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Startup businesses will do well to set a time frame for when the "just testing the waters" period ends and when serious business begins. That's why doing a business assessment after the first year of operation is advisable.

Making an evaluation of the 12 months that have passed allows you to do a SWOT (strengths, weaknesses, opportunities, threats) analysis. Doing this lets you "have an early assessment of the viability of the project, and whether to continue such operations or activities," says Isabel Lovina, general manager of Vicmik Enterprises, a garments company that operates in Negros Occidental.

Lovina saysit is important to identify the strengths and weaknesses of your business on the following areas:

 

1.  Market Penetration. Are your items or services priced right? Do your customers react positively to your product packaging? How is your sales volume? When and how large will be the  possible future demand? What is your competitor doing?

 

2.  Operational Capacity. Do you have sufficient administrative and production support?

 

3.  Capital Requirement to continue your operations in the next two or three years.

 

4.  Profitability of Operations.

Criteria for Assessment
To begin your business assessment, Lovina suggests making a list that includes three columns, namely:

• Column 1. The Positives: List successes and things that are working well. This column is your "balance" column. An assessment or list that only contains the negatives is not focusing on the big picture.

 

• Column 2. The Reality Check: List business goals that have not been met, specific challenges and setbacks. This column should not contain personal statements that begin with "I." You are not looking to reinvent yourself, but for ways to improve your business.

 

• Column 3. The Assessment: In this column you will try to identify key reasons for the challenges and divide each issue from Column 2 into two main areas: Things you can change; and things you cannot change.

 

Take the Business Assessment Checklist sample below:

My Business Assessment
Column 1. Positives: Balance List	Column 2. My Business Reality Check List	Column 3. The Assessment
The business did well for the first half year, growing from a three-person operation to a company employing 10 workers.	The past four months the business has taken a loss; sales have declined and expenses exceeded revenues.	Things that led to business losses: product sales are down, direct and indirect expenses of hiring new employees, moving into bigger office space - the rent is too high now. The economy is horrible!
		Cannot Change: The economy or consumer spending habits.
		Can Change: Number of expenses. Look at downsizing as a strategy for long-term viability; try to renegotiate the lease or sublease until more suitable space can be found; examine product lines and closely study what products are selling better and why.

There are no standard measures for assessment. "However, most companies assess their operations on Industry Performance and benchmarking. Others follow profitability ratios such as return on investments," says Lovina. "For financial concerns and projections, a CPA can help you perform an assessment. For market trends and other information, there are consultants who specialize on sales and production."

WHAT NEXT?
After you have conducted an assessment, you should develop strategies to address the company's weaknesses and threats, as well as identify opportunities by using your strengths. "Strategies can be in the form of operational policies and directions," Lovina says. Based on your third column entries, you can have an idea of the appropriate course of action to take in the coming period.

At this point, it is to prepare a business plan which provides future action guidelines, which both the upper and middle management should consistently refer to. A business plan that covers the market,  production finance and administration aspects of your firm will be an invaluable tool in growing your business.

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