We have spoken over the last few posts about where your Business Fits in regarding ‘Growth, Improvement or Rescue’ and we said that very few Business Owners are actually getting a Salary from their Business and of those few 35% are living off the Equity growth in their Home. This implies the Business is losing money = Imminent Failure.
In saying that, many businesses have a reasonable turnover, but, most of the money that comes in the front door gets spent out the back door. Every business owner has the opportunity to put more of this money into their back pocket. But to do this, they need to know where the immediate opportunities for increasing income are and the dollar value of what they are worth.
A Business Diagnostic Tool identifies where these opportunities for additional income may be found. The Business Diagnostic tool focuses on the Strategic and Operational Elements of a Business and identifies Profit Leakage in all of these areas.
Now some Business Owners may be asking ‘What is a Strategic Element?’ Some may have heard about but don’t quite know where it fits in or what it exactly entails. Never Fear!
Strategic Elements, of which we briefly discussed 3 in the previous Blog, namely:
a. Personal Vision
b. Business Vision
The Strategic Elements, namely Structure and Culture are probably the two MOST Important Elements for me in the Strategic Elements. We will discuss these in more detail in another BLOG.
The Strategic Elements are where the owner works ON their business starting with a clear path for growth towards their vision.
The strategy needs developing to take the business towards its vision. Getting the rest of the business on-board is achieved by getting the structure and culture aligned to this new direction.
This planning process will change the way the day-to-day activities are approached and improved.
Without time spent on the Strategic Elements, businesses tend to get bogged down in the day-to-day running and not achieve their growth potential.
Not only is the owner unclear on how the business will grow, there is usually no plan that spells out to the staff where the business is going and the role they will play in getting it there.
In this scenario, the owner finds themselves fighting fires rather than pro-actively growing the business and these are all possibly leading to Business Owners incurring Profit Leakage.
The Operational Elements or Day-to-Day elements form the daily running of the Business, namely:
a. Product or Service
b. Marketing & Sales,
c. Systems & Processes,
These seem like a lot of areas that a Business Owner needs to know about and YES a Business Owner must KNOW what is happening in these Elements but by growing the Business the Owner does NOT have to DO all the work.
This is the day-to-day running of the business that takes up most, if not all, of the owner’s time. The Operational Elements are where the Business Diagnostic Tool will find strategies to increase the income the owner is taking out of the business.
This can be quite substantial if the business has been operating for a long period of time.
The Business Diagnostic Tool will identify where the short-falls in all these areas are and what Financial Impact they have on the Business Owners Income. It looks at 11 key drivers that determine the “Income Potential” that your business should be able to provide you with.
So it may be valuable to have undertake such a Business Diagnostic to determine where you may be losing income.