How to analyze a business?
Do you really want to grow up as a business? Then, you really need to understand how to analyze a business. Whether you’re evaluating your own company’s performance, planning on starting a new one, or investing in other businesses, a thorough analysis can provide the most valuable information. Keep reading!
What is Business Analysis?
First things first, let’s define a business analysis.
Business analysis is the practice of identifying business needs and determining solutions to business problems. These solutions may include the development of software systems, process improvements, organizational changes, or strategic planning. Essentially, business analysis is about understanding how an organization works and how it can meet its objectives. This involves exploring current processes, identifying inefficiencies, and making the right changes or improvements.
Business analysis is not just about solving problems—it’s also about understanding opportunities and making informed decisions. This discipline is crucial for businesses aiming to optimize their operations and stay competitive in their market. When done correctly, it helps businesses minimize risks, avoid mistakes (which makes you save a lot of money), and achieve sustainable growth.
6 Steps of Business Analysis
Now that we know what a business analysis is, we can start with all the steps you will have to follow through for a good analysis of your business. Each step builds on the previous one, creating a comprehensive picture of the business and its environment.
1. Gather Background Information
Whether your business is new or existing, the first step in any business analysis is to gather all relevant background information. At this stage, there is just a few things to keep in mind (although they are very important to cover the groundwork for your project):
- What could potentially affect your business strategy? There’s hundreds of ways to accomplish this. Just as an example, you could use Porter’s Five Forces, a model that identifies and analyzes five competitive forces that shape every industry, identifying its weaknesses and strengths. Porter’s five forces are:
- Competitive rivals.
- Potential for new entrants.
- Supplier power.
- Threat of substitutes.
- Customer power.
- More background information: What domain is the project under? Not talking only about the hosting, but financially speaking too. Just keep researching until you find all the answers, since you too have to learn about what you can and can’t do. In addition to this, you could take the chance to learn the terminologies of that market.
To sum up all of this: you should review financial statements, annual reports, and market research data to understand the business’s financial health and market position. This step also includes analyzing the company’s products or services, target audience, and unique selling proposition (USP).
Just a reminder that all of this also involves understanding the company’s history, mission, vision, and values.
2. Identify Stakeholders
But, who are these stakeholders? Well, basically, anyone that has an interest in the business: Employees, customers, investors, suppliers, and even the community in which the business operates.
To identify stakeholders, start by listing everyone who is affected by or can affect the business. Next, categorize them based on their level of influence and/or interest. Take this list as an example:
- Owners. Shareholders, anyone sponsoring your project.
- Managers.
- Employees.
- Suppliers and partners
- Customers.
- Competition.
3. Define Business Goals
Every business operates with specific goals in mind. These goals could range from increasing revenue, expanding market share, or improving customer satisfaction, to launching new products or entering new markets. Clearly defining these goals is critical to the success of the business analysis. Just remember, those goals must always be SMART—Specific, Measurable, Achievable, Relevant, and Time-bound.
SMART goals provide clarity and focus, making it easier to develop strategies and measure progress. Defining business goals also helps in prioritizing efforts and resources, ensuring that the business stays aligned with its long-term vision.
4. What Options Do We Have?
We are halfway through this. Now, the next step is to explore potential options for actually achieving these goals. Sure, you can always try to rely on a good brainstorming with your team, but there’s always a path to follow, more trustworthy than just throwing ideas here and there.
The best path to follow here:
- Identify your options. Here’s the moment where you can actually use a good brainstorming, and only here.
- Can you enhance an existing product or service to achieve your goal?
- Can you buy an existing service?
- Can you build your product?
- How much money will it take to pursue this, and how much benefit will it give you?
- Impact analysis.
- How risky is it to pursue this idea?
- Have you already identified your stakeholders and shareholders? Show them your idea, and have them make a decision about it.
5. Define Project Requirements
If you really want to know how to analyze a business, once you’ve identified the best options, it’s time to define the project requirements.
These requirements outline what needs to be done to implement the chosen solutions. Requirements can be functional (what the solution must do) or non-functional (how the solution should perform), and they must be clear, concise, and complete.
In this step, you will probably need to collaborate with stakeholders and all needs are being captured and understood.
Something that can help you here: storyboards, wireframes, prototypes…
6. Timeline for These Requirements
The final step! Time to develop a timeline for implementing all project requirements and goals. It might seem like it’s simple, but take your time here. A well defined timeline will keep you on track, providing a clear roadmap for achieving all of your goals.
When you are setting key milestones and deadlines, don’t forget to consider potential risks and challenges that can affect your timeline. For instance, delays in decision making or unforeseen changes in the market could affect the project’s progress.
How to analyze competitors in business?
If you already know how to analyze a business, it’s the same, but easier:
- Identify your direct and indirect competitors. Direct competitors are those who offer similar products or services to the same target audience, while indirect competitors offer alternatives that meet the same needs.
- SWOT analysis of your competitors. Look at their strengths, such as brand reputation, customer loyalty, or superior technology. Also, identify their weaknesses, like poor customer service, limited product range, or high prices.
- Which strategies do they use?
- Identify what makes their offerings better or worse than yours. Features, quality, pricing…
- Keep an eye on your competitors’ market activities, such as new product launches, partnerships, or marketing campaigns. Stay informed about their moves!
But, how to overcome them? When you’ve already checked all of the above, lots of options open for you. One of the best ways, it’s to build a relationship with other businesses. How so? Networking, using a business growth platform… your choice!
