Understanding Your Business: A Feasibility Analysis
Every business is unique. There is no single set of rules that apply to all. The challenge to survive and grow that business is a function of its market, its customer base, its competitors and its resources. Only by understanding where opportunities may lie for supporting, growing and expanding opportunities will the business be able to meet and overcome the enormous challenges that exist today.
(While understanding the competition is of extreme importance, it is beyond the purview of this article.)
Understanding the overall picture is vital. You need to understand your consumer and his relation to your product or service. What is the ‘value proposition’ that your product or service offers your customer?
Regardless of the type of product or service you offer, a major determinant of the success of your business will be the price you set. Price must cover the costs of production including overhead. To lower prices, you must lower your costs, so you must know the real costs of running your business.
The first step is to gain a thorough understanding of the internal workings of your business--you need to understand your critical business processes—all of the activities that are essential to providing quality products and services.
Work to understand your culture, processes, and technology. Start by analyzing your business using a process map to identify your bottlenecks and delays. Identify the activity owner of each business function. This is generally a manager or supervisor with overall responsibility for a particular business unit.
Rank the importance of each process as it impacts the performance of the business. The aim is to identify where the flow slows within your business. By documenting and analyzing every interface between departments you will ensure that all business problems are addressed and reduce the risk of eliminating the benefits of existing processes.
Determine how effective the accounting procedures are in monitoring all your financial activities. Out of date or poorly prepared records can actually hinder the growth of your business. Evaluate how computers and software can improve efficiency.
Understanding your business inside and out will give you much better operational control. It will enable you to determine what processes and procedures need to be eliminated or added to ensure your survival and prosperity.
Understanding your business, and understanding what the risks are and what changes you have to make will be the key to whether the business succeeds or fails.
About the Author
Richard Frederick, PMP, MCP, MSF Practitioner, is a Business Analysis subject matter expert.
Richard Frederick recommends business analysis training.