How do you tell how well your business is doing? Is it a feeling? Is it something that you think? Unfortunately, those two parameters aren’t going to help you very much when it comes time to look at your bank statements. What you need for your business are metrics. And that’s when diagnostics are going to be your best friends.
Three times, in particular, will come to mind where diagnostics perform a function that nothing else can regarding your business. First of all, diagnostics about equipment functions are critical. Second, when you analyze your advertising, you’ll come up with helpful metrics. And third, whenever there is any financial planning or budgeting involved, the more numbers you have to back up your decisions, the more readily they will be accepted by your organization as a whole.
If your equipment isn’t working at its peak efficiency, then you are losing money. For example, you might need an analysis of equipment so that you know you aren’t losing functionality in an industrial setting. Or, you might want equipment analysis when it comes to Internet speed if you are in a data-driven industry.
Regardless of what the equipment is, having numbers to suggest that something is operating at peak performance or not will make a big difference in your ability to make the right decisions.
Then there is the matter of advertising analysis. Do you use Google Analytics to your advantage? Do you know how many people visit your website and look at different advertising pages? Do you know how many people click on certain ads so that the sales funnel moves them in the appropriate direction?
Having answers to these questions is very important because that’s where the numbers provide the best evidence for success or failure. Without analyzing your advertising, how can you ever associate a particular decision with a specific outcome?
Financial Planning and Budgeting
A final example of appropriate business diagnostics would be when it comes to financial planning and budgeting. After you’ve created your business plan, you have a very specific set of numbers that relates to future predictions. However, even the best predictions are probably not going to come true.
Because of this, you need to diagnose and analyze the difference between the monthly budget that you have and the monthly budget that you want. Looking at these discrepancies every month will give you a much better idea of how to create financial plans for different specific aspects of your company, recognizing that normative and descriptive financial considerations can be very different.
If there’s one thing that you should analyze more than any other aspect of your business, it is income and expenditures.