Financial Analysis: Your Health History
A business checkup
FINANCIAL ANALYSIS: YOUR HEALTH HISTORY
1. Do you have an annual budget showing budgeted sales and expenses for each month to help you guide and control your operations?
2. Do you have monthly profit and loss statements by the 15th day of the following month to quickly compare actual performance with expectations?
3. Do you share your financial statements and conclusions with your key employees so they can contribute more to your success?
4. On your statements can you clearly identify items that are overhead and those that vary directly with volume?
5. Do your financial reports tell you how profitable your various products or departments or types of customers are?
6. Do you know your return on investment?
7. Do you know how your ROI compare with your past performance and with industry standards?
8. Do you know how profitable you have been after adjusting for inflationary changes in sales price, materials/purchases costs and wages?
9. Do you know annually your specific real rate of return on your personal investments in money markets, stocks, shelters etc.?
10. Are you reinvesting cash in marketing, new products and new equipment more rapidly than in salaries, bonuses and overhead?
11. Do you have a conscious strategic budget specifying each year how much you intend to invest in projects with long term benefits?
12. Do you audit your strategic and capital expenditures to determine if the original assumptions you made proved reasonable?
MARKET ANALYSIS: YOUR VITAL SIGNS
13. Have you clearly defined your market and how big it is?
14. Have you clearly defined who your key competitors are?
15. Do you have a good sense for your market share versus that of your key competitors?
16. Are you gaining market share-that is gaining sales faster than key competitors?
17. Do you know which major customers, if any, are gained and lost each year?
18. Are the customers you are gaining more attractive long term customers than those you are losing?
19. Have you attempted to identify and rank in order of importance the benefits (quality, service, etc.) your potential customers most want from you and your competitors?
20. Is your quality position improving relative to key competitors, and do you define quality as meeting the requirements of the next process?
21. Compared to your key competitors, are you increasing your marketing budget faster than they are?
22. Are you offering new products and or services faster than your key competitors are?
23. Are your salespeople actively seeking and bringing new customers to you in addition to maintaining and expanding their older, established accounts?
24. Do you set sales targets, including business gained from new accounts?
STRATEGIC ANALYSIS: YOUR FITNESS
25. Do you know where the economies of scale or leverage are in your business-where costs come down fastest with volume?
26. Do you reward people for gathering competitive intelligence-catalogs, advertisements, credit reports etc.?
27. Is it clear whether your primary strategic purpose is to be a lower cost, lower priced competitor; a differentiated higher quality, higher priced competitor; or one that focuses on fulfilling the unique needs of a specific well defined market segment?
28. Do your competitors know that you are serious about your business and intend to win, even if at considerable expense and sacrifice?
29. Does your management share common assumptions on how attractive your industry and markets are-whether they are growing , where the new segments are and how tough the competition is?
30. Have you clearly agreed upon what you hope to be the best direction for future growth-new products, new locations, acquisitions etc.?
ORGANIZATIONAL ANALYSIS: YOUR VITALITY
31. Do you have a complete posted organizational chart?
32. Do you have an employee manual?
33. Do you have regular, efficient, well managed management meetings?
34. Do you have occasional meetings for all employees to communicate progress and plans?
35. Do you have candidates for each top job, including yours?
36. Do you have a balance of people by ages-some older, some middle aged, some younger?
37. Are you willing to replace and remove people? And have you done so in the last few years?
38. Do you have a formal development plan for your key people?
CULTURAL ANALYSIS: YOUR PURPOSEFULNESS
39. Does your business have a sense of purpose-a meaningful motivating reason for being?
40. Do you have a a management philosophy that expresses the roles of employees, customers, suppliers, investors and community in your purpose?
41. Are your people genuinely willing to try things, make mistakes and even disagree with you?
42. Do your facilities look more like a busy, mature place of work than an art gallery, a sterile laboratory or a sweatshop?
43. Do you lead by example and actively promote ethics and honesty among all employees?
44. Do you provide rewards and recognition to top performers?
45. Do you occasionally have a company celebration of a major success or tough task finally done?
SELF ANALYSIS: YOUR MENTAL ATTITUDE
46. Do you set attainable goals for others?
47. Do you evaluate people more by their specific measurable results than by their style?
48. Do you trust people? Are others designated to open your mail and sign checks? Can others see the books?
49. Do you subject yourself to accountability through a board of directors or other peer group associations?
50. Do you seek excellent advisers, accountants, lawyers, bankers and those whose business is growing rapidly?
51. Do you formerly review and reopen bidding for your advisory services every three to four years?
52. Do you seek personal outside growth and stimulation via civic and trade association involvement or professional activities with other business owners?
FAMILY SUCCESSION ANALYSIS: YOUR ENDURANCE
53. Do you portray your business neutrally or positively at home-rather than showing the frustrations and problems?
54. Does you family truly believe that any vocation is valued and that participation in the business is purely voluntary and hardly the last resort?
55. Do you conduct open family meetings discussing the status and plans of the family business?
56. Have you assured a lifetime of economic security for you and your spouse?
57. Do you have an exciting and active retirement planned?
58. Have you developed a firm philosophy of how to share the business' equity, control and salaries in the future?
59. Do you have pre-established rules for family participation in the business?
60. Has your successor been identified and his/her likely succession well communicated to the company?
61. Has your successor worked for others in the business successfully?
62. Has your choice of successor been reviewed by outside opinion-board of directors etc.
63. Has your successor had successful experience being solely responsible for a sub business or major department or function in your business?
64. Is you successor so good that he or she could readily find at least a comparable job with another company?
65. Has a successor been clearly identified and developed for the family leadership role in addition to and distinct from the business leadership role?
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