Could small changes make a big difference to your profit and business valuation?

Posted by Phil Murray 13 March 2015 09:30 AM

What the most successful businesses do

Having gathered all the best available information and analysis on how your business and its competitors are really doing, the next step is to use that information to work out how much better you could be doing.

In other words, to estimate your improvement potential. And then to use “sensitivity analysis” to see how sensitive your results are to changes in the key factors driving your profitability.

As a result of doing that, you will know what is at stake - i.e.:

  •         How much you stand to gain if you take action to achieve your improvement potential
  •         How much you will miss out on if you don't take action

And you can then use those insights into what is at stake to decide how much effort and energy to put into improving your performance.

For example, if the evidence suggests that there is very little scope to improve your results, then you will probably put more emphasis on consolidating what you are already doing, rather than trying to improve it. Whereas, if the evidence suggests there is considerable scope to improve your results, you are more likely to want to make those improvements happen, and less likely to accept the status quo.

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Topics: Business Owner