Purpose
Determine whether a business or business unit is fundamentally viable as a standalone economic entity — separating fixable operational problems from structural decline — and deliver a defensible verdict that drives a restructure, hold, or exit decision. Replaces gut-feel debates in the boardroom with a structured diagnostic that holds up under investor and board scrutiny.
When to Use
Invoke this skill when the user asks to:
- Decide whether to restructure, turn around, or exit a business or division
- Evaluate whether an underperforming business unit is worth continued investment
- Assess the standalone viability of a portfolio company or carve-out candidate
- Determine if losses are temporary (fixable) or structural (terminal)
- Build a viability case to present to a board or investment committee
- Pressure-test a turnaround plan's underlying assumption that the business can survive
Inputs Required
Before starting, collect:
- Business/unit description: What it does, what it sells, and to whom
- Financials: Revenue, gross margin, EBITDA, and trend over the last 3 years (annual or quarterly)
- Market context: Market size, growth rate, and the business's market share
- Competitive position: Top 3 competitors and how this business compares on price, product, and scale
- Cost structure: Fixed vs. variable cost split and how unit costs compare to competitors
- Management capacity: Quality and stability of the leadership team, recent turnover
- Constraints: Available capital for turnaround, time horizon, and any hard deadlines (covenant breaches, cash runway)
If competitive cost benchmarks are unavailable, state the assumption and flag cost competitiveness as a lower-confidence dimension in the verdict.
Instructions
Step 1: Establish the Financial Trajectory
Anchor the assessment in the numbers before opinion enters.
- Plot revenue, gross margin, and EBITDA over 3 years — identify whether the trend is declining, flat, or recovering
- Distinguish revenue decline (demand problem) from margin decline (cost or pricing problem) — they require different verdicts
- Calculate cash runway: months of liquidity at the current burn rate
- Flag the single most urgent financial constraint (covenant, runway, working capital)
Step 2: Assess Competitive Position
Where does this business actually stand against rivals?
- Cost position: Is it a cost leader, at parity, or structurally disadvantaged? A business that cannot reach the cost frontier in a commoditized market is structurally challenged.
- Differentiation: Does it have a defensible advantage (brand, IP, switching costs, network effect) — or is it competing on undifferentiated terms?
- Market share trajectory: Gaining, holding, or losing share — and why
- Strategic group: Is it stuck between scale players and niche specialists ("stuck in the middle")?
Classify the position: Advantaged / At Parity / Disadvantaged but Fixable / Structurally Disadvantaged.
Step 3: Assess Market Trajectory
Is the business in a growing, mature, or declining market?
- Growing market: Underperformance is more likely an execution problem — viability is higher
- Mature market: Viability hinges on relative cost and share position
- Declining/disrupted market: A strong position in a shrinking market may still warrant exit or harvest; weak position almost always does
- Identify any structural shift (technology, regulation, channel) that permanently changes the economics
Step 4: Assess Cost Competitiveness
Can this business make money at scale market prices?
- Compare unit economics (cost per unit, cost-to-serve) against competitor benchmarks where available
- Determine whether the cost gap is structural (scale, location, asset base, labor) or operational (waste, process, overhead) — only operational gaps are reliably fixable
- Identify the realistic post-restructuring cost position, not the current one
Step 5: Assess Management Capacity
Can the team execute the path forward?
- Evaluate leadership track record, recent turnover, and bench depth
- Assess whether the current team can run a turnaround — turnarounds and steady-state operations require different capabilities
- Flag whether a leadership change is a precondition for any viability verdict above "Not Viable"
Step 6: Synthesize the Viability Verdict
Render one of three verdicts with explicit reasoning:
- Viable: Defensible competitive position, acceptable or improvable cost structure, market that supports profitability, and capable management. Problems are operational, not structural.
- Conditionally Viable: Can be viable if specific conditions are met (cost reduction target, leadership change, capital injection, divestiture of a sub-segment). State each condition and the probability it can be achieved.
- Not Viable: Structural disadvantage in cost or position within a mature/declining market that capital and effort cannot overcome. Recommend exit path (sale, wind-down, harvest).
Tie the verdict directly to the evidence from Steps 1–5. Do not hedge into a fourth, vague category.
Step 7: Recommend the Strategic Path
Translate the verdict into action:
- Viable → Restructure/invest plan: the 2–3 highest-leverage moves
- Conditionally Viable → Conditional plan with go/no-go decision gates and timelines
- Not Viable → Exit plan: sale vs. wind-down vs. harvest, with value-maximizing sequence
- Specify the capital required and the realistic time-to-result for the recommended path
Output Format
- Structure: Diagnostic sections followed by a verdict and a recommended path; verdict stated in bold up front in the synthesis section
- Length: 1,000–1,400 words
- Format: Structured document with section headers; competitive position and cost dimensions summarized in a short scoring table
- Sections: Financial Trajectory → Competitive Position → Market Trajectory → Cost Competitiveness → Management Capacity → Viability Verdict → Recommended Strategic Path
- Tone: Board-level advisor — direct, evidence-led, willing to recommend exit when warranted; no false optimism
Quality Checklist
Before delivering output, verify:
- [ ] Each of the five diagnostic dimensions (financial, competitive, market, cost, management) is assessed with a stated classification
- [ ] The verdict is one of exactly three options — Viable, Conditionally Viable, or Not Viable — with no hedging
- [ ] The verdict is justified by specific evidence drawn from the diagnostic sections, not asserted
- [ ] Cost gaps are explicitly labeled structural or operational, since this distinction drives the verdict
- [ ] Conditional verdicts list each condition and an estimated probability of achievement
- [ ] The recommended path specifies capital required and realistic time-to-result
Notes
- The most common error is treating a structural cost disadvantage as an operational one — a business that cannot reach the cost frontier in a commoditized, mature market is rarely savable regardless of effort.
- A strong position in a declining market often warrants a harvest strategy, not a turnaround — maximize cash extraction rather than reinvesting.
- When cash runway is under 6 months, the verdict must account for whether any viable path can be executed before liquidity runs out — viability without time is not viability.
- Separate the business's viability from the current team's capability; a "Not Viable under current management" finding is a leadership decision, not an exit decision.
How to use this skill
This file is a Claude Code skill in Anthropic's standard format — markdown with YAML frontmatter at the top.
Installing in Claude Code:
~/.claude/skills/<folder-name>/SKILL.md— auto-loads in every session anywhere on your machine (recommended for skills you'll use across multiple projects)<your-project>/.claude/skills/<folder-name>/SKILL.md— auto-loads only when working in that project (recommended for project-specific skills)
Restart Claude Code or open a new session to register.
Using in Claude.ai, ChatGPT, Gemini, or other AI tools:
- Drag this file into a new chat, or copy and paste its contents
- Send your task or request as your next message — the AI will apply the skill where it fits
For Claude Code skill details: https://docs.anthropic.com/en/docs/claude-code/skills