Here is a de-identified version of a capability review conducted for a client. You might find it useful to understand some of the things we look for in assessing companies for growth potential and the prospects of building real capital value into shareholder equity with the tools and techniques we provide.
At the highest level, we cover the 4 key areas of business that are common to all businesses:
- New Product Development – whether you’re developing your first product, or working to stay ahead.
- Delivery to Customers – getting the product or service out to customers and charging for it.
- Sales & Marketing – attracting new customers and selling to existing ones.
- Management – pulling the whole thing together for long-term profitability.
Many managers believe they don’t need one of these areas, but often find a key mistake in this assumption. For example, you may work with a very steady customer base and don’t feel you need to attract new ones. In this case, your potential growth – and hence your prospective capital value – are inherently limited. (We sometimes call these ‘lifestyle businesses’ where management is not targeting aggressive growth.) Few investors will be interested in companies of this sort.
Similarly, in today’s environment, if you’re not developing your product, you’re likely to become obsolete with surprising speed. But if development is all you do, it’s often very hard to manage significant profitability. While this seems obvious written this way, many software developers, for example, focus on this function and sell only as a ‘necessary evil.’ These firms often fall into a hand-to-mouth financial trap that also limits their growth potential.
There’s lots to understand from this sort of an analysis, especially when it’s conducted by a fresh (but expert!) pair of eyes. Contact us today for a review – it’s not an expensive process, but it can be a turning point in the growth of your business’ real value!