Do you ever wonder if your business is really healthy? You look at the financial performance, employee morale, new contracts coming in and they seem alright, but what if you are missing something really important?
Here’s a speedy company assessment to ensure you are on the right track. Whether you are a start-up or a mature company, losing clarity in these critical areas in your company will guarantee coming up short. Use the checklist below as an assessment tool for long-term business success.
The 5 M’s of a thriving business can be simplified as:
- Market Research– Have you thoroughly researched the market to determine if there is a demand for your product or service? Do a detailed and exhaustive investigation to fully convince yourself (or investors) the market is ready for what you have. Are there any regulatory issues that could prevent the business from succeeding?
- Reality Check- Do you have just an idea, solution or invention? These may or may not be the basis for a company. This is usually where things start, but building a BUSINESS is much more than a good idea.
- Market Size-Is there ENOUGH of a market to develop a business to support you (at a minimum) and potential staff you will need to hire as you grow?
- Who owns the high-ground? Is there already a company that owns the market in your niche? Is there room for another? If so, how difficult will it be to take market share away from the industry leader? (usually long and difficult).
- Unclaimed high ground? If there is unclaimed high ground (a void), can you go after it and own it outright?
- Who is your who? Is it clear who you will sell to?
- Uniqueness- Is your product or service offering unique enough to set you apart?
Mission (Why you do what you do)-
- Vision-What is the true passion of your company? Take the time to do this right (https://ericmeadeconsulting.com/essentials-for-successful-annual-strategic-planning/). Consumers are smart and can smell a made up “soul” in your company. Don’t speed through this step.
- Strategy-Have a clear strategy-know this before you define tag lines, logos and marketing campaigns.
- Authenticity-Build a brand that is genuine. Most brands do not gain traction quickly. Often times it is 4-5 years before the market embraces brands. Do you have the emotional, financial and physical endurance to endure the time necessary to truly build your brand and company?
- Messaging-Can clients/customers identify with your company and your beliefs?
- Target Market-How will you get in front of your target market? Social media, trade shows, demo’s, networking, referral organizations, industry connections, endorsements, advertising… Have a plan.
- Scaling-What is your plan for growth? Do you want to grow?
Model (how you do it)-
- Sales channels-What channels are you selling your products and services through?
- Structure-Is your model direct to consumer, or through wholesale resellers, or both? Different models have unique long-term outcomes and potential earnings.
- Supply Chain- If you are manufacturing something or providing a service, what is your model? Making it yourself? Outsourced? Inventory is a huge cash drain and can ruin a company if not properly managed.
- Source of cash- Are you using your own cash, or do you have outside investment?
- Margins-Based on your model, do you have sufficient margins for healthy earnings
- rules of thumb: manufacturing should be around 40% gross margins minimum, 30% for expenses and indirect wages, 10% left for profit. Service businesses should have around 50% GM minimum, 35-40% expenses and indirect wages, 10-15% profits.
- Measurement-Are you capturing financial data now in monthly profit & loss and balance sheet formats to ensure you have solid data?
- Forecasting-How are you forecasting future sales, earnings, expenses…? Forecasting growth and costs associated with scaling up has to be realistic while maintaining profits, or being able to pay off investors.
- Cashflow-cash is king, a strong profit and loss statement does not necessarily ensure a strong cash position. Can you predict your cash position in the future to know if and when you need more cash?
- Leadership-Are you a leader, or just a boss? Leaders have to keep learning in order to be effective and not get in the way of progress. Are you honest about your personal limitations and where you can use help? Be humble, be smart. The company is not YOU.
- Hiring-How do you attract and hire the best people? What skill sets, attitudes and attributes do you look for?
- Right people, right seat? Do you have the right people involved and working in the right position?
- Extended professional team- CPA, lawyer, insurance and banker?
- Outside perspective-Do you have an outside advisor/mentor to help you focus and keep an unbiased perspective on the business?
- KPI’s-Do you have shared key performance indictors with clear expectations of company and staff? This builds accountability.
Eric Meade is the Owner of Eric Meade-Purposeful Consulting, www.ericmeadeconsulting.com. He was the former owner/CEO of Entre Prises USA, a leading climbing wall manufacturer. He is also a co-founder and mentor in the outdoor product accelerator, Bend Outdoor Worx. Eric specializes in strategic planning / financial controls / leadership development for small to medium sized businesses. firstname.lastname@example.org, 541-948-0578.