A Guide to Analyzing Your Business

We’re all looking for ways to make our business more profitable.  Analyzing your business is an important tool.  This analysis guide is how you start!

The conversation on how to improve your business focuses on efficiency.  Before you began making changes, let’s look at how to analyzing your business to determine where your business currently stands.

Analyzing your entire business sounds like a major project.  It is!

“A journey of 1000 miles must begin with a single step.”  Lao Tzu

Here are some steps to help you make this a relatively easy process.  Start by breaking it down into individual steps.  Look deeper at your existing data.  This is more than looking at about should to see where your money is being spent.

Use this process to gain a new perspective on your business.  Every step should provide some enlightenment.

Combining all the information into the final report should provide a better understanding of your business.  Once you know where you stand now, you will be ready to make a plan for where you want to go.

George Harrison sang, “If you don’t know where you’re going, any road will take you there.”

First, we will break the business down into segments for analysis.  A lot of your existing reports will already have the information you need.  Import the information into a spreadsheet, if it is not already in a spreadsheet.  Analyzing your data using a spreadsheet pivot table is simple and effective.  Combining the information in a different format for analysis might even create a tool you want to use on a regular basis.

(A pivot table is a valuable analytical spreadsheet tool.  It is easy to use.  If no one in your office knows how to use a pivot table, there are multiple instructional videos available for free on the Internet.)

Analyzing Products:

Sales and inventory reports should provide you with a wealth of information.  Here are some questions and actions that will provide some preliminary analysis.  We can use this information later during the planning process.

  • How many total items do you sell?
    • Run the following pivot table reports:
      • Sales by item from highest to lowest sales.
      • Gross sale margin; item sale price minus item cost
        • (This does not factor in the overhead costs.)
      • What is your inventory policy?
        • Buy in volume and keep an inventory stocked.
        • Coordinate inventory purchases with deliveries to minimize inventory.
      • Where do you buy your inventory?
        • From a wholesaler?
        • From the manufacturer?
      • How do you track losses from perishable and damaged products?
      • How do you track returned products?
  • Do you carry specialty items on holidays or for other limited times?
  • What is your policy for trying or introducing new products?
  • What is your restocking policy?
    • On a regular schedule?
    • On an as-needed basis?
  • How do you monitor your stock at the sales site?

Analyzing Overhead:

This section will be subdivided for convenience in explaining the process.


Transportation needs vary depending on the type of company you own.  All of these ideas may not apply to your company.  I hope in analyzing this you will find some important benefits.

  • Vehicles
    • Do you lease or own your vehicles?
    • Have you analyzed the costs associated with each type of vehicle?
      • Fuel efficiency; Insurance costs; Maintenance
    • Routes
      • Have you analyzed which is the most efficient type of vehicle for each route?
      • Have you analyzed your routes for efficiency?
        • Most direct route; Safest route; Reducing or eliminating left-hand turns


  • Sales Equipment: Vending machines; Micro market displays, coolers, security and payment systems; Other equipment
  • Storage Equipment: Coolers, etc
  • Delivery equipment: Hand trucks; Portable coolers, etc
  • Miscellaneous equipment;
  • On all your equipment, have you reviewed…
    • Maintenance costs?
    • Upgrade costs?
    • Replacement costs?


  • Computers, Tablets, Smart Phones and other Data Devices
  • Telephone systems, Security Systems, Timekeeping systems
  • Cash room equipment: Coin counters; Bill counters; Barcode readers; Cash bags, etc
  • On all your office equipment, have you reviewed…
    • Maintenance costs?
    • Upgrade costs?
    • Replacement costs?


  • Pay: Salary; Hourly; Part-time
  • Taxes, Social Security, Workers’ Comp
  • Insurance
  • Retirement
  • Other benefits


  • Office
  • Banking: Fees, Loans/Interest payments, Credit cards, etc
  • Utilities
  • Licenses, Permits
  • Taxes
  • Professional Services
    • Accounting
    • Advertising
    • Cleaning
    • Legal
    • Miscellaneous

Preparation for Planning

The purpose of this project is to identify opportunities to improve efficiency and generate savings.  There’s a proven history of this process.

Working with a medical equipment company, analyzing the business provided the impetus for developing the company.  This single action catapulted the company into a regional business.  A competitor actually bought the company to shut it down.  It was growing up while driving down prices.  The competitor found this too disruptive.

What was their secret?  The company began purchasing directly from the manufacturer.  It started by purchasing a three month supply to meet the minimum order from their walker manufacturer.  With a direct purchase discount, they were able to significantly lower the sale price and increase their profit margin.  The new price also sold with three month supply of walkers in less than two months.

“Luck is where preparation meets opportunity.” – Dwight Eisenhower

It is time to make your own luck.  Greg Carron used his analysis to identify a major bottleneck in his counting room.  His solution was to create a specialize cash bag that separated coins and bills.  The savings in time alone allowed him to retask a position.  A single task position was able to expand into other office duties.  His solution was so successful he created a spinoff company to help others; Greg’s Super Bags.

With your analysis in hand you are prepared to make targeted changes to improve your business.  Next month we will look at some possible changes.  Ideas to help you make specific plans to save money.

DISCLAIMER: It must be stated here that these are suggested actions.  Business laws, regulations and legal requirements vary by city and state.  These are subject to change even nationally.  Consult your attorney, CPA or other professionals for appropriate advice on tax and legal ramifications for your business.

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