Business DNA Can Help Diagnose Problems and Solutions

Written by admin on Sunday, January 4th, 2009

Most entrepreneurs fail because they can’t see the forest for the trees. and unfortunately, advisers, confidants, friends and associates only add to the foliage.

Obviously, it’s imperative for a business owner/entrepreneur to keep a close eye on the day-to-day operations of their company. But it’s that closeness that keeps them from accurately recognizing the weaknesses of their business and how to prepare a strategy that will help their business to succeed.

They’ve lost perspective on the things that are putting their company at risk by not being able to understand the mistakes they’re making. This ultimately leads to confusion and frustration that can cause an entrepreneur to dig a deeper hole for themselves.

The hole gets deeper when entrepreneurs hire consultants to help them identify their problems. What typically results are rah-rah sessions where the consultant tells the entrepreneur only what he or she wants to hear. The root of the problem is never discovered, and solutions are never brought forward. Instead, they are given pat answerers that may provide short - term relief and gratification, but will just set them up for failure later.

Fortunately, there is a better way for entrepreneurs to diagnose the weaknesses of their business and more readily identify potential solutions. By putting their company through a Business DNA (Diagnostic Needs Assessment), entrepreneurs will have the ability to pinpoint the key issues that pose a threat to a company’s financial stability and the ones that may open the door to great profits.

The Business DNA

1) Step One, puzzle pieces - Since problems and solutions my lie in different parts of a company’s operations, it’s imperative for an entrepreneur to identify the different pieces of the puzzle. Without breaking up the different segments of their operation, and looking at them on a case-by-case basis, they won’t be able to identify specific problems.Some of the most common puzzle pieces include:

Marketing
Sales
Cash Flow
Production
Management
Product development
Leadership/vision
Company culture
Employee relations
Competition

Granted, different companies have their own unique sets of pieces, but unless an entrepreneur understands what those pieces are, they won’t be able to properly separate their challenges, Rather they’ll lump things together and won’t have a clear focus.

2) Step two, rating system - Once the puzzle pieces have been identified ,the entrepreneur needs to be able to rate each aspect of their company. This requires an honest assessment of the different pieces.
Using marketing as an example, and entrepreneur should rate the current marketing plan, hot it’s being implemented, how it ’s being monitored, how it’s being integrated and how it compares to the competitions’.
The rating system can take on any number of characteristics, with the easiest typically being a grading scale of one to five, with one being very poor and five being excellent. Once the totals are added up, and entrepreneur will get a sense for where their weaknesses and strengths exist and what parts of the company need their attention.

3) Step three, preparing goals - Once the rating system is complete, and entrepreneur can begin to decide where to dedicate resources,. They ca identify the things that need to be corrected immediately and what can wait, for the company to succeed. These decisions will help an entrepreneur decide on realistic and specific goals that will make an impact on their company’s success, as opposed to creating random goals of their own. For example, rather than saying: “I Want my business to earn $1 million this year.” the entrepreneur can set a goal of “generating more press than my competition during the next six months.” The second goals is more specific to a cause and the end could help the company make the million dollars it’s after.

4) Step four, by the numbers - For a Business DNA to work, entrepreneurs have to be honest with themselves and their company. The assessments can’t be based on personal feelings or aspirations, but must be grounded in the Financial facts of the company.So while the Business DNA is being prepared, it’s a good idea to involve the company’s CFO or recruit the help of an outside CPA. That way the entire process is done according to the numbers.
Once these steps have been completed, an entrepreneur will have a much clearer picture of their company’s strengths and weaknesses. Its with this vision they’ll be able to develop realistic goals that, once achieved, will bring the success they’re working for.

Nigel Clayton is president and founder of Clayton and Associates, a Denver-based business consulting firm. For more information on this subject go to http://www.claytonandassoc.com

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