Analysis of an existing company

Startups Technology Strategy

Posted by Enrico on May 26, 2017 1580

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.

Company background

  • When was the company started?
  • What does the company do exactly?
  • What does the company sell exactly?

Financials

  • 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?

People

  • 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?

Business model

  • 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?

Client acquisition

  • 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?

Competition

  • 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

User/client acquisition:

  • 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?

Engagement:

  • 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)?

Retention:

  • 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.

Timing

  • 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?

Social

  • Is the product ethical?
  • Is the product/service in line with current social trends?

Technology

  • 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

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    Enrico Tam

    MBA, PhD, tech entrepreneur, maker

    Hi, I’m Enrico and I started hacking at 9 years old back when it was Visual Basic. After trying to become a professional tennis player I somehow got entangled in a PhD in engineering, an MBA programme and a big consulting fir... (continued)

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