Having a business is one thing, but knowing whether or not it will sustain itself into the future. A good place to start is by doing a strategy audit of the business. In this blog, I provide the ‘golden 8’ elements that you should at least be looking at as part of your business strategy audit.
1. What is the business all about?
- Clearly define what it is that you want to do and why.
- What customer problem are you trying to solve?
- How will your opportunity solve this problem?
- Does the solution create a tangible and sustainable business opportunity for you?
2. How does the business work?
- Explain exactly what the product or service is and the entire process from beginning to end.
- Where and when does the customer fit in?
- Are there multiple sources of revenue and expenses?
- Where are the most resources required?
- Who exactly is going to do the work?
3. What is the size of the market?
- Who and where are your customers?
- How do you know that they would be prepared to pay for such an offering?
- How big is the size of the market?
- Is the market local, regional, provincial, national or global?
4. Is there a product-market fit?
- Is there a genuine need for what you have to offer?
- Are customers really ready of for the offering now?
- How can you attract the market with your offering?
5. What is the revenue and profit model?
- How will revenue be generated?
- Is the revenue once-off based per sale or is it annuity-based (recurring).
- How will you derive the revenue (i.e. what is the selling price and expected volumes).
- How did you determine the expected revenue and what are some of the key assumptions?
- What is the cost structure to deliver your offering?
- What are the fixed costs?
- What are the variable costs?
- What are some of the other costs that you may have left out?
- Have you factored in a fair salary for yourself?
- Have you factored in a fair profit that you can then use to grow the business?
6. What are the main features of the business model?
- What is the value proposition of the business and what sort of resources – financial, physical, intellectual and human resources do you need?
- What key activities are you going to execute to deliver the value proposition to your customers? – Which customer segments are you serving?
- What channels are you going to use to reach your customers?
7. How scalable and sustainable is the opportunity?
- Can the business grow its revenue and how quickly can this happen?
- What will happen to the business model if the business grows?
- Can the business grow or is it just a lifestyle business?
- Can the business scale and grow to employ more than just the owner?
8. How do you know that the business will work into the future?
For example: Have you done enough market research to know that there is a market for this product or service; despite competition that may exist. Do you have the knowledge, skills and expertise?
It’s important that you write all this information down. Seeing it on paper will provide more clarity and many of your answers will form part of your strategic and business plan.