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October 5, 2021by amybabashoff0
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When was the last time someone took an objective look at your business – evaluating your strategy, deciding whether it’s still the right strategy, seeing whether your operations are in line with your strategy and objectively examining your financial results? If your answer is “not recently,” then it may be time for a strategic, operational and financial assessment (SOFA).

A strategic, operational and financial assessment looks at your business fundamentals to understand whether you’re on track for sustained success; ascertains your short-term and long-term competitive position in the industry; identifies any areas where you aren’t on track; and pinpoints opportunities for growth and efficiency improvement. You can think of this as a health checkup for your business.

Broadly speaking, you might decide to do this assessment for one of two reasons:

  1. Your company is facing a challenge, and you’re not sure what to do next.
  2. Everything is going smoothly in your company, and you want to see whether you’re on the right track – not missing any opportunities or any potential obstacles.

In short, a strategic, operational and financial assessment enables you to use real data, compiled by objective and experienced outsiders, to make decisions about the company’s operations, strategy and future.

When is a good time to have a strategic, operational and financial assessment?

There’s no bad time for this assessment. Here are a few examples of how it might be useful during various stages of a company’s lifecycle.

Your company is successful:

  • Get help deciding what to do next – whether that’s entering new markets, expanding your product line, adding new services, changing your pricing model or something else.
  • Review whether your business model is still working, and whether it’s likely to be a good model for the future.
  • Better understand your talent and financial picture for succession planning.
  • Uncover and address business continuity concerns.
  • Create a formal strategic plan if your company doesn’t have one or if your current plan isn’t fully documented and shareable.
  • Revisit your strategy to consider whether it’s the right one and see whether your operations are in line with your strategy.

Your industry is changing:

  • Identify new strategies that will lead to sustainable success in a changing industry.
  • Figure out your best path forward in the face of industry consolidation.
  • Transition to online sales or services delivery.
  • Identify potential risks or disruptions that could impact your business.

You are considering selling the company:

  • Help maximize the value of your business through operational and financial improvements.
  • Help arrive at a fair valuation of the business.
  • Streamline the buy-side due diligence process by proactively addressing risks.

The company is experiencing trouble:

  • Address a recent drop in sales or decrease in profitability.
  • Identify performance improvement opportunities.
  • Address cash flow issues.
  • Mitigate risks and minimize negative impact to your bottom line.

How does a strategic, operational and financial assessment work?

Most companies hire an outside organization to provide a strategic, operational and financial assessment. This gives you an objective perspective on the company, and minimizes disruptions in the day-to-day business. A qualified business consultant will interview key employees and executives, take a hard look at company financials, and research your industry and competitors.

This is a relatively quick assessment (often performed in eight weeks or less, depending on the complexities of your business). Generally, the professionals performing the assessment will interview key stakeholders, including the management team, and will look at the past few years of your company’s performance.

This assessment will analyze your company’s:

  • Strategy
  • Value proposition
  • Competitive position (i.e., strategy and performance relative to competitors or the industry as a whole)
  • Revenue and profitability
  • Cost structure
  • Resource allocation
  • Debt, equity and other capital allocation
  • Use of working capital

At the end, you will receive a report with findings and recommendations that should equip you to start improving your business operations, make a plan to address any gaps, and capitalize on opportunities to grow or increase profitability. You may choose to implement the recommendations on your own or engage a consultant to assist with implementation.

Don’t neglect this valuable assessment.

When you’re in the day-to-day of managing your business, it’s challenging to step back and assess its overall health. However, not doing so can put the business at risk.

Global competition is a fact of life in many industries, and highly competitive industries require highly efficient and effective operations. Companies that are on top of strategy, finance and operations are better-positioned to gain clients and market share. In addition, if you’re looking to sell your company, bring in investors or obtain financing, having a strategic, operational and financial assessment can show you where you need to make improvements to maximize deal value.

Even when everything is running smoothly, a strategic, operational and financial assessment can alert you to new opportunities for growth or call your attention to trends that might be going in the wrong direction so you can get ahead of any issues as early as possible.

Contact MCDA CCG’s business consulting services team today to learn how you can maximize your company’s success with a strategic, operational and financial assessment. With demonstrated industry-wide expertise, our team of strategists can effectively pinpoint business-specific strengths and underlying weaknesses, to evaluate and further implement solutions to drive success. 

Call our office – headquartered in Placentia, Orange County, California- to speak with one of our business professionals in a short, no-obligation discussion. Don’t wait; as the end of the year quickly approaches, spots are filling up at a rapid pace!

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