What is it: The business health diagnosis is one way of analyzing the degree of maturity of the business management in question.
Why do: Over the years, it has been easy to observe a lot of entrepreneurs who have been frustrated with their low profits, lack of company growth, or the stress of endless demands.
Many struggle with all these three factors. Although each company is different, there are common denominators. The tricky part is the lack of having a focus on just one of these areas that can result in mediocre performance, a stressful existence or a fatal failure. That's one reason why the rate of small businesses that fail is so high.
How to diagnose what is wrong with your business?
Here are the 4 steps that should be considered in a business diagnostic worksheet:
Do you have a strategy for reaching your best potential customers with your sales and marketing efforts? A blunt approach is very expensive and inefficient for any company, especially the smaller ones. What percentage of people approach you to buy your product or service?
Advertising and Public Relations
There are many options for where to place an ad and how to run a public relations campaign. The problem with small businesses is that their marketing activities are driven primarily by salespeople who draw attention to them.
Ineffective advertising or public relations can not only be a tremendous waste of money, but a tremendous waste of opportunity. If you're doing things the same way you did 10 years ago then you're getting less results.
You need to surpass people's expectations by coming up with your own message line. Whatever it is, it should say something about your company that means something to potential customers.
Do not think of anything more important than hiring the right people. Great hiring is a skill, which is often not the strong point of the typical entrepreneur.
Do you have a hiring process? Hiring by trial and error is a very costly and painful way to build a team. The hiring of the right people is 75% of management;
Training, standards, support, recognition, systems, key performance indicators, monitoring ... Is your company getting the job done? It is very important to know how your company's operations are going, as well as the effects of the procedures. Are customers satisfied with the end result of the work? And do the methods of operation please employees? Try to get feedback - it is the best way to improve your business operations;
3. Accounting and Finance
Many seemingly successful companies were in trouble for neglecting accounting. Accounting is not just about paying taxes. It is about information, perception and control. Great accounting will not make a business successful, but poor accounting can destroy a business.
This is probably the biggest weakness in these steps. It is not possible to say how many times the entrepreneurs put their business in the trash, or never generated the money they should have because of bad prices. They charge prices that have nothing to do with costs or value proposition.
This is just one of the reasons that the company needs to have accurate accounting so that it can determine the true cost of a product or service. Do your salespeople have price control for the jobs that they quote? If so, are they selling at a price that allows you to make a profit?
Any of these topics could fill a book - and leadership is no exception. Leadership is vision, direction, inspiration, support. It is similar to management, but not the same thing. When you have management managers, leadership is easier to manage.
When a company is smaller, the boss has to manage and lead. One moment you are writing about violating company policy, and the next you are trying to inspire your employees. Maybe management is what pushes and leadership what pulls. It is not easy to do both at the same time.
Did you see how important it is to diagnose the state of your company? The LUZ.vc created the Business Diagnostics Worksheet to assist you in this function! Get this tool already and get organized!