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Why Would my Business need an Operational Review?

Start the new year off with an operational review and take a deep dive into your financial or legal standing. Conducting a thorough internal review of your own company, similar to the due diligence process in mergers and acquisitions (M&A), can be immensely beneficial for business owners. This self-assessment allows you to gain valuable insights into various aspects of your company's performance and identify areas for improvement. This usually involves carefully investigating the target company’s financial, legal and operational positions.


Operational Review

Why Do It?

An operational review is essentially a reality check into whether, from the standpoint of day-to-day operations, your company is running smoothly and fully capable of accomplishing its strategic objectives. So, here are a few reasons why such a review is essential:


  1. Identify Strengths and Weaknesses - A comprehensive review helps you identify the strengths that can be leveraged for further growth and the weaknesses that need to be addressed. Understanding these aspects can guide strategic decision-making.

  2. Financial Analysis - Reviewing your financial standing involves analyzing your income statements, balance sheets, and cash flow. This can help you assess your company's profitability, liquidity, and overall financial health. A Selling, General, and Administrative (SG&A) analysis is a way for businesses to assess whether the company’s operational expenses are too high or too low.

  3. Operational Efficiency - Conducting an operational review enables business owners to identify inefficiencies, bottlenecks, or areas where processes can be streamlined. This can lead to improvements in overall operational efficiency and effectiveness. Analyzing operational processes allows business owners to identify cost-saving opportunities. This can be essential for maintaining profitability and competitiveness.

  4. Legal Compliance - Ensure that your company is compliant with all relevant laws and regulations. This includes reviewing contracts, permits, licenses, and any potential legal issues that may arise. Addressing compliance issues proactively can prevent future complications.

  5. Risk Management - Identify potential risks that could impact your business. This includes market risks, operational risks, and other external factors. Developing strategies to mitigate these risks is crucial for long-term success.

  6. Employee and Human Resources Review - Evaluate your human resources policies, employee satisfaction, and overall workforce management. A content and motivated workforce contributes significantly to a company's success. By listening to members of your leadership team, and perhaps even some key employees on the front line, you can gain a sense of your staff’s operational confidence. If they have concerns, better to address them sooner rather than later.

  7. Market Analysis - In a rapidly evolving business landscape, businesses need to be adaptable. Understand your position in the market by analyzing competitors, market trends, and customer feedback. This insight helps you make informed decisions on product/service offerings and marketing strategies.

  8. Strategic Planning - The insights gained from an operational review feed into strategic planning. Business owners can use this information to set realistic goals, allocate resources effectively, and plan for the future.



 

Would you buy your company if you didn’t already own it? It may seem like a funny question, but an operational review can tell you, objectively, just how efficiently and impressively your business is running. Our consultants will be happy to help you gather and analyze the pertinent information involved to begin your process. Schedule an appointment today to begin.

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