It’s tough running a successful business. There’s a ton of competition and a constant stream of new technologies available to you and your competitors to chart and navigate the ever-changing seas.
If a business wants to thrive today, it must leverage every possible advantage it can find. While this boring fact is not all that new, technology is changing in new ways — and at warp speed. That’s why business analysis is essential for success, and why professionals adept at analyzing a business strategy and plan are in super-high demand. This article explores the concept of business analysis and why analyzing a business is critical for success. We’ll explore the processes and aspects that matter most to business analysts.
What Is Business Analysis?
Business analysis is the practice, or discipline, of identifying and creating solutions for business needs. Business analysis helps people understand how their respective company functions to fulfill its primary purpose.
By analyzing a business plan or strategy, you can pinpoint areas that need change and introduce those changes to your team members and the stakeholders in your organization. Solutions will range from organizational changes and strategic planning to process improvement and software systems development.
A business analyst is a professional responsible for analyzing a business and guiding it through the improvement process. They begin by analyzing the business environment, including its systems, processes, and assessing its business model. Once the analysts complete their research, they use data analysis tools and other techniques to shepherd the business by improving products, processes, and services.
Analyzing a Business: Why?
We can keep saying that businesses these days are faced with more tremendous obstacles, but that’s not helping matters unless we can specifically show why a company needs to conduct a business analysis. Let’s look at why companies need to be doing this regularly.
1. Figuring Out the Company’s Performance
Analysts conduct a business portfolio analysis to look at its services and products and categorize them based on their performance and competitiveness.
2. Getting an Account of the Company’s Resources and Goals
A thorough business analysis imparts an understanding of a company’s operations, structure, policies, and goals. Armed with this information, business analysts can recommend which solutions are needed to achieve those goals and figure out what resources and tools they need to achieve them.
3. Facilitating Digital Transformation
Digital transformation is the new black, especially considering elements such as data analytics and information management. Simply put, analyzing a business through data-driven stats is the only way to succeed today.
4. Incentivizing Change
It’s one thing to create a business project meant to provide solutions to a company’s most pressing issues. It’s another to get the staff to go along with the changes. A successful business analysis coupled with transparency gives proof to a skeptical staff about why the changes are a positive step.
The fact is, analyzing a business will help organizations determine how their products and services are performing versus the competition, measure digital transformation progress, and provide evidence to the staff and stakeholders to convince them to adopt the recommended solutions.
Factors to Consider While Analyzing a Business
So if a business is at the point where it recognizes the value of business analysis, the next question is, “What factors weigh into analyzing a business?” The key is to make sure the analysis focuses on details that matter and make a difference.
Here are some key factors that show up in the most successful business analysis examples.
1. Customer Research
Let’s begin with the most essential factor, the customers! After all, if a business doesn’t have customers, it won’t remain around for long. Customer research includes feedback such as surveys (mail, internet, phone, in-person), customer service interactions (often by a chatbot), and online reviews. Analysts use this research to figure out what customers want out of the product, even down to details such as preferred sizes and colors. Accurate customer research, culled by business analysts, is an invaluable tool for determining a company’s future product releases.
2. Product Quality
Covering everything from product testing to quality control and safety checks to benchmarking, product quality and benchmarking is paramount. Benchmarking involves companies constantly measuring their products against similar items produced by competitors. A sound analysis paints a good picture of how the market sees the company’s product value, longevity, and quality.
3. Labor Costs
Employee costs account for the largest piece of most business' budgets, so companies should conduct a thorough analysis of wages and how they line up with the bank. Analysts also need to factor in what the competition is paying their employees as many businesses won’t hesitate to pay (and poach) for qualified, valuable employees. Analyzing a business’ labor costs is often like walking a tightrope between staying within budget and paying a competitive salary. Still, it's worth it in the long run.
4. Success in Meeting Goals
Lots of businesses talk a good game, but talk is cheap. A thorough, unbiased business analysis measures how well the company delivers what it promises, meets its goals, and lives up to the hype. The research focuses on revenue growth and accounts receivable turnover to put together a clear picture that jibes with the quality and reliability of the products and services that are being delivered.
5. Financial Analysis
This ties in with the previous point. But whereas measuring the company’s success at meeting its goals as a “make or break” proposition, a thorough business analysis compares daily, weekly, and monthly sales figures and compares them to sales forecasts during peak shopping seasons, variables such as the global pandemic, natural disasters, changing demographics, and so on. Advice: always be prepared for anything that comes your way.
6. What’s the Competition Up To?
While a business struggles to win the race against ever-changing technology, market uncertainties, and crippling pandemics, it can’t lose sight of the competition. Is the company in question keeping up, passing, or falling behind their rivals, and if the latter is true, what can they do to change the narrative?
7. Company Size and Growth
Companies that grow too quickly often run into pitfalls. Is this business growing too fast and reckless? Because if so, it’s likely to experience shrinkage as the market self-corrects. Additionally, management often struggles with over-confidence and finds it difficult to switch their approach to an even-growth model.
8. Trend Analysis
Game-changing technologies and new business models are popping up like crazy in today’s hyperconnected world. If you’re analyzing a business well, you must be keeping up on the trends. If the competition is doing a better job of adapting to industry changes, they will come out ahead. By leveraging the latest analytics tools, you can stay competitive.
What’s the Process Involved in Analyzing a Business?
Now that we've ascertained how vital business analysis can be for a company's future and what factors we need to consider, the final step is figuring out the process. That’s called the business process analysis, broken down into the following steps:
1. Identify All Relevant Processes
Analysts must ascertain which processes need improvement and focus attention only on them. Once you identify the necessary processes, you can start putting together goals. Here are some questions that help identify these processes:
- What’s our company’s mission?
- Who are our clients?
- What’s important to our customers?
- What are our Key Performance Indicators (KPI)?
- What’s the plan?
2. Put Together an A-Team
This team consists of people who will help carry out the business analysis — ideally leveraging the members who are already familiar with the daily processes, while always recruiting new talent. The team needs people who understand business process management (BPM), can take on leadership roles, and motivate employees to effect necessary changes swiftly.
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3. Create a Business Process Diagram or Flowchart
Analysts who draw up a step-by-step diagram help people to visualize the process and can facilitate better business outcomes. The chart should include:
- Who is responsible for each process
- Events that initiate the processes
- Tasks and their relationships
- Determine how a process ends and how to mark its end
4. Define the Process as It Now Stands
The analyst defines how the process is currently taking place.
5. Call Out Improvement Points
Analysts figure out the necessary improvements, and if they’re possible, make sure that they fit with the company’s overall goals. Potential improvement points include:
- Addressing bottlenecks and obstacles
- Increasing customer interaction
- Decreasing task and information handoffs between people and systems
- Bolstering the value to the customer
- Continuously defining business standards, rules, and procedures
6. Creating Better Processes
Here is where the analysts take all the above information and model the new process, aligning it with data-driven and informed objectives and goals.
Do You Want to Become a Business Analyst?
Business analysts are a precious resource in today’s high-pressure environments. If you would like a business analysis career, Simplilearn is ready to provide you with the tools to make your dreams come true. The Business Analytics for Strategic Decision Making with IIT Roorkee helps you master critical business analysis techniques, Agile Scrum methodologies, SQL databases, and visualization tools like Excel, Power BI, and Tableau.
According to Indeed, you can earn an annual average of USD 79,690 as a business analyst, not counting bonuses. So if you’re ready for a challenging, in-demand career that offers excellent benefits, let Simplilearn help you take those first steps!