6 questions to ask for your 2017 business and financial analysis
No matter the stage of your business – whether a startup or established company – it’s always beneficial to do an annual business and financial assessment to see where you stand. This will give you a better idea of how you did the previous year and also help determine ways to improve and grow in the new one. The year 2017 brought a lot of changes, including a new tax plan that has the potential to effect businesses of every industry, in particular those in the construction, housing, and manufacturing sectors.
Why is a business analysis so important?
As a business owner or manager, it’s easy to get so lost in daily crises that you start to overlook the bigger picture. Performing a business and financial analysis will force you to take a step back and see where you are in terms of performance and profitability.
A business and financial analysis will answer some key questions, such as…
- How well your business is performing
- How well you are taking advantage of market opportunities
- Whether you need to update your business plan
- Whether you need to move in another direction
- Determine if you’ve been slow in responding to market changes and demands
6 questions to ask for your 2017 business analysis
Now that you know why an annual assessment is so important, let’s discuss what your analysis should include.
1. What are your core activities?
In this first step, evaluate what your business actually does, including your core activities, products and services. Were you successful in delivering these services or is there room for improvement? Do you need to look at adding or changing services to meet new customer demands?
Some questions to ask include:
- Do the goods and services you offer match customer needs?
- Which goods or services performed best last year?
- Are there any problems or issues with your goods and services? Look at price, marketing, sales, service, and systems of delivery.
- What are your costs? Do you need to explore ways of lowering costs and overhead? Is there a way to negotiate better prices with vendors and suppliers?
2. How efficient is your business?
Next you want to study your systems and operations to test efficiency. Look at any internal factors that could be keeping your business from growing.
There are several areas to investigate, including:
- The premises and facilities – Does you current location and facility still meet your needs? If not, how can you make changes such as moving to a new location or updating equipment… and how will you finance those changes?
- Information technology systems – Do your management and IT systems still meet the company’s needs? Is it time to update or expand?
- People and skills – Assess whether you have the right staff and whether you have effective training and development plans to build up their skills.
- Professional skills – Assess whether you have the right management team in place. Do they have the right skills in order to sustain growth or expand into new services or markets? Do you need to make any changes or additions?
3. What is the state of your finances?
Poor financial management and planning has led to the demise of many businesses across all sectors. Your business assessment must include a hard look at your finances, including:
- Cash flow – Balance of money going into and out of your business.
- Working capital – Analyze whether you have enough capital or if you should source additional capital.
- Costs – Review your costs for goods, materials, operations, manufacturing, etc.
- Debt and borrowing – Look at your lines of credit and loans. Is there a way to find cheaper or better forms of financing?
- Growth – Have you developed a plan for adapting to changes in the market, economy, customer base, and other needs?
4. What are your competitors doing?
Chances are you conducted a competitive analysis before you even started your business. It’s just as important to do the same thing annually in order to track changes and new trends in your industry.
You want to look at your competition and ask:
- Who are they?
- What do they offer?
- What do they charge for their goods or services?
- What is their customer profile compared to yours?
- What are their competitive advantages? Their disadvantages?
Pay special attention to what your competitors say about themselves versus what customers say about them.
5. Is it time to change your marketing plan?
You probably also developed a customer marketing plan when you started your business. The annual analysis is a great opportunity to review your current marketing plan and make adjustments accordingly.
Look at:
- Changes in your market.
- New or emerging opportunities and services.
- New customer needs and demands.
- External factors such as changes to the tax code, economic factors, and new technology.
- Changes with your competition, such as a new player in the industry.
6. Do you need to redefine your business goals?
The business landscape changes. Your competitors and customers change. Technology changes. If you can’t adapt to these changes, you will soon be out of business. Once you have conducted your annual analysis, it’s time to look at your goals and determine if you need to alter them or set new ones. Ultimately, you want to look at where your business is now, where it is going in the future, and how you’re going to get there.
Conducting a 2017 business and financial analysis is one of the most important steps you can take in order to stay competitive and continue to grow in this upcoming year. Following these 6 steps will give you a guide to accomplish your business goals in 2018.
