Business Analysis – Get A Handle On Your Business.
Instinctively, we know what we know about our businesses. But what about the things we don’t know and perhaps should know? This gap in our knowledge can have serious consequences for the business. How often do you do a root and branch review of your business or do you ever take a look under the hood? If you do it at all, is it all encompassing or do you just look at the numbers? Does the feedback become a prompt for action?
Let’s face it, most business owners keep any eye on the key performance indicators (KPI’s) and ignore everything else. They don’t see the need to look any deeper. They certainly don’t go to the expense of getting an external business analyst or consultant to look at the business, and they just keep on moving forward once there are no alarm bells ringing.
The problem with this strategy is that the business owner may be leaving lots of opportunities to do better on the table. They may ignore the opportunity to be more efficient. They may achieve a reasonable return on investment instead of a spectacular return on investment. They may be operating on the basis of one day at a time instead of having a focused long term plan and end game.
The real question here is why business owners don’t periodically take time out to re-examine the fundamentals of their business. Okay, not everyone has a budget for getting in a business consultant or analyst. But if they can just systematically and periodically ask themselves the right questions, spend some time thinking about their answers (either alone or with their top team) and then write down their answers or conclusions, then they are in a far better position to make coherent judgments about the future and how they may influence that future.
As a former lending banker, I have watched many business customers react to questions about their business with blank stares. They have simply not taken the time out to work on their business instead of working in their business and they have a lot of unasked questions to deal with, before they can even begin to think about answering them.
If you have a framework that you can use to develop the right questions, this can be a terrific help. It can provide the illusive place to start and a mechanism to move through the analysis process. For this reason, I developed a business analysis framework which I call the “28 Point Business Analysis Framework”. It looks at a business from the point of view of 28 different functions and it poses questions in each of these functions, which the CEO should be able to answer. In larger organizations, the CEO’s direct reports or department heads can contribute to the business review process. The 28 functions are shown in the Mind Map diagram below.
This gives you the starting point for your business review. Starting with Management in the top right of the Mind Map, you gradually move clockwise around the diagram until you get to Financial Performance. I leave financial performance until last because most business owners want to start with this one. It is counter-intuitive to do this but the reasoning behind this sequence when examining functions, is that decisions taken in each of the other 27 functions will determine the results that show up in the 28th and final function.
The next step is to establish the questions you ought to be asking in relation to each of the 28 analysis areas. A starting point for your questions in the management function might be as shown below.
The larger and more complex your business is, the more questions you should be asking. Each answer you write down should be followed by further clarifying questions such as where, what, why, when, and how.
To simplify this business analysis process for business owners, I have developed two separate and distinct products, both of which can be accessed online without ever meeting me or talking to me. They might be described as self-help for business owners.
The first product is a detailed eBook that guides the business owner and his team through the analysis process and provides all of the questions that the business owner needs to be asking in each of the core business areas. It includes brainstorming templates in Mind-Mapping format, which allow the answers to the questions posed, to be input directly on each template. Simply click on the book cover below to get access to this product.
For those of you that are time-poor, and would prefer to have a comprehensive analysis carried out, which benchmarks your answers to the questions posed against best business practice, you can click on the image below which will bring you to our automated business assessment product – HowsMyBusinessDoing. This will generate a detailed report on your business performance in each of the 28 functional areas and it will display traffic light indicators to show where your business is strong, mediocre or weak. This product does all the heavy lifting for you and it will take just 90 minutes of your time from commencement of the questionnaire to delivery of the final report.
And if you prefer the old-fashioned way of brainstorming your business in a one-to-one environment, you can always drop me an email and we can set up a time to chat.