This is the second in a series of blog posts examining profitability. For a more complete look at practical steps any small business owner can take to ensure profitability, please refer to this handy step-by-step guide. In her next post, my colleague Karen Utgoff will offer thoughts on assessing market threats and opportunities. Finally we will do a joint post to offer tips on how to evaluate strengths and weaknesses in light of opportunities and threats.
My last post focused on understanding your company’s overall profitability and how each product/product line and service contributes to the overall. Now, I’ll ask you to consider your company’s relative strengths and weaknesses in context – most broadly, in relation to your ability to fulfill your mission and achieve your vision or, more narrowly, how well positioned your company is to meet your current business objectives. And, since very few if any companies operate without competition, please consider how your company compares to your competitors.
In your business, what are the factors that keep customers loyal and encourage growth? Is it the quality of your products and services? Does convenience in terms of location and/or hours of operation play a role? Are your employees particularly knowledgeable or helpful? Do you work closely with suppliers to keep costs in check and ensure product availability? What strengths give your business an advantage over the competition?
Similarly, in what areas do you feel your company is relatively weak? Do you wish that you were better capitalized? Might your systems better support your business practices? Is the competition better able to serve customers in some areas? What weaknesses hold your business back?
It can be a challenge to identify strengths, and especially weakness. Of course you will start with how you as an owner see your company. To ensure an objective view, involve others. Is your perspective different from your customers’ view? How about from the standpoint of an employee, supplier or vendor?
While it’s not easy to ask for feedback and then listen to what others have to say without comment, it’s an essential skill if you want honest opinions. Start by preparing a short list of open ended questions and try one or two out on someone who is likely to be tolerant of a stumble. If you stick with it, you’ll soon be able to get through the list with a few key members of each of the groups mentioned above. Write down the answers and look for patterns. Don’t take action until you see the trends. Make clear to those you ask that you’re the owner and ultimately making the decisions, but that you value others’ opinions.
Here are factors to consider when examining your organization’s strengths and weakness.
Do you deliver what you promise in terms of timeliness, quality, and price?
Do your actions align with your stated values?
How is your company perceived by your community and customers?
Are your facilities exceptionally convenient in terms of operating hours, accessibility, or workflow?
Are your products and services relevant to customers?
Do you have a range of offerings, price/value, adapting to different markets?
Are your customers loyal? Would they recommend your products and services to others?
Is your customer base growing/shrinking?
Are suppliers reliable, financially viable, and properly integrated to your supply chain?
Is your capitalization sufficient to meet your needs and to fuel new growth? Is your debt position sustainable? Is cash flow sufficient to meet all of your obligations and take advantage supplier discounts?
Do you have a complete team or are there gaps to fill? Are key skills or knowledge missing? Are your employees happy and engaged? If you have a board of directors/advisors, do they have the expertise needed and the ability to make connections on behalf of your company? Are they committed to your success?
Since 1991, Laurie Breitner has assisted organizations with operational improvement, organizational development and strategic planning. Learn more at http://www.breitnerandassociates.com