THE BUSINESS REVIEW - Do It for Yourself!
Business Sense | Issue #2 | November 25, 2005
A good business strategy includes a business review
I have spent many years analyzing, preparing and helping in the implementation of business plans. In most cases, these plans have come about as a means to access investor (equity) or lender financing. Business plans are seldom written as part of a personal assessment as to the feasibility of a project, or for an internal review of an existing business' status. These business-writing exercises can be best described as business reviews.
While there can be many purposes for a business review, the most common would be for start-up decision making (feasibility review), business purchases and as status reports for existing operations. In each case, the operative goal should be to complete a frank examination of the situation. This situational focus can be difficult to maintain, with the tendency to sell the deal or business status, often overriding good judgement. Critical thinking and the discipline to "Do It For Yourself" are the keys to a satisfying result.
For the most part, start-up and business purchase situations can be considered to have similar business review terms of reference. The outcome should provide you with an information profile that contributes to the "go-no-go" question in a meaningful manner. However, you shouldn't consider such a review as the ultimate answer to the decision making process. It's much better to conclude such an exercise with pro and con summaries. Perhaps the most important factor is to be truthful to yourself. If you have the entrepreneurial bug, another deal consideration will find its way into your life. But, a bad start-up or purchase decision can affect your life for many years. The decision to pass on a business venture may be one of the best decisions you will ever make!
It takes a forward thinking owner-manager to complete a business review for no reason beyond wanting to take a critical look at their business. The difficulties in putting aside personal involvement, habit and operational prejudices cannot be overstated. This is especially true when things are going well, revenue is growing or being maintained, profits are good and the owner's salary is meeting expectations. Only the best managers recognize that a stand back assessment can spur positive change, moderate improvement, or perhaps provide the comforting affirmation most things are on track for success.
The emphasis in this discussion is on the "Do It For Yourself" aspects of a business review. Although this should be the most important motivation for the process, many people don't feel comfortable in their abilities to undertake such a project. There is also the consideration that a truly objective review must be done by an outside source. This is a reasonable thought and there are many consulting professionals who can provide such services. Shop for these services carefully and be sure the terms of reference are clear to all parties. Business reviews shouldn't be overly structured and narrow in their scope. They can have a brainstorming tone and should be adapted to fit the business situation. However, they all need to have the following elements:
The decision to undertake a business review can be an important part of your overall business strategy. They are largely done for internal decision-making purposes and can lead to expansion, restructure, or pulling away from a deal that can't work. In the final analysis, you will be the benefactor!
John Ablett is a Business Finance Specialist and licensed Mortgage Agent at Westcor Mortgage. 403) 270 - 1574.