10 Areas in Your Business that You Need to Review
This article is the second in a three-part series about business assessments and the importance of getting objective feedback on your business. My first article, Get Ready for 2018: Why Great Organizations Rely on Objective Feedback, can be found here.
Whether we are conscious of the fact or not, we are constantly assessing the world around us: things, people, places, situations.
And we make decisions based on those assessments, too. These decisions range from the mundane (Is this a good time to cross the street? What should I wear today based on the weather?), to those that require strategic planning to get the best outcome possible (When is the best time to launch my product? When is a good time to ask my boss for a raise?)
Many of those decisions have layered options, depending on what you want to see happen. For example, a bad experience at a restaurant might result in you talking to a manager, or leaving a message on Yelp, or coming back another night, or trying another restaurant. Traffic on your route to work is a nightmare, so you might try altering your route, or leaving 15 minutes earlier, or using the time to learn a new language from those CDs you bought a couple years ago.
And of course, you can always choose to do nothing about any of these things.
Businesses, regardless of size or industry, do not have that luxury.
Complacency, inefficiency and an inability to adapt are the kiss of death for many businesses. It is imperative that businesses — especially small and solopreneurs — take the time to regularly have a business assessment.
The upshot is this: If you aren’t doing regular business assessments, you may not know if anything is wrong with your business until it’s too late.
So what, exactly, is a business assessment?
Let me first start with what a business assessment is not. It is not a valuation of your company. It is not a substitute for a business plan or a marketing plan. It is not judgment on you as the business owner.
(Yes, you may have made some bad decisions or screwed something up, but this really isn’t about you. It’s about your business.)
A business assessment is an objective review of different aspects of your business, any of which may impact your valuation, business plan, marketing plan and how your run your business. A business assessment provides you the empirical evidence you need to make the best decisions you can. Simply put, it’s useful information.
The following is a list of areas that a business assessment typically reviews, and are fairly self-explanatory:
1. Revenue and profitability
Is revenue increasing? Where are you making the most money? Are your profits also increasing? (You’d be surprised how often this doesn’t correlate, and it should.)
2. Analyzing markets, products and/or services
Are you offering the products and services your markets want? Has the avatar for your market shifted (say, perhaps to one that’s more willing to spend money on what you sell)? Do you need to adjust what you offer to accommodate this shift?
3. Customer acquisition
Is the way you are acquiring customers effective and efficient? Does the way you’ve been doing this still work? Are your customers still hanging out in the same places as they were last year?
4. Company growth
Is the company growing or constricting? Is your market growing or constricting? What are the opportunities in your company and/or market for growth? Is this the right time to add a new product or service?
If an assessment is detailed, it might also include this as part of the overall assessment:
5. Human capital
Do you have the right people in the right positions? Are they contributing to the company? Do they understand and share your vision? If you need new team members, what’s your plan for talent acquisition? Are you, as CEO, using your time and energy more efficiently, or do you need to delegate or delete? Is it time to get more help?
6. Company goals and if they are being reached
Are you meeting your targets for company growth? What is your plan for company growth? Does it need to change? How do you want to grow (more employees, more customers, new locations, etc.)?
All of these are important areas to assess, but there are a number of other areas that are also important to review but aren’t necessarily regularly assessed in any meaningful manner. And yet, these areas can literally make or break your business, regardless of how well you’re doing in revenue. Smaller businesses, particularly those with less than less than 50 employees, must delve into all these issues with more depth and personalization. Generally speaking, these issues fall into the following categories:
7. Mindset Mastery
Are you audacious enough to believe that you can accomplish your goals? Do your team members also believe this? Do you have a vision that is set? Have you shared this vision with your partners and team? Are you all on the same page? Do the different departments/job functions make decisions based on the parameters you’ve set (specifically, the vision you share)?
8. Business Strategy
This is more than just marketing. Once you’ve identified your company company goals, what is the best way to achieve them? Do you plan to grow organically, or do strategic partnerships make sense? Where can you enhance another company’s product or service without diluting your core market and brand? What does your brand stand for?
9. Organization Workflow
It’s rather stunning how often this aspect of running a business is overlooked, because this could literally make or break your business. Are your physical and virtual work spaces organized organized so that you can easily find what you’re looking for? Is it set up to most efficiently and effectively facilitate an efficient workflow? Can you find what you need? Are the right people touching the right projects, or are there too many decision makers? Are there repetitive tasks? Can you systematize any of the functions and workflow?
10. Business Fundamentals & Operations
Interestingly, the one area that most business assessments seem to miss is basic business operations. And I’m not talking about start-ups, but for existing businesses.
How efficiently are you running your business? Have you automated, streamlined and systematized your business where you can? Can you save time or money, or can you provide a better product for less money, just by making a few changes, sometimes small?
Do you have the right insurance and licenses? Is everything up-to-date, or are there any new requirements? When is the last time you verified or updated your cybersecurity, employee handbook, and other policies? When is the last time your staff was trained on your cybersecurity or sexual harassment policies?
Business operations is not the “sexy” part of most businesses. In fact, most business owners hate dealing with this part of their business. They want to focus on what they love to do.
I appreciate this kind of passion, but the fact is that if you don’t take care of the basics, everything else can be affected. And more importantly, businesses that have limited resources (especially in human capital) really need to make this a priority.
It’s a Big Deal
The impact of efficient operations can be incredibly dramatic. For example, when I opened a franchise, I was told by my mentor that “this job is 70 percent paperwork.”
I saw two problems with this statement. First, I didn’t buy a franchise to buy myself a job, and second, 70 percent paperwork.
Unfortunately, she was right, but there was no way I would spend my time micromanaging inefficient and antiquated processes. It didn’t take me long to implement systems that cut the amount of time my managers and I spent doing paperwork by 80 to 90 percent, systems I later shared with other franchisees. (Years later, I still get thank you emails.)
And not only did I make us all happier, but I saved a lot of money (especially in payroll costs), simplified it so that it was considerably easier and faster to train a new manager or trusted employee, and better accuracy. I also implemented checks-and-balances that resulted in very few things falling through the cracks.
To have a healthy and successful business, you must regularly assess all aspects of that business.
Spending all your time and energy on sales and getting new clients is good. And even increasing revenue is good. But if you’re still losing money because your break-even point is higher than you thought, or because you are spending too much money on inefficient systems, you have a bigger problem to solve. Think about doing one annually.
In my upcoming article, I will share some ideas where to find someone who can provide you with the advice you need.