Business Assessment

A business assessment is an analytical activity that allows you to understand what happens to a business — both internal and external.

It is a very important activity not only for external consultants and agencies, but also for managers and the business owners themselves. Most of the time, the managers and owners are very down-in-the-weeds that they often forget to step back and look at the bigger picture. That’s why they hire consultants to do these analyses.

While there are countless ways to assess a business, there is a particular framework I’ve fallen in love with. It’s called the business situation framework.

It’s one of those tools that management consultants use that allow them to gather data and learn more about the business. They use this to develop and further refine their hypotheses until they get to the root cause or problem.

The business situation framework focuses on 4 key areas:

  1. Customer
  2. Product
  3. Company
  4. Competitors

This gives a holistic view of the business, instead than just focusing on one issue. Most of the times, there isn’t any single cause of a problem. It’s usually a domino effect where there are a lot of causes that contributed to that problem or negative result.

Therefore, the business situation framework is an example of a systems thinking where everything is linked to one another. And to solve a particular problem, one must understand how it all fits in together.

There are other frameworks that can be used in this case like the SWOT analysis, Porter’s 5 Forces, and the Value Chain. Some more advance tools for further analysis are the Competitive Profile Matrix (CPM), Internal Factor Assessment (IFE), External Factor Assessment (EFE), BCG Matrix, and the GE-McKinsey Matrix. And there are a lot of them.

Depending on your needs, these can be done. But in most cases, it’s overkill if you go through each of these.