Questions for an Objective Business Assessment

Contents:

• Control over our revenue: an accident or deliberate actions?
• Sales plans: actions in case of their failure.
  
• Increasing revenue: does this really indicate the company's development?
• Business dependence on large customers: reality or myth?
• How will life change after the crisis is over?
• Is the time for the introduction of automation, robotics and artificial intelligence has come?
• What proportion of ideas manage to achieve implementation and implementation?
• Striving for ambitious goals: risk or the need for streamlining?
• The constant connection of a business with key individuals: how dangerous is it?
• Consequences for a company in the event of temporary incapacity of the founder.

Zoya Strelkova, Head of Company Economics at ARB Pro, shared her questions.

Sometimes it seems that everything is fine with the company: it serves large clients, demonstrates revenue growth, and the team consists of highly qualified specialists. However, beneath this favorable surface, serious problems may lurk.

In this article for the Skillbox Media Business editorial team, I will present ten questions that will help identify potential problems and address them promptly.

Control over our revenue: chance or deliberate action?

Nothing comes easy, but sometimes luck plays a role. For example, our competitor ran into difficulties, and as a result, we received a large contract that we never even dared to dream of. Our revenue increased by 50% compared to last year. But will we be able to repeat this success in the coming year?

When does it become necessary to ask this question? It happens during the process of developing sales plans. When planning for the next year, it is important to use real data, but before doing so, you should exclude “extremes” – both significant successes and major failures that are unlikely to be repeated in the coming year.

If you do not ask this question, there is a chance that an inflated plan will be set for next year that will be impossible to achieve. This can lead to a decrease in motivation among the team due to failure to achieve the set goals.

Sales Plans: Actions in Case of Failure.

Almost all organizations develop a sales strategy, but only a small number of them determine in advance what actions will be taken if goals are not met. As a result, many managers perceive the fulfillment or non-fulfillment of the plan as something dependent on external circumstances, which they hope for.

The question of when to raise this topic arises annually during the strategy session, when key goals are defined, and then remains relevant monthly, when plans are adjusted. What risks might arise during the process? What can be done to increase sales volumes, besides significant discounts? Just as in football, pre-planned and rehearsed plays contribute to victory, so in business, it is important to prepare in advance.

Failure to ask this question may result in expenses being exhausted before planned sales volumes are achieved, which could result in financial losses for the company.

Increasing Revenue: Does This Really Indicate Company Growth?

In the 2024–2025 period, revenue growth will be largely driven by price increases. At first glance, the results appear positive—revenue is indeed growing. However, true growth lies in the increase in the number of customers and the volume of purchases made by each of them.

This question should be asked when analyzing results for a given period. It's important to break down revenue into its components to identify areas where the company is showing growth, as well as those experiencing stagnation. Ignoring this issue can lead to ignoring undesirable processes, such as customer churn and a decrease in the average order value when shoppers begin to purchase fewer items from the offered assortment. If you don't monitor negative changes in customer behavior, you can miss the moment when a problem arises, and you will have to deal with its consequences later. Business Dependence on Large Customers: Reality or Myth? If the share of revenue attributable to one customer exceeds 10%, this signals the company's dependence on them. This situation is a risk, since the loss of this customer can significantly affect the financial health of the business. At the same time, the client realizes their importance and can use this to their advantage.

This This question should be raised when we evaluate the results of the past period and develop future strategies. If we have managed to win over one significant client, this means that we are capable of attracting others. It is important to discuss who our target clients are and outline ways to begin cooperation with them.

If we do not address this issue, then by the time dependence on a single client reaches a dangerous level, the company will not even have a strategy for attracting new large customers.

How will life change after the crisis is over?

We expect more stable times to arrive soon. However, will we not lose some of our revenue in the process? How will demand for our products change if foreign companies that reduced or suspended their investments in 2022 return to the market? Or what will happen if citizens begin to actively choose foreign trips instead of vacations at Russian resorts? How prepared are we for such changes?

This question should be discussed at the annual strategy session. It is recommended to develop three scenarios: optimistic, pessimistic, and the most realistic.

If you do not ask this question, there is a chance that in a situation where there are no significant competitors, the company will stop improving and developing its product, which is currently successfully selling solely due to the lack of alternatives.

Is it time to implement automation, robotics, and artificial intelligence?

It is known that the costs of implementing new technologies can be significant, the implementation process takes a long time, and the results do not always come quickly. In this regard, managers are interested in such projects, but are reluctant to invest their own funds in them. Nevertheless, technology continues to develop, reliable contractors appear, and the cost of live labor increases, while the efficiency of workers does not increase.

This issue should be considered on an annual basis, when analyzing actual income and expenses, and preparing a budget. In order to decide on investments in automation, it is necessary to consider not only financial resources, but also the potential benefits that the business can receive. Such benefits may include, for example, reduced labor requirements, a reduction in human errors, and accelerated order processing.

If you ignore this issue, the organization risks not noticing when automation becomes economically feasible for it. As a result, it may continue to use manual processes, which in turn will lead to a loss of competitiveness in terms of both costs and speed of work.

What proportion of ideas are realized and implemented?

Russian businessmen are abundant in creative ideas. When a manager participates in seminars and conferences, and actively interacts with colleagues, the number of their ideas can reach dozens per month. These concepts are shared with the team. But what happens after that?

This issue should be raised at least once every three months. It is important to compile a list of all proposals and tasks that have been shared with the team, and also to request information from those responsible on the results achieved. The result is considered not only the successful implementation of an idea, but also situations in which it was analyzed and deemed inappropriate.

If you ignore this issue, an employee constantly receiving new ideas may begin to perceive them as something insignificant and not requiring mandatory implementation. In this case, only those proposals that spark interest from the employee and are consistent with their personal goals will have a chance of being implemented.

Striving for Ambitious Goals: Risk or Need for Streamlining?

In the current cooling of both the Russian and global economies, companies are facing significant difficulties in achieving growth. If an organization aims to increase its customer base by 50% or transition from equipment sales to engineering services, it becomes a real challenge for all departments.

What happens if the accounting system doesn't provide accurate profitability indicators? Or if the warehouse system isn't automated and regularly delays shipping orders to customers? Increasing the volume of activity with an ineffective infrastructure can lead to serious consequences and even a crisis.

This question should be raised annually during the strategy session. Before setting ambitious goals, it's important to conduct a thorough analysis of all departments: how effectively are they handling existing tasks, what feedback do they receive from internal users and external customers?

What happens if you don't ask this question? At one plant, designers decided to change the shape of a heat-shrink bottle cap. They produced a trial batch, and the result was quite appealing. The new design was presented to customers, and orders soon came in. However, it soon became clear that the trial batch had been hand-made, with the caps "shrinking" over the teapot. The necessary equipment for mass production was unavailable.

This awkward situation can occur in any department of an organization.

The constant connection of a business with key individuals: how dangerous is it?

In some cases, the functioning of an entire enterprise may become dependent on a single technologist with the skills to configure complex equipment. Similarly, among all the programmers, only one may be familiar with the intricacies of a custom-written information system. Such an "irreplaceable figure" becomes both a bottleneck, hindering the normal course of processes, and a source of potential risks.

This issue should be raised at the annual strategic session. Discussing succession and forming a talent pool for key positions are necessary conditions for ensuring business growth.

If this issue is not addressed, the risks associated with dependence on certain key employees will eventually manifest themselves, which may lead to a halt in the business.

Consequences for the company in the event of temporary incapacity of the founder.

Russian business today is just over three decades old, and in many organizations, founders still play a key role in management. However, no one can say with certainty that they will be able to successfully lead the company for many years. Certainly, health is an important aspect, but having a clear plan for the transition of power - whether temporary or permanent - is a very advisable step.

When should this issue be raised? Every year at the strategy session, when the team openly discusses the company's development prospects.

If this issue is not addressed, the founder's age can lead the team to quietly ponder what the company's future will look like without him. Such employee thoughts can lead to a negative attitude toward their work.

You might also be interested in the materials from the "Business" editorial team from Skillbox Media.

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  Fictitious bankruptcy is a serious problem that requires a comprehensive approach to solve. To effectively combat this practice, you can use several strategies.

  First, it is important to tighten the legislation regarding bankruptcy proceedings. It is necessary to introduce more stringent requirements for documents and information provided by debtors. This will reduce the number of cases of abuse of the right to bankruptcy.

  Second, it is necessary to strengthen control by government agencies. Establishing specialized structures to monitor and analyze bankruptcy cases will help identify suspicious schemes and prevent fraudulent activity.

  Also important is raising entrepreneurs' awareness of the consequences of fraudulent bankruptcy. Conducting educational programs and seminars can help businesspeople understand the risks they face when resorting to such methods.

  Furthermore, cooperation should be developed between various agencies, such as the tax service, law enforcement agencies, and the courts. Information sharing between them will help more effectively identify and prevent fraudulent bankruptcy cases.

  Finally, initiatives to protect creditor rights must be supported. This may include creating mechanisms to protect the interests of those who have lost their funds as a result of fraudulent actions by debtors.

  All this will create a safer and more transparent environment for doing business, reducing the number of cases of fictitious bankruptcy and ensuring the protection of the rights of all market participants.

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