All businesses have strengths, weaknesses, aspirations and challenges. When creating any strategy, the first step is to take stock of your current situation; where the business is, what you’re striving to achieve, business strengths and weaknesses and your available resources among other things.
One of the greatest challenges that CEOs face when running a small business is taking the time to step back from your business to objectively evaluate what’s really going on. Once your business is established and running well, you barely have time to focus on the day-to-day running of your business and it's easy to let things continue to run as they are.
However, it is essential to regularly review business progress, identify how to make the most of the market position you've established, decide where to take the business next and assess what business needs ought to be addressed to achieve that goal.
A needs assessment is a business tool used to gain valuable insights into your company’s actions or processes to determine efficiency. It can be part of a planning process to determine gaps, or needs, and how to address areas for improvement. It involves determining the needs, or gaps, between where the organization envisions itself in the future and the organization's current state.
A needs assessment is useful for companies to determine priorities, make organizational improvements, or allocate resources.
First, it's important make a distinction between solution and need, as it can affect your needs assessment process. As doers, business owners and leaders tend to jump prematurely to focusing on solutions before identifying and prioritizing needs or delving into what the underlying issues or problems they reflect. When problems do arise, the tendency is to skip over the arduous task of finding the real reasons, issues and problems responsible for the business challenge and find need based strategies. Instead, just implement solution-driven, arbitrary, across-the-board measures or improvements that often dissipate quickly.
Therefore, it’s the needs, not solutions, that have to be considered to ensure business goals are guided by needs. Otherwise, poor or unfitting solutions could be implemented at considerable cost in time, energy and business resources.
A business assessment provides a fair and impartial vantage point needed when making sound, strategic decisions about the direction of your business, especially if
- you’re uncertain about how well the business is performing
- you’re unsure if you're getting the most out of the business or
- you’re concerned you’re not making the most of market opportunities
- your business plan may be out of date; it hasn't been updated it since you first started
- your business is moving in a direction different to the one you had planned
You then develop a plan of action to address the needs (or close the gaps) to bring the business closer to its desired future state.
Why is a business needs assessment important?
Businesses are complex entities made up of a diverse variety of people, functions, goals and objectives, it’s not always easy to know what exactly may be keeping the company from reaching its desired goals.
A needs assessment removes this uncertainty by exploring the company’s specific needs and the actions it can take to attain them. Below are some reasons for performing needs assessment for your business- • . To review the current structure, strengths and weaknesses of the business. • . To understand current problems in the business. • . To identify areas of improvement and define strategic goals. • . To identify and articulate the need for change. •. To maximize the value of your business for all different stakeholders. When business owners and leaders understand the company’s strengths and weaknesses, they can more easily create clear and defined goals. A needs assessment takes into consideration the smallest and largest of levels within a business, from the micro to the macro level, to determine a plan of action to elevate the business. Overview of Needs Assessments Needs assessment involves performing an in-depth review of various functional areas of the business to understand the internal and external environment in which the business is operating, identify the issues facing the company and improvements needed to achieve the goals and objectives to reach the desired future state for your business. Needs assessment helps to ensure the development of meaningful and achievable strategic and work plans and to chart a course for successful growth journey. It plays a critical role in the strategic and business planning process by helping define: • . Purpose, mission, core values and culture for your business • . Budget for current operations and for planned growth efforts • . State of various functional areas, what’s working well and what needs to change • . Team, what additional roles and support are needed to achieve desired goals • . What products/services are serving well and what additional ones are needed • . What customer or geographic segments are working well and which ones to target • . How well the existing products and services are priced, and if revision is needed • . Operational efficiency and improvements needed to drive higher profits • . Current and desired finance, revenue generation and profit margin goals • . What partnerships might be needed to help achieve desired goals • . What growth strategies make sense given the budget, team, resources and market • . If inorganic growth is an option for your business currently • . If financing will be required before embarking on this journey Beyond internal needs assessment, external market analysis focuses on what your potential customer base wants and what price they will pay. External needs assessment also identifies other players (competition/collaborators) delivering similar or related products and services. The activities conducted during a needs assessment and the information obtained provides the quantitative and qualitative data needed to formulate a business and market strategy. Needs assessment in of itself does not ensure the success for a business, or the planned growth initiatives. It provides the information necessary to make informed decisions about business’s strategic direction, planning and areas to focus on for effective execution. Performing needs assessment for your business Your business needs assessment journey traverses different milestones and stages- • . Business needs identification, requirement planning and management • . Business need elicitation, analysis and documentation • . Strategic development plan for the business • . Communication, implementation, re-evaluation and iteration Here are some steps to follow when conducting a needs assessment for your business- 1. Information gathering for business needs identification The first step in a business needs assessment process is compiling background information, both internal business data and data from outside the business, so that you have all the information you need for planning. The internal business information helps determine company’s most urgent needs by collecting data from different functional areas in the company. The external information from outside the company is equally important and can be collected through surveys, interviews or market research. This includes industry-related information such as industry trends, current industry environment, the terminologies related to the industry and identifying influential circumstances. Tools such as PESTLE analysis and Porter’s Five Forces framework can be used to gather this information. The PESTLE analysis technique helps evaluate the impact of six crucial external forces, namely, political, economic, social, technological, legal, and ethical. These factors have a crucial impact on a business that can influence the strategic planning process. Porter’s Five Forces framework is used for identifying the factors which could negatively impact the business performance. The five forces include competitors in the industry, buyers, suppliers, substitutes, and new entrants in the market. The evaluation of these forces helps in determining the extent to which they can influence business performance.
Business needs analysis process also involves a clear understanding of historical perspective that can contribute to better requirements planning based on past experiences in the business. 2. Identify Key Stakeholders The second stage in the business needs analysis process is identifying various stakeholders, the individuals involved in making decisions, determining priorities and requirements and/or implementing the plan. Some stakeholder categories that can influence and support the business strategy and performance include- First and foremost, the business owners, trustees, shareholders and investors in the business. Then, customers, suppliers, partners and competitors are the next category of vital stakeholders. Also crucial stakeholders are the regulatory authorities, as they help ensure the required rules and regulations are followed during this journey. 3. Outline the Business Objectives The next stage in the business assessment is identification of business goals and objectives to plan out the business strategy and development plan in line with the vision for the business. The objectives can help define the scope definition for the analysis. Objectives can also provide insights into areas that need attention and improvement. The smart way to find business objectives and uncover the needs of the business is using SMART goal setting techniques and performing benchmarking, SWOT analysis to understand the competitors as well as recognize the strengths and weaknesses of the business. SMART goal setting could help in classifying the exact criteria for objectives by creating Specific, Measurable, Achievable, Realistic, and Time-bound objectives. In addition, focus groups and brainstorming are also promising activities for identifying business objectives. These techniques also help bring all stakeholders in alignment with a single unified vision. 4. Prioritize to Narrow Down the Options The fourth stage in the business analysis process involves evaluation of available options including customization or enhancement of existing solutions. The data that’s been acquired can guide you toward the changes your workplace needs to make to achieve your goals and objective. It requires you to organize and prioritize various steps that should be taken in a specific order, and get to know which solution is best for each need by comparing the costs and benefits. The factors which can help narrow down the objectives include feasibility and business case, the availability of funds as well as return on investment determined through business requirements analysis, impact analysis, risk analysis, and cost-benefit analysis. Cost-benefit analysis refers to the evaluation of costs related to a particular option and the benefits of the same. The risk analysis can help in finding various risks that accompany a particular action. The impact analysis can help in finding out the actions that can influence the impact that the planned changes can have on the business’s future. This exercise helps define the scope of the business development strategy and plan of action in line with the vision of the CEO and business leaders. 5. Defining Strategic Development Plan In this stage, a detailed timeline for delivering the goals and objectives outlined in the strategic development plan taking into account the scope and priorities. Assigning accountability and their availability for the tasks is also important concerns when creating the timeline. The plan acts as a guide to define the needs based on available resources, desired timelines and business requirements for improved performance, sustainable growth and long-term value creation. These requirements can be clearly outlined in this business needs plan. 6. Evaluating the Value Added by the Assessment The final stage refers to the analysis of value added by the assessment by evaluating the business outcomes that contribute substantially to the effectiveness of the plan and keep it on track. This stage in the business needs analysis process helps in ensuring that the plan provides the desired benefits and delivers the value that was initially estimated. This stage of business analysis process can also include communication to stakeholders and aligning implementation with business objectives.
A need is the gap between what is and what should be.
A business needs assessment, in simple terms, is figuring out what the company needs.
But, in a growing company with so much going on, it’s hard to pin down exactly what the business needs are and what may be holding it back.
This is where a business needs assessment begins. The process starts by gathering data and comparing the current situation against the future direction of the company.
This defines the gaps that are preventing the company from reaching its desired goals and will give you a complete list of what the business needs.
In most cases, this complete list of business needs will be a long one.
So, in the real world, there will never be enough money to address every single one of your business needs.
This is where prioritization based on the business needs assessment comes into play.
Once you’ve identified the gaps and have your list of business needs, the process then enables you to evaluate each need and set priorities.
Whether it’s establishing what the deficit is, or discovering the reasons for poor performance or low productivity, business needs assessments are the best way to identify what the organizations most significant needs are.
Business needs assessment helps redefine your business goals, and answer the following key strategic questions:
• Where is the business now?
• .Where is it going?
•. How is it going to get there?
Often businesses are able to work out where they want to go but don't draw up a roadmap of how to get there. If this happens, a business will lack the direction needed to turn even carefully laid plans into reality.
At the end of the assessment process, therefore, it's vital that implementation plans are generated to put the new ideas into action and that a timeline is assigned.
Regularly reviewing how the new plan is working and allowing for necessary periodic adjustments is important too.
Today's business environment is exceptionally dynamic and it is likely that you will need regular reviews, updates and iterations to your strategic business plan in order to maintain success trajectory in the long term.
In addition, a simple strategic planning ritual can greatly enhance your ability to make changes in your business routinely as needed, help anticipate problems and adapt to change.
You may need external help with skills to help you with the changes you plan to make, therefore, you might consider:
• employing skilled consultants in areas where you cannot afford to build internal talent
• . working with an experienced coach or advisor who can provide a regular, unbiased assessment
• . using a management consultant to help you grow the business systematically and strategically.
Are you ready to assess your business needs?
Contact us info@josh-i-associates.com for your complimentary needs assessment.