How to Give Your Business a Self Exam

You seek out medical professional to assess your health, why aren't you doing the same assessment for your business? By David McNutt

Every year I make the oft-annoying appointment to see my personal doctor for a checkup during which he asks all about my life. What am I eating and drinking, how am I sleeping, am I exercising, what stress am I under, how do I feel, do I have any pain? Occasionally he asks how my tennis or golf game is going, neither of which ever get good reports.

I make this effort because, in spite of my own awareness of my health, there are things he can observe and discover I simply can’t. One year my bad cholesterol was up a little and we spent a year bringing it back down. A few years ago my blood pressure was on the high side and 18 months later it was back to normal. He finds things that need attention.

There are times we need a professional assessment of how we are doing, compared to a health standard or a previous benchmark, so we can know how to improve.

Consider this: Why don’t we do this in our businesses?

Owners and owner representatives often call for a design and engineering firm to conduct a peer review for their large projects. This can be a little unnerving for the firm under review, but it protects and assures the owner the design is complete and solid. Accounting firms often engage in voluntary peer reviews by other firms to confirm the methods, processes, and rules they follow are up to current professional standards.

But why don’t we do this for our normal business practices? Let me ask, has your business ever had an assessment? Unless you are currently trying to sell your business, probably never. Even so, an assessment of value is usually superficial because it doesn’t uncover where or how the business can improve. It is only an estimate of how much might be worth to a potential buyer.

The first thing we do when we work with a client is observe and critique their business from three different perspectives: administrative/finance/strategic; sales/marketing/business development; and operations/integration/service.

During this process we discover many specifics in each of these broad areas that relate to every other area of the company. No one area is unique unto itself. In a business, they are all interconnected, or at least they should be, which is why this approach is valuable. This holistic approach provides granular insight into recommended changes that can break down silos, reduce cost/waste, increase profitability, improve the timing of the operations, and better align the business with its strategic and ownership goals.

Out of these discoveries come recommendations. But we tell our clients everything they can do by themselves with little or no guidance, to do themselves. At other times an item may not be a priority, the client may need assistance, they may not have time to do it themselves, or they may not actually know how to achieve an improvement.

Not every business is ready for such an assessment. In fact, many are not, but every business can benefit from an honest one. So here are some questions with which you can start your own self-assessment and focus on business improvements:

  • How aligned/connected are the processes between sales, project management, integration and service in order to start/complete a mature, profitable project?
  • How much time is wasted on every project that could be turned into profit? (Saving 15 minutes a day for 25 technicians billing $100.00/hour saves $32,500 per year, which directly impacts the bottom line. A company would have to generate $162,500 at 20 percent GP to make up that much.)
  • How prepared, informed and ready is the service department to receive a finished project and begin the ongoing service relationship with the client?
  • How is my cash flow affecting the growth of my business? What can I do to change this?
  • How prepared is the business to engage in new emerging business models and markets? What can I do to become more prepared?
  • How is the business helping owners reach their ownership goals? What should I change?
  • Is succession/retirement or merger/sale in the five-year future? If so, what can the business be doing now (today) to prepare for such a change?

These questions are not easy ones and they require focus, discipline and honest evaluation. But they are doable.

Bring your owners together. Bring your managers together. Carve out time to spend on one question, one topic, or one area of the business. Find a new practice in order to improve. That’s the easy part.

The hardest part is exercising the discipline to stay at it until the new best practice becomes a best habit in the business.

 

This article was originally published by our content partner Commercial Integrator