Let's explain why business reviews are a good idea - even for small and medium sized enterprises (“SMEs”), although many smaller business owners and leaders might find that idea to be quite daunting.
Large organisations usually have more or less formal Business Review (or strategic review) structures in place, such as Board timetables, annual rounds of Business Plans and Budgets and even Three or Five Year Plans (for those who still lead like its the 1980s… but that’s a subject for another time). These structures provide strategic frameworks for CEOs and other senior leaders to follow, hopefully in a way that is effective and efficient for all involved. And - when time permits, and the Risk Committee has nagged them enough ! - leadership may even have time to conduct a Risk Management Review.
Not having the luxury or burden of preset structures and expectations, or specialist Business Review skills inhouse, smaller business leaders usually have both more freedom and fewer resources to carry out Business Reviews, and might not even know how to approach them. At this point many will find this to be “a bit too hard” and find something more tactical to focus on instead, but they will almost certainly miss out on identifying significant growth opportunities and risks.
In our experience, any SME can implement a simple but effective strategic Business Review framework and process by first answering these five questions:
- Why should my business conduct a Business Review ?
So let’s start today with “Why business reviews are a good idea”.
Growth and Risk Management Create Value
Nearly every organisation, no matter how large or small, wants to grow their business and make it more valuable. And no matter how hard we work, at some point growth will only be achievable at an affordable cost if there is a step improvement made to either customer demand for the goods or services we sell (eg by improving functionality at a given price and production cost), or the processes by which we sell them (eg identifying better channels to market). Step improvements are rarely achieved, however, through doing “more of the same” - although that is often a good thing in itself; they are usually discovered through stepping back and thinking more about the business’s fundamentals and the world that it trades in.
Similarly, every business, no matter how large or small, has business risks that will need to be managed, which may be latent (like an iceberg “waiting” for the Titanic to take the wrong course) or even active (eg where a competitor is actively trying to steal your customers). Once again, doing more of the same prevents us from thinking critically about what lies just over the horizon, or what others might be planning to do that will hurt our business.
So a well designed and executed Business Review is your best opportunity to work “on the business” rather than in it, and to actively focus on both increasing your growth and managing your risks in a strategic, balanced and sustainable way - which will in turn increase the value of your business.
But smaller businesses have limited capacity and capability. This means that they can only undertake strategically timed, periodical Business Reviews, which will bring us to answering the question of “When” in our next post in this series.