The business diagnosis is a methodology of company valuation that allows an in-depth analysis of the main areas of management of a business. With a deeper understanding of the organization, it is possible to solve problems in a practical way and directed to what really matters and without spending time on little relevant items. We use a method of questions, answers and feedbacks to evaluate the 5 main areas that every business has:
Strategy
Finances
Marketing
Human Resources
Operations
Benefits of making a business diagnosis-
Understand which areas are most important to your business - not everyone realizes this, but each company has more important areas and, depending on this importance, it must create action plans and strategies based on what is most important.
Compare your current performance - There are usually two very useful comparisons here, with your minimum recommended performance and the minimum you want. The ideal is that you are always above both, but understanding each of these levels can direct what needs more attention and what can wait a little longer.
Discover the degree of maturity of your company - understand if you are on a very amateur level or if you are already mature enough to pursue new goals. This understanding can greatly help in establishing business strategies and purpose.
Understand what needs to be done and where - just knowing the overall performance of your company may not be enough, but with the business diagnosis it is possible to know exactly where the errors are and what your company is failing to do to reach a new management level.
What is analyzed in a business diagnosis?
This will depend on business to business, but in general; there are some items that need to be analyzed in any business or reality because they are part of the 5 large areas of management. I am going to separate which are the main areas and sub groups (within those areas) that we analyze in our business diagnostic worksheet:
Strategy- Such as: short-term, medium term, long term, and environmental analysis.
Finances- Such as: financial control, financial planning, contribution margin and profitability, and financial indicators.
Marketing- Such as: marketing planning, online media, offline media, and customer relations.
Human Resources- Such as: recruitment and selection, training and development, and retaining talent.
Operations- Such as: processes, quality, and logistics.
For each of them, we use a structure of some standardized questions, answers, and feedback.
How to make a diagnosis in practice?
Now that we understand the mechanics and functioning of a business diagnosis, I can list the key steps you need to take, regardless of which tool you use:
Step 1- Ask the right questions (according to the reality of your business) - this is one of the advantages of using a ready-made business diagnostic worksheet, you do not have to think about the entire structure of questions and areas. Below I show an example of questions for the HR area, sub recruitment and selection group:
Step 2- Answer the questions in the most honest way possible - the paper and spreadsheet will always accept any response you give. So, the more realistic you are, the better it will be for your analysis and for the action plans that will be created from it.
Step 3- Analyze your result - see the most important areas, making a good comparison between your current score, the recommended minimum and the desired score
Step 4- Develop strategies and action plans - to optimize those areas and sub areas that need more attention (urgency) and which are performing worse.