immediately address this issue by lowering costs. If your margins are high then go onto the next question. It is useful to relate margins to volume (see below) for a complete analysis.
Is Volume Sufficient
Volume is a critical component of value. It reflects the expected amount of sales your product/service can generate. Sufficient volume will depend on the size of margins. Therefore it is useful to compare volume to margins when evaluating this category.
| Low | If the expected volume is too low to achieve profit targets |
| Medium | If the expected volume is sufficient to achieve profit targets |
| High | If the expected volume is more than sufficient to achieve profit targets |
If the volume is low, then you should not go on with your start-up venture. If the volume is low for your existing business, then you must either find a way to sufficiently increase margins or increase demand for your product/service. If the level is high then go onto the next question.
3. Persistence (Is it persistent over time?)
There are three questions that allow you to distinguish whether your venture is persistent over time.
Is it repetitive?
You may have a very valuable product or service but it is only valuable to your business if you are able to sell that product/service over and over again.
| Low | If the purchase of your product/service is rare or unpredictable |
| Medium | If your product/service is purchased occasionally or slightly predictable |
| High | If the purchase of your product/service is frequent or predictable |
If the purchase pattern of your product/service is low then you should not go on with your venture. If the purchase pattern is low for your existing business then you must find ways of increasing the purchase frequency of your product/service. If the purchase pattern is frequent or predictable proceed to the next question.
Is there a long-term need?
For your venture to be successful there must be a long term need for your product/service. It is obvious that your venture will not survive if what you are offering is not needed after some point in time. It is very important for entrepreneurs to be aware of their product/service life cycle. -->
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