One of the first things I typically do with a new client is some type of Business Analysis (also called Business Validation). The purpose of this is to fully understand the key drivers, opportunities, and challenges of the business in order to determine a plan and to find where the biggest wins may be found.
These specifics are separate and apart from whatever industry attributes the business may work with; the purpose here is to determine what the nuances of your particular business are.
Often when I’m evaluating a business, whether as a coach or a prospective buyer, there are 7 must-haves I look for when performing a business analysis.
7 Must-Haves for a Successful Business Analysis
1. Understand the current state of affairs
One of the most important things I create for my clients is a basic financial “model” of the business. This identifies the Key Performance Indicators (KPIs), which allow the business owner to know “where they are at” AND “where they are going” at any time.
Too often business owners rely on their financial statements, or even worse, their bank account balance, to determine if they are performing financially. You have to look forward if you want to steer!
2. Effectiveness and utilization
Once we have an idea about how the business makes and spends its money, I ask about Utilization. This simply means figuring out how much of your current capacity are you selling and how efficient you are overall.
Many times, business owners believe they are “full”, when in reality much of their time is spent on activities that do not produce income! This helps us figure that out and make changes as necessary.
3. Marketing Analysis
Your advertising (and your marketing in general, particularly in social media) may be proving fruitless and a waste of money. What marketing are you doing now? Is it working? How do you know? Can we implement some way to Test and Measure each aspect of your marketing?
Ensure that your marketing efforts are not just spent on creating awareness, avoid “billboard advertising” (look at us, look at what we do) and focus on “solving for the customer”. Create and implement a true lead generation strategy at the heart of all your marketing efforts.
4. Sales strategy
Do you have a defined sales process? Is it written down? What is your actual conversion rate? Our experience is that almost every business owner wildly over-estimates their conversion rate; usually because they only count the ones they close!
Having a well documented sales process relies upon the set of steps and actions that sales team performs to close more deals. Each business has its own unique way to offer and sell its products. This should be based on the customer needs, the market, and most importantly, on the business objectives.
5. Maximizing profitability
What are you selling and in what units? Can repackaging or bundling your product/service change your profitability? How do you compare to your competition in terms of price, delivery, quality, customer service, etc.?
6. Production, fulfillment & staffing
How do you fulfill orders? What is every member of your staff doing? Is it written down? Is the task flow logical and efficient? And my favourite: do you have a backup in place if someone is unable to come to work?
7. Business expansion opportunities
What opportunities do you, the small business owner, have to expand your business? There may be times when a business coach can see a bigger picture when the business owner is only seeing the bottom line. As a business coach I can act as a visionary and show you how to implement innovative business techniques. A business coach can view the broad scope of things to determine a new need by a customer. Perhaps, the business owner may never have seen that these areas of opportunity exist
How does your business stack up??
Building profits and customer relations are two key components that make up what your business should be focused upon.
A good business coach will be able to integrate these key elements into a plan for action for the business. And here’s the thing – the investment in a business coach can significantly raise the profits of the business; sometimes by multiples.
Is you business running at it’s potential? Do you think there are areas for improvement? Get a no commitment business assessment today from one of Entrepreneur Evolution’s leading coaches, and stop the guess work. Know where you stand.
How do you analyze your business? Sound off in the comments below.