When someone starts a business or introduces a new product, they are very excited.

It’s good to be enthusiastic, but you don’t want your emotions to blind you to the reality of whether your business will work or not.

Before charging ahead and investing a lot of money in marketing and infrastructure, put together some estimated numbers about how your business will work.

What will be your business model? How will the business generate ongoing revenue? Most businesses can’t survive as a “one product wonder.”

How many sales can you hope for? What will be the cost of fulfillment? What is the estimated cost to promote the product or service? What infrastructure (rent, employees, independent contractors, equipment) will be required?

An accountant can help you put these figures together into a financial projection or business plan. The projection is only as good as the assumptions and information provided to the accountant. You might need additional information from engineers, marketers and other individuals with experience with a similar business to assure the assumptions are realistic.

Marketing teacher Dan Kennedy shared an experience about a client who had a great skin care product. It was costly to produce because the ingredients were rare, exotic and expensive. The product would have to be sold for $149 per month to be profitable. Dan’s experience was this type of product wouldn’t sell for more than $49.95 per month. (That’s an amount that goes “under the radar” on a monthly credit card statement.) He spent a day explaining to his client that the economics didn’t work for this product, and no marketing strategies could overcome bad economics.

Avoid sending your money down a “rat hole”. Pencil out what the likely outcome will be from offering your products or services. If the business can produce a profit and you’re still excited, then go ahead.