Business Evaluation


Business evaluation is a method of assessing and formulating the current state of a business and plans to improve or maintain standards. It is carried out periodically. A business evaluation can be carried out by either a board arranged for such an evaluation, or even employees can be a part of such an exercise. Hence, the different kinds of business evaluation are:

A combined exercise by both employee and employer which includes research and inputs from both in order to present a holistic and well rounded view of the current state and the changes required.

A business evaluation carried out at the managerial level which may also result in certain measures like handing pink slips to non performers. This is a more radical sort of an evaluation, resorted to when the situation is dire and quick action is needed.

A business evaluation can also be carried out by a third party, an external source with a view of taking over a defunct operation. In this case, the business evaluation serves as a kind of guidance as to whether the critical business is worth saving or a takeover.

Business evaluations are extremely important as they allow one to take stock of a situation. Such regular assessments improve the quality of businesses and facilitate transparency. Other advantages include:

Facilitation of employee-employer interaction leading to trust.

A fair idea of the strengths and weaknesses of any operation.

A comprehensive view of the technological and human resources of a company.

Knowledge of how the business will function at moments of crises, whether it has the skill to overcome lean periods.

Business evaluation must concentrate on certain key areas like:

Annual turnover

The profit margin over the last few years

Productivity of employers; performers and non performers.

Hence, for the success of any business, a well conducted business evaluation is absolutely necessary.

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Category: Business Evaluation

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