How can you prove the value in doing a business assessment?
If done properly, a business assessment provides the business owner with significant value and benefit because it helps him/her to focus on what is important. Here is a real life example of how an objective look at the strategy and operations of a business helped distill, focus and change a company’s actions that resulted in increasing revenues and growth.
The company, a SaaS (software as a service) operation, initially provided subscriptions to an application that served a very specific industry. The application was well-received in the industry and the company experienced steady growth. Revenues from new sales and renewals of annual subscriptions were rising when the economy turned and the target industry fell into a serious slump.
Revenues fell when a small percentage of clients cancelled their subscriptions. The majority of subscribers, however, continued to use the application. Realizing the slump could last for a long time, the company took action to modify the application for use in a completely different, but promising, industry while maintaining support for their original client base.
Revenues slowly began to increase and the company was back on the upside of the growth curve with two versions of the original application being used in different markets. The CEO was convinced he could accelerate revenue growth by adding a sales person to concentrate on selling subscriptions to prospects in the new market.
The Business Assessment
To verify his plan, the CEO decided to have an objective set of eyes come in and evaluate his current business and his growth plans. A business assessment was completed that included an in-depth SWOT (Strengths, Weaknesses, Opportunities, & Threats) analysis. The results were not what the CEO had expected.
The applications being used in both industries were stable and well supported. The company had not actively sold to the original industry in several years, but the original client base was extremely loyal. They continued to subscribe and use the application despite the downturn in their industry. Renewal rates were 95%.
New customer sales within the second industry were slowly increasing, but renewal rates were beginning to fall. The sales cycle to land a new client had reached a whopping six to nine months and, more often than not, required the CEO’s participation. Renewal rates had fallen to 55% from an initial 82%. While helpful, the application was not establishing itself as a critical tool within this industry.
The “Aha” Moment
When presented with the sales and renewal rate statistics, the CEO was astonished. Additionally, the downturn in the original industry had run its course and the industry was beginning to grow once again. All indications showed this original industry was going to bounce back quickly and the first version of the application was considered a key tool by the client base.
The “Aha” was that the CEO had been so focused on the second industry, he had taken his eye off what was happening in the original industry. He hadn’t realized how much of his revenues were continuing to come from that first industry and how entrenched his application had become with his clients. His satisfied client base was eager and willing to provide testimonials to help his sales efforts. The new sales person was needed for the original industry – not the second industry as he had planned.
Real Life Example of a Business Assessment
Listen to Ann describe this real life example on this audio clip from the Financial Spotlight radio show.
Think about your business – really think about it. Take our Quick Look Business Assessment to help crystallize your thoughts. What value can be wrought from your taking a step back and getting an objective opinion on where your business is headed?