Business analysis uncovers small details for development through innovation to make substantial operational improvements. Improvements made in finances, marketing, research, relationship building, and resource management happen by adapting common strategies to unique situations. These strategies provide a blueprint which businesses use to construct a long-term solution. Innovation is a key factor in constructing a working, long-term solution, and business analysis collects all the information usable to the process.
Why Business Analysis
Business analysis is necessary for every business. Small or large, growing or stable, the processes involved for analyzing businesses bring to light many current problems or potential ones. Business analysis finds these problems and finds their causes. By understanding the cause that is hindering productivity, unique solutions stop the problem and prevent its recurrence. Business analysis is a benchmarking and diagnostic process. It calculates performance of a business and determines where the business needs improvement.
Innovation and Business Analysis
The process collects a large amount of information. Analysis allows business insight into changes that could be adapted for unexpected and novel use. One possible innovation is to market an existing product for another use. An example of this is Play-Doh. Daven Hiskey of Today I Found Out writes that Play-Doh was “originally used as a wallpaper cleaner” and “twice saved a failing company.” Innovations like this can happen because of the information collected about the correlation between problem and cause. Innovation can happen in any business process through analysis.
Finances may show that it is better to buy larger quantity of materials with longer intervals between purchases. This might be done to manage costs better, to build relationships with suppliers, or to stimulate greater production. Innovations through business analysis improve other business processes and the total operation.
Developing an annual cycle creates a history that businesses can use for analyzing:
- when to hold sales or clearances
- when to stock materials
- when to release new products or services
- when to expand to new markets.
Many industries and businesses operate through cycles and seasons:
Some businesses create their own cycles. Intel releases a new CPU technology approximately every 18 months. Apple releases updated versions of phones, tablets, and computers every year. Manufacturers and retailers have seen that these constructed cycles are well appreciated by their customers.
Analyzing the business operation each year provides a record of when products and services were in highest demand. This information permits businesses to adjust their spending and production when out of season and in season.
Business analysis is an important process for understanding problems, their causes, and solutions that work for the situation. The information collected during this process allows for innovative development of solutions into strategies that encourage long-term growth and prevent recurrence of similar problems. Analyzing businesses annually develops histories and information that give insight for constructing strategies advantageous to cycles in industry and customer behavior.
Remember, running a business successfully does not need to be complicated. Keep it simple!
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Manny Skevofilax is a consultant and speaker that assists his clients with successfully navigating the challenges of growing their businesses profitably. Since 2003, Manny helps businesses to enhance their financial results by using his experience in strategic planning, financial statement analysis, operations, and team-building. His consulting firm, PORTAL CFO Consulting, Inc., has attracted clients from diverse industries in the United States and abroad.
Manny can be reached at 410-808-3441 or via email at firstname.lastname@example.org.