Just like any other well-functioning machine, your business needs a checkup every once in a while, in order to make sure everything is running smoothly and that it’s heading for growth.
Though many business owners know that they have to get their business evaluated for the sake of its own health, they just don’t have the time to do so while handling the day-to-day tasks.
There are also those who aren’t aware that this is something they should do, due to the lack of documentation concerning business evaluations. That being said, it is absolutely necessary for you to take a look at your business from a different perspective, periodically.
Check out the six reasons below for why your business absolutely needs to be evaluated.
1. Stop the Trickle (of problems) Before It Becomes a Flood
If you’re not aware of an issue, there’s no way you can solve it. This premise applies to your business; if there are issues or problems going on but you haven’t identified them, you’re not going to be able to stop the behavior that will lead to your business failing.
While this may sound like an exaggeration, the truth is that most businesses that go under don’t realize they have problems until it’s too late. In fact, over 60% of businesses are running fine and actually making a profit before they go into receivership or bankruptcy.
The most interesting part about this is that most of these businesses went under because small mistakes were being made consistently, not due to one large event that caused the business to fail.
So do yourself a favor and head off this flood of issues by cutting it off at the source. Complete an evaluation and you’ll be able to identify any issues, problems, and mistakes being made. It’s far better to discover a trickle of problems before they become a flood that causes your business to fail.
2. You Can’t Proof Your Own Work
As much as we don’t like to believe it’s true, we have a hard time seeing our own mistakes. When it comes to an industry that you’ve been in for a long time, your expertise makes this especially true. So if there are any issues going on in your business, it’s probably really difficult for you to see them.
That’s why so many business owners decide to work with business advisors and coaches. They’ll be able to look at your business from an objective angle and spot issues you probably missed.
3. Educate Yourself About the Key Areas of Your Business
A thorough examination will allow you to move your business in the right direction, as well as reduce risk. The list below details the key areas you should examine.
- Business Strategy Plan
- Cost Reduction
- Compliance and Risk
- Process Improvement
- Competitor Analysis
- New Product / Service Development
- Marketing Strategy
- Digital Marketing
- Email Marketing
- Social Media
- Lead Generation
- Business Development / Sales Strategy
- Customer Relationship Management (CRM)
- Customer Service Policies
- Measure and Analysis
- Training and Development
- Employee Incentives and KPI’s
- Workplace Culture
Leadership & Wellbeing
- Time Management
- Leadership and Direction
Accounting & Finance
- Tax Compliance
- Payroll Administration
- Financial and Cash Flow Forecasting
- Financial Goals
- Budget Management
- Financial Policies and Procedures
- Financial Performance
- Operation Management
- Cloud and Infrastructure
- Cyber Security
4. Put Your Money (and resources) Where it Matters
The majority of businesses don’t have unlimited resources, so when it comes to achieving business goals it’s important to use your limited resources wisely.
Not sure where the best places are to put your time and resources? Luckily private equity and venture capital firms have come up with a neat trick that can help you identify them. When working with a company, these firms will identify that industry’s 3-5 must wins. These must-wins are the specific areas and tasks that create the biggest impact. The tasks that directly lead to business growth.
If you follow their lead, this will allow you to focus your time and money solely on the tasks that really matter, creating the greatest possible return. You’ll also stop wasting resources on areas that aren’t doing much of anything for your business.
5. An Evaluation Allows You to Strategically Plan for the Future
When you have limited resources it’s essential that you create a business plan that allows you and your team to focus only on the tasks that will drive your business forward.
As discussed above, it can be difficult to know where to put your focus if you haven’t identified key areas. But once you have evaluated your business, you can start to plan how to best actualize your goals. An evaluation will help you to plan your next steps over 3, 6, and 12 month periods.
A strategic business plan lets your team know just what to focus on to build profitability and sustainability.
One business plan that consistently sees results allows business owners to break tasks up into:
- 100-day Plan
- 6-month Target
- 12-month Target
- 18-month Target
It’s also a good idea to supplement this plan by adjusting your KPIs and adding monthly reporting.
6. Put Your Best Foot Forward
Working towards growth is a huge undertaking and you’ll always want to put your best foot forward, to give yourself the best chance of success. The same is true for your team, and your business advisor.
If you provide them with the most information possible, in the shortest amount of time, this ensures they’ll immediately be able to make informed decisions.
A high learning curve allows your business advisor to start working on your business plan from the get-go, instead of wasting time learning about the ins and outs of your business that may have no effect on business growth.
Any missing information that they consider vital could set them, and your business, back significantly. To avoid this, your best option is to have a full evaluation done before you begin working with an advisor.
That way they don’t go in blind, and can start thinking about how to scale your products and 2x or 3x profits within the next year.
It just makes more sense to have your business advisor immediately begin working on the areas that will propel your business forward, and the best way to accomplish this is by evaluating your business.
Whether new or established, large or small, every business can benefit from an evaluation. An evaluation can help you identify opportunities for growth, as well as potential issues.
If you’re aware of these opportunities, you’ll be able to make more informed decisions and avoid mistakes. You’ll also be able to put your resources and use your business tools where they’ll make the greatest impact.
A business evaluation will help you to view your business from the outside, so you’ll be able to scrutinize key areas all from one detailed document.