ABSTRACT
The first step toward gaining control over the direction and success of your business is to understand what actually constitutes your business through analyzing its components and how they contribute to or detract from the whole. These are both qualitative and quantitative analyses. Only then can one decide intelligently which areas to emphasize and which to de-emphasize or even to discontinue. Making such decisions imposes opportunity costs, of course, so that they must be informed and considered judgments, not intuitive ones; sometimes the correct decisions prove to be counterintuitive. The term
opportunity cost
means that pursuing one option will necessarily result in giving up the opportunity to pursue another, as no one has unlimited resources. As a consequence of deciding what are your best opportunities, you must also assign your best people resources to them, not necessarily the greatest amount of dollars or pieces of equipment. The process described in the following paragraphs does not constitute a complete approach but rather a basic test of what the application of your company’s resources is producing and what you might expect from reassigning them. Only after you have completed such an appraisal (and the competitive analysis described at the end of this chapter) can you undertake to create business plans.
