[this article is from: http://www.infoentrepreneurs.org/en/guides/review-your-business-performance/ ]
Once your business is established and running well, you may be inclined to let things continue to run as they are.
However, it’s actually time to plan again. After the crucial early
stages, you should regularly review your progress, identify how you can
make the most of the market position you’ve established and decide where
to take your business next. You will need to revisit and update your
business plan with your new strategy in mind and make sure you introduce
the developments you’ve noted.
This guide takes you through this essential process, detailing the
stages you should go through to assess how well your business is
performing, highlighting your strengths and areas that could be improved
and suggesting the actions you need to take to implement the
improvements that you’ve identified.
It’s easy to focus only on the day-to-day running of your business,
especially in the early stages. But once you’re up and running, it can
pay dividends to think about longer-term and more strategic planning.
This is especially true as you take on more staff, create departments
within the business, appoint managers or directors and become distanced
from the everyday running of the business.
Reviewing your progress will be particularly useful if you feel:
It is also useful if you have decided that your company is ready to move on to another level.
Setting the direction
A clear business strategy will help to answer any concerns and show practical ways forward.
Questions you might want to ask include:
It’s doubtful whether you will be able to answer these questions on
your own - involving your professional advisers, your fellow directors
and your senior staff will all help to make your review more effective.
A good starting point for your review is to evaluate what you
actually do - your core activities, the products that you make, or
services that you provide. Ask yourself what makes them successful, how
they could be improved and whether you could launch new or complementary
products or services.
Key questions about your products or services
It’s useful to address these questions:
Answering these questions will give you the basis on which to improve performance and profitability.
Many new businesses work in a short-term, reactive way. This offers
flexibility - but can cost time and money as you move from getting the
business going to concentrating on growing and developing it.
The best option is to balance your ability to respond rapidly with a
clear overall strategy. This will help you decide whether the actions
you take are appropriate or not.
At this stage you should ask yourself if there are any internal
factors holding the business back, and if so, what can you do about
them?
Consider the various aspects of your business in turn.
Premises
Facilities
Information technology
People and skills
Professional skills
Businesses often fail because of poor financial management or a lack
of planning. Often the business plan that was used to help raise finance
is put on a shelf to gather dust.
When it comes to your business’ success, therefore, developing and
implementing sound financial and management systems (or paying someone
to do it for you) is vital.
Updating your original business plan is a good place to start.
When reviewing your finances, you might want to consider the following:
Now that you have been running your business for a while, you will
probably have a clearer idea of your competitors. Gathering more
information may cost time, money and effort, but there are many benefits
to knowing more about what your competition is doing.
What you need to know
The type of competitor information that will be really useful to you
depends on the type of business you are and the market you’re operating
in. Questions to ask about your competitors include:
You will probably find it useful to do a SWOT (strengths, weaknesses,
opportunities, threats) analysis. This will show you how you are doing
in relation to the market in general and specifically your closest
competitors. See the page in this guide on models for your strategic
analysis.
How to find out more
There are three main ways to find out more about your competitors:
When you started your business, you probably devised a marketing plan
as part of your overall business plan. This would have defined the
market in which you intended to sell and targeted the nature and
geographical distribution of your customers.
From that strategy you would have been able to produce a marketing
plan to help you meet your objectives. When you’re reviewing your
business’ performance, you’ll need to assess your customer base and
market positioning as a key part of the process. You should update your
marketing plan at least as often as your business plan.
Revisiting your markets
A business review offers you the opportunity to stand back from the
activity outlined in your plan and look again at factors such as:
Asking your customers for feedback on your business’ performance
will help to identify where improvements can be made to your products or
services, your staffing levels or your business procedures.
At the same time, it is important to remember that while reviews of
this kind can be very effective - they can give your business the
flexibility it needs to beat off stiff competition at short notice - it
is important to think through the implications of any changes. In the
new phase of your business you’ll need to plan your finances and
resourcing carefully at all times.
To remain successful it’s vital that you regularly set time aside to ask the following key strategic questions:
Often businesses are able to work out where they want to go but don’t
draw up a roadmap of how to get there. If this happens, a business will
lack the direction needed to turn even carefully laid plans into
reality.
At the end of any review process, therefore, it’s vital that work plans are prepared to put the new ideas into place and that a timetable
is set. Regularly reviewing how the new plan is working and allowing
for any teething problems or necessary adjustments is important too.
Today’s business environment is exceptionally dynamic and it is likely
that you will need regular reviews, updates and revisions to your
business plan in order to maintain business success.
Continuous improvement
In addition, a simple planning cycle can greatly
enhance your ability to make changes in your business routine if
necessary. Good planning helps you anticipate problems and adapt to
change more easily.
Expert input
You may find at this stage in your business’ development that you
need external skills to help you with the changes you have to make. In
this case you might consider:
There are a number of useful business-analysis models that may help you think more strategically about your business.
The SWOT analysis (strengths, weaknesses,
opportunities, threats) is one of the most popular. This involves
looking at the strengths and weaknesses of your business’ capabilities,
and any opportunities and threats to your business. Once you’ve
identified all of these, you can assess how to capitalise on your
strengths, minimise the effects of your weaknesses, make the most of any
opportunities and reduce the impact of any threats.
Opportunities and threats in the external environment
It’s important to remember that opportunities can also be threats -
for example, new markets could be dominated by competitors, undermining
your position. Equally, threats can also be opportunities -for example, a
competitor growing quickly and opening a new market for your product or
service could mean that your market expands too.
A SWOT analysis can provide a clear basis for examining your business
performance and prospects. It can be used as part of a regular review
process or in preparation for raising finance or bringing in consultants
for a review.
Once you have collected information on your organisation’s internal
strengths and weaknesses, and external opportunities and threats, enter
this data into a simple table.
| Positive | Negative | |
|---|---|---|
| Internal | Strengths | Weaknesses |
| External | Opportunities | Threats |
Other tools include:
STEEPLE analysis - a technique for understanding the
various external influences on a business – Social, Technological,
Economic, Environmental, Political, Legal and Ethical.
Scenario planning - a technique that builds various plausible views of possible futures for a business.
Critical success factor analysis - a technique to identify the areas in which a business must succeed in order to achieve its objectives.
The Five Forces - the theory that there are five
defined factors that influence the development of markets and businesses
- potential entrants, existing competitors, buyers, suppliers and
alternative products/services. Using this model you build a strategy to
keep ahead of these influences.
As owner-manager of your business or as a member of its management
team, you should stand back once in a while and review your business’
performance.
The areas you need to look at are:
Next steps
The five steps above will give you a clear indication of any issues
that you need to address quickly in order to maintain your business in
its early stages.
If you feel all of the areas above are strong, you can start to plan
for the next phase and build a cohesive strategy to develop your
business. However, if there are areas that need attention, deal with
them now so that you can move forward. There are a variety of growth
options for every business - it’s important that you settle on the right
one for you.
Also, once you’ve isolated your best route for developing your
business, you can boost your chances of success by planning it carefully
and monitoring your progress against an updated business plan.
Original document, Review your business performance, © Crown copyright 2009
Source: Business Link UK (now GOV.UK/Business)
Adapted for Québec by Info entrepreneurs