For most small & medium business owners and their management team, it’s often a challenge to take the time to stand back from the daily business operations and be able to take stock of their performance and long-term strategic issues. It is however imperative that they review their progress and understand how to get the best out of their business & implement the steps necessary to make them profitable & prosperous.
Businesses that understand ‘what makes them tick’ are the ones that are most successful and profitable. They also do not develop complicated development strategies. They understand that the best strategies are usually the simplest as they are easier to communicate, understand and implement.
The simpler and easier it is for everybody to understand what delivers profit, the easier it is for them to align and support the strategy. The ability to identify and crystallize the most important performance metrics is a simple & effective way of communicating strategy. It also ensures that everyone is focused on a simple model that drives profit in a consistent & repeatable way. These businesses know the main business drivers and use the most important success metrics to monitor their performance against these drivers, and they use this information to ensure they have:
- winning products or services that people want to buy and will continue to want to buy
- clear objectives simply set out and communicated to all staff to motivate them
- a dedication towards continual improvement
- effective management information and financial control
- efficient services and distribution
- dedicated management with the right information & business responsibilities
- Compliant with regulations and minimum disruption to routine.
Business Ownership & Organization Checklist
Selecting the right business structure is a very important decision for a business owner as it affects personal liabilities, taxation and levels of control in the business. The wrong business & financial structure can act as a constraint on the development of your business and cause problems. Hence
having the right information should enable you to determine the right structure for your business.
Businesses can be Sole Proprietorship, General Partnership, Limited Liability Company, Limited Liability Partnership, C Corp, S Corp, etc. Make sure you talk to an Attorney / CPA to determine the right fit for you.
Use this checklist to determine if the business structure is right for you.
Management & Governance Checklist
A Business owner has to understand the value in their proposition to customers, including the tangible and intangible benefits their products or services provide.
Businesses must establish and manage the process for setting vision, mission, strategy and direction in order to achieve superior performance. These then need to be translated into plans, projects and actions throughout the organization.
Use of this checklist will help you understand the importance of clarity of vision, mission and values in a business’s offering.
Are You Creating Value through Your Business?
Your business has to add value. Make sure your selling price covers all your costs of production and promotion. You cannot sell below cost for very long without going bankrupt. Remember also that working more closely with your customers and suppliers can bring competitive advantage. Understanding the value drivers in your business is essential for maximizing your company’s
Use this checklist to look at the factors that can improve or destroy value for your business.
Are You Proactively & Effectively Managing Innovation?
Innovation is all about continuously moving ‘up the value chain’ and adding value in each and every product and service. Successful businesses understand the importance of innovation and incorporate processes into every aspect of their operation to innovate continuously. Innovation is essential for business survival in today’s highly competitive markets where it is increasingly difficult to differentiate between products and services.
This checklist covers the areas that you should consider to ensure your company manages innovation effectively.
Do you know your Business’s Financial Health?
A mix of daily earnings, equity, long-term/short term borrowing, creditors and lines of credit funds a business. It is important that the right balance is struck between these. Each has a cost and you have to be sure that you understand it and are able to pay it.
Understanding your financial position is an important step in evaluating the health of your business. Cash is the life-blood of any organization and must be closely managed to ensure the business can survive and grow effectively. Understanding the basic concepts of cash flow will help you plan for any unforeseen eventualities that may occur.
This checklist will help you analyze the financial health of your business and help you calculate the financial ratios that you need to know.
Do you know your Business’s Physical Health?
You have invested in physical assets such as machinery and equipment. It is essential that you get the most from your investment, but you must also keep an eye on replacement. Technological change is rapid. You should not allow your processes to become non-competitive. Effective asset management helps to improve productivity and performance and reduce costs. This checklist covers the areas that you should consider to optimize your company’s use of assets.
This checklist will help you analyze the physical health of your business.
Do you know your Market Dynamics?
Information about your market and your competitors will enable you to plan your business
strategy and your business structure better. While it may be difficult to build up a complete picture, you should seek to obtain as much information as you can from your customers, trade bodies, suppliers, competitors and the media. Getting a good understanding of how your market is expected to develop is essential if your business is to make the most of its opportunities and remain competitive.
This checklist looks at the competitive dynamics in your market.
Do you continually improve your business?
Quantity without quality could ruin your longer-term market prospects. Quality is a measure of your ability to meet the needs of your customers in a more cost-effective way than your competitors. Be careful to avoid ‘over quality’. Your products and services need only meet your customers’ needs and what they are prepared to pay, not exceed them.
Best value requires businesses to ensure continuous improvement in their performance,
and to demonstrate a commitment to sustainable development.
This checklist looks at the factors affecting quality in your business to examine where there may be opportunities for improvement.
Is your Team Optimized for Success?
Management is all about achieving success through people. Manage them properly and enable them to maximize their own contributions to the success of the business. Good people management is at the heart of achieving a successful, high performance business.
This checklist looks at the key criteria for achieving success through people.
Are you ready for Growth?
Consider whether you want or need to grow. If you decide to grow then do so in a manner that the business can sustain. Appraise the time it takes for you to bring a new project on stream. Match the market with all the resources necessary to achieve your objective. As markets mature, companies need to find new sources of growth. Businesses that are not growing through new product and service introduction are likely to be in decline, as their existing sales portfolio inevitably matures.
This checklist examines the key drivers for growth and managing growth.
Are you in compliance with Rules and Regulations?
Don’t let regulations put you off. An integrated approach to information will mean that many of the demands of the tax man and others can be met from the same information source that enables you to run your business better. It is important that you comply with statutory and other regulatory obligations. Non-compliance is costly and could put you out of business.
This checklist covers the key areas of compliance that businesses need to be aware of.
In summation, the on-going economic downturn means that now, more than ever, small companies need to take a good look at the fundamentals of their businesses, and understand how they can improve performance, strip out any unnecessary costs and focus on the right strategy to survive and take their businesses forward.
When times are tough, knowing exactly what you are facing and being realistic about what needs to change will put your business in better shape to respond quickly to further changes in the market (be they positive or negative) as they occur. Using these checklists will place you in a better position to understand areas of weakness in your business and your potential exposure to the downturn. However, the key thing is prioritizing which areas require immediate attention
and identifying appropriate actions to deal with them.
Suggested actions you could take:
- Improve your decision making – With all the information & insight you have gathered, value creation & creating a competitive advantage should drive all your business decisions.
- Seek fresh perspectives: Business owners and managers are often so close to the action that they lose objectivity. It might help to talk to a trusted professional such as your CPA, Accountant or mentor.
- Evaluate your Strategy: Now that you have access to more current and relevant data, evaluate your strategy and see if it aligns with your mission, vision and core values.