In a precedent article, I describe how to evaluate a business idea. In this article, I summarize the most common questions I use to quickly analyze the health of an established company. This helps me detect the main issues and/or business opportunities. I subsequently use specific templates to dig into the specifics and build strategic solutions.
- When was the company started?
- What does the company do exactly?
- What does the company sell exactly?
- What is the equity structure?
- How much long term debts does the company has?
- How much cash does the company have?
- What is the month/year turnover?
- What is the burning rate?
- What is the burning capital?
- How many months of cash does the company have?
- Who are the founders?
- Who is the CEO?
- For how long has the CEO been in charge?
- Are management procedures transparent?
- How many employees?
- What kind of employees?
- How many employees per section?
- What is the rotation rate per category?
- What is the company culture?
- What is the revenue model?
- How are payments performed? Via the internet? Via mobile?
- What could be the expected income?
- What is the investment needed?
- When will the company be ramen profitable?
- Why do that now and not in two years?
- Who could be interested in buying the company?
- Who is the typical user/client?
- What is the customer segmentation (age, geography, etc.)?
- How does the company reach them?
- What is the average acquisition cost?
- What is the customer lifecycle value?
- If pre-revenues, when will the company have the first paying customer?
- Who are the competitors?
- How many are they?
- Who is the most dangerous competitor?
- What is the concentration of the market?
- Is this a chicken and egg problem?
- How are you going to solve chicken and egg (if relevant)?
- What would make reluctant users/clients try you out?
- Why are you better than the competition?
- In which way you are unique?
- What is your competitive advantage?
- Who can become a competitor?
- What are the possible substitutes?
Current metrics and trends
- What is the revenue growth like?
- How many users/clients growth?
- Is it linear? Is it exponential?
- Is there a type of user/client that is harder to attract? Which one?
- What is the bottleneck?
- How many users/clients fully use your product features?
- What is the liquidity like? (Ratios suppliers-selling-to-demand-requests-ratio; provider-to-customer-ratio; repeat-purchase-ratio)
- What is the gross merchandise volume (GMV)?
- How many users/clients are coming back more than one time?
- What is the average time between visits/sales for the same user/client?
- What is the user/client churn rate?
- How will you improve your users/clients retention?
- What is the 1-to-10 net promoter score (NPS)? With less than 7 a customer would talk negatively about your product/service.
- Is this the right moment for this product/service?
- Has anybody done the same thing in the past? Have they succeeded or failed? Why?
- Who could potentially enter the market in the future?
- Is the product ethical?
- Is the product/service in line with current social trends?
- What is the maturity of technology?
- What is the technology legislation?
- Is the intellectual property an issue?
- What can be improved?
- Is technology slowing any process?
- Is technology based on new standards?
- Does the used technology follow current trends?
Typical issues for new innovative products/services
- Is the product/service new in the market and there are few/none alternatives?
=> You should focus on distribution as fast as possible to conquer the market and reduce copycat
Ex: Facebook, Twitter, AirB&B, etc.
- Is the product/service an improvement of something existing?
=> You should focus on having a product that is at least 10x better than the competition on something. For instance, it could have a user experience that is 10x better.
Ex: Google search was 10x better than Yahoo.
Typical issues for products/services at maturity
In another article I describe the main strategic frameworks to be used when the company is facing any of the following situations:
- profitability issues
- decide what to do next
- mergers and acquisitions opportunity
- supply/demand issues