The Business Analysis – Why Your Company’s Future May Depend on It

Once a year you should do a thorough analysis or review of your company to make sure you are staying on track. As a general outline you can follow these 10 categories:

1)Management and Administration: your strategy, supervision, delegation, accountability, accounting, human resources, payroll and benefits, risk, legal, cost controls, decision making, growth, data and records, responsibilities

2) Operations/Production: your processes, standards, labor, tools, equipment, parts, facilities, materials, vendors, independent contractors

3) Sales and Marketing: how to find prospects that become your customers; sales presentation and marketing materials

4) Technology and Applications: how can technology be utilized to optimize your key company functions; hardware, software, industry specific applications

5) Company Culture: how your company is perceived by your employees, customers, vendors and the local and cyber communities; what is management willing and capable of doing. How are training, learning and education perceived? How is your image and morale?

6) Priorities and Budgets: what is most important, when is it needed and how much does it cost; cash flow management

7) Short and Long Term Goals: short term is within a year; long term is next 1-10 years. Where do you plan to be?

8) Execution: what do you need, how will you carry out your plan and how you will monitor your progress toward your goals

9) Ongoing Development: what reviews and new developments are necessary to maintain growth and improve?

10) Overview and Summary: the big picture or how your business model matches your goals; what are your short and long term strengths, weaknesses and opportunities.

The list above does not include everything but it does cover the basics. Remember that every business is unique so the challenge is to find out what applies to your business.

Here are a few more pointers before you begin:

A) Most businesses find it impossible to be objective about themselves so they look for an outsider. The analyst is neither an employee, friend nor relative. This prevents one’s self interest from influencing the final report.

B) Request that your outside analyst tell you what you need to know and not what you would prefer to know. Don’t waste your time and money if you don’t really want to know. Also ask why bother if you won’t change anything once you do know.

C) Make sure your analyst interviews your key people and submits a written, detailed report. If they don’t interview your people, how will they know? If you hide things from the analyst you will get back a skewed perspective which will be reflected in the final report.

D) When reviewing the report, ask questions until you clearly understand each point. If you do not understand something then the report will be of less value for you and your company. A good analyst will answer your questions and not ridicule you. A really good analyst will chastise you for not doing what you really should be doing.

What is the net result? Unfortunately some businesses actually go through the process of a business analysis and then ignore the observations and suggestions. This of course makes no sense.

What does make sense is to take the results of your business analysis and modify your current business plan to make it more effective. This is what a business analysis is all about; this is what is in it for your company.

From the analysis you can focus on those activities which will have the biggest impact and results such as increasing sales or reducing costs. Also look for improvements that are free, cost little and can be done quickly.

The biggest obstacle to improvement and growth is overcoming that initial inertia; if you remember your physics, “an object at rest tends to stay at rest.” The business analysis provides the ideal platform from which you can get going if you stay consistent with your plan and focus, focus, focus.

Are the Kids Ready to Take Over The Family Business?

Do your children want to take over the family business? Many young people may or may not be thinking about it. Business owners that have children can take the initiative and ask their kids about their plans. Why? In many cases the future of the business depends on it.

If the parent wants to get out of the business, do the children want to take over? If not, does the business owner close the business, sell to someone who works for the business or sell to someone outside the business?

Plans of the Family

Because of education, their children have shaped their own view of the world and how they can make a contribution to it. This occurs one generation after the next.

Typically, business owners adore the legacy they started and want to see it continue beyond them. Otherwise they would have gotten out a long time ago.

But given the shaped ideas of their children, they shouldn’t necessarily expect them to have the same admiration for the business that they do.

For instance, if you’re a parent that loves architecture and you have a child that grows up on Tolstoy and Adam Smith, it’s clearly not realistic to expect them to take over the business. That is an obvious scenario but in many cases it may not be that obvious.

Also, business owners need to make sure that their passion for the business doesn’t completely push their children away. That can truly hurt the legacy planning. It’s understandable that they want their children to follow in their path but if it’s not their calling, it’s not their calling. It may be a bitter pill to swallow but it may be the needed medicine.

Children Who Want to Continue the Business

One of the great results that can occur through this conversation is the realization that the children do want to take over the business. Thirty percent of successful businesses are passed down from one generation to the next according to the SBA. Fifteen percent reach the grandchildren.

Knowing this as a business owner gives them the opportunity to start the grooming and education process. That process involves including the children in the details of the business.

In doing that, it’s best to be fair with the children. Owners shouldn’t simply hand over the reins to the business and the children run the business into the ground in six weeks. Why? Owners can be kind about the process, but competitors and clients may not be.

On the other hand, parents shouldn’t burn children out so that they no longer have a clear succession plan. That also can disrupt suppliers, employees, clients and other family members.

So depending on how their children develop business owners should open up a dialog with their children about what they plan for the future and determine how that relates to the business. By doing that, they are able to plan for the future of the business.