Planning is the foundation of any business. Individual targets or industry-wide averages can be used as the base indicators. Business analysis allows you to understand whether the interim, final performance indicators for the reporting period correspond to these indicators. Its results are taken into account when making management decisions.
Business analysis allows you to identify white spots in the conduct and / or accounting of financial and economic activities. It also solves the problem of finding reserves to eliminate errors and implement new projects. In addition, timely analyst contributes to the effective planning of the financial result. As a rule, several indicators are analyzed at once. The standard list includes investments, marketing, margins, finance, resources, and personnel. How does business analysis work?
Analytics in action is the easiest way to look at examples. Let's take a company that was forced to suspend its activities for 3 months and, of course, suffered losses. In order to return to work without incurring new losses, the organization will have to decide how many staff can and should be reduced.
Business analysis includes an indicator such as HCVA. According to the added value of human capital, the real impact of employees on the company's profit is determined. To calculate HCVA, the following indicators are required:
The organization's income for the period (12 million rubles).
Expenses of the organization for the same period (9.6 million rubles).
The costs of labor (3.9 million rubles).
Number of employees (76 people).
HCVA formula: (Income–(Expenses-Labor Costs))/The number of employees. When calculating according to the data from the example, the added value is 8289 rubles.
Two indicators are calculated: pre-crisis and actual. We will take into account a 35% decrease in income, a reduction in labor costs to 2.6 million rubles, and total expenses to 6.72 million rubles. While maintaining the same number of employees, the added value falls by 1.7 times and amounts to 4842 rubles. To restore the pre-crisis HCVA indicator, the company will have to retain 44 employees.
What will happen without business analysis and if you want to maintain the number of employees? The company will suffer losses. How is business analysis performed?
The top analytics method is SWOT. It identifies strengths, weaknesses, opportunities, and risks (threats).
Also popular is the "Boston matrix", which provides for the division of goods into groups, taking into account the sales rate and the growth rate of market share. This method is loved by marketers. The "Boston matrix" defines groups of products that require large investments in order to make a profit in the future, and groups of products that need to be discontinued.
For the analysis of production costs, the ABC method is suitable. It is focused on the assessment of resources, from the use of which the company earns the maximum (80%), average (15%) and minimum (5% and below) income. What is the result?
The indication for business analysis is not necessarily a real drop in sales or profits. Working ahead of the curve is a rational step. A comprehensive analysis reveals the factors of increasing profits and increasing sales rates, as well as the reasons for the decline in performance indicators. It also allows you to predict profit when the above indicators change.
According to the analysis, the company's management evaluates its financial stability, solvency, resource efficiency, the reasonableness of spending on marketing, advertising, and the feasibility of implementing investment projects.
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