For most Small & Medium Business (SMB) 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. This is especially true if  there have been recent changes to their business, their market or the economic environment that they operate in. SMBs often fail because owners are unaware of the many aspects that can prevent their business from growing and being successful as the business is organized around the owner’s specific area of expertise, such as marketing, accounting or production and they are not able to see the big picture.

In the first part of this article, I am going to discuss the importance of a business audit, the importance of understanding your business, how & why to develop a business plan and the role of performance metrics. In the second part I will be sharing a number of checklists which will help you analyze your business and benchmark performance standards for the future and also suggest possible next steps.
HOW TO USE THIS AUDIT

If you want to get the maximum benefit from this audit, please make sure that you read through all the material and honestly answer all the questions, with an  “Yes” answer indicating no problem and a “No” answer indicating a problem in that area.

This audit is more than a simple audit about management or finances. It provides an overview of the core aspects of your business including its soul i.e. Vision, Mission & Values. Apart from that, the type of organization you are, value proposition, innovation capability, physical assets, marketing, advertising & public relations, financial planning, human resources, growth plans and  governance & compliance are also covered. Once the audit is complete, you must & analyze each section of the audit to develop an action and next steps.

A healthy & successful business is well rounded and all the core areas are well balanced. The audit will help the business owner/manager identify the areas that need to be worked on and regular audit will help the business become more adaptive, efficient & prosperous.

The Prologue

Now, more than ever, businesses need to make sure that they are: 
·     Headed in the right direction
·    Competing in the right markets, with the right products and/or services
·    Optimizing their market situation - performing better than the competition
·    Using the right mix of assets, skills, finance, infrastructure and relationships that enables them   maximum value to their customers
·   Minimizing the costs that do not add value to their business or customers
·  Aware of external environmental changes and are building the capability to respond quickly to new opportunities or threats
·  Measuring their performance continuously so that they are always aware of their current performance and the successes or failures of their strategic initiatives.

 
 
"If I had asked people what they wanted, they would have said faster horses."
–Henry Ford
"It's really hard to design products by focus groups. A lot of times, people don't know what they want until you show it to them."
— Steve Jobs
What do the above statements show? Should innovators listen to their customers? Do you think that if Henry Ford & Steve Jobs had listened to their customers, Ford Cars or iPhones would not have existed? There is a wonderful wonderful article called "Why Steve Jobs Never Listened to His Customers" by Gregory Ciotti which poses this question and is a must read. Agree, disagree or maybe, you should definitely read the article. The questions it raises and how it makes you think about entrepreneurship is important. The article and the subsequent comments got me thinking. What exactly is an innovative product or service and what role do end users play in its development. There are numerous products & services we have today and have existed in the past that would not have been possible if they had been customer tested to begin with. 
So, is there a kind of innovation, which, in-fact should not be customer tested at its inception? What would that kind of innovation scenario be? How does the innovator decide whether he should engage customers or not? Lots of questions spring to mind, unfortunately, not enough answers.
CREATION Vs ENHANCEMENT
For me, this seems more like Creation vs Enhancement. Innovation, I believe can apply to either case. Creating something new or enhancing an existing product so that it meets a totally new need are both innovations. Focus grouping & customer testing is, I believe most applicable when there are enhancements or improvements  to something that already exists. The first iPhone, even though built on existing concepts, was, for all practical purposes, a radical new creation. It totally redefined the mobile phone from what we had known it to be at that time. I don't believe focus groups at that point would have been helpful. The users perception and expectation would have been based on what they already knew. Their whole expectation would have been baselined on what they knew. 
Enhancements, on the other hand, I believe can be customer tested. You already have a product which people are used to and hence upgrades or modifications are something they can relate to and can give an opinion about its merits. Redesigns, added features, extra services, etc. are all things which can be very innovative and a great value add for a product or service. Cup holders in cars when initially introduced by GM were optional.  But they became so popular that GM very soon made it standard. Now, that is an add-on, an enhancement. 
Personally, while introducing a new product or service, I always start small and that methodology has always worked for me. I introduce the product/service based on my years of experience, confidence in the product & a gut belief that in this big wide world, there must be at-least a few more people who think like me and could possibly give this product a try. That has been my mantra. What I try to do is to minimize the loss potential, market it well and be ready to admit defeat if that was the case. The commonality of my experiments is that I always try to understand the result. Pass or Fail, I always try to understand why that happened. What clicked or did not. That is where the customer feedback comes in and that is where my experience comes from. 
So, yes, customer feedback and input are important but mostly in instances where the prospective customer can relate to the product or service. When a totally new concept or invention is happening, that may not be the case. End users, after all, don't always know what they want.
Well, those were my thoughts and experiences.....What do you think?