Assessment of business and finding ways to improve its effectiveness

In the construction of the development strategy of an existing business or to improve its effectiveness it is necessary to understand the current situation as a whole. As a rule, the accounting information does not provide a complete picture of the real financial condition of the enterprise, and especially not answer the questions: what is the reason for the low efficiency of the business and what should be done to improve its effectiveness

VIP consulting offers a new approach to evaluating the effectiveness of existing business. Practice shows that to determine the deviations in the existing business processes it’s necessary to compare the ideal to the real business. The ideal business model is a business model, made to calculate the business plan, where all options and their interaction in accordance with the norms and rules of effective business are built. After compiling a perfect model, a real model of your business is built, where in figure form the business processes of your enterprise are described.

After the two models in the same format are ready, a comparison of results on individual indicators and business processes and overall efficiency is conducted.

Take the example of livestock:

We have:

a) cattle farm (barn, a dairy farm or other);

b) doubts about the effectiveness of the farm.


a) determine the effectiveness of the farm at present;

b) find inefficient business processes;

c) specify the ways to improve efficiency;

r) to confirm all items of intelligence and calculations.

The approach to solving the problem:

The main business processes of livestock are:

Reproduction and structure of the herd;

For the analysis of the reproduction fertility process builds up in time with the allowable case. This part of the model to calculate the number of animals in the herd, and the structure of the herd as a whole (normative and real). As a result of this work, the customer sees whether his business corresponds existing norms, does not the loss of livestock exceed the normal value. If this occurs, then look at what periods of life its happening and are looking for  the reasons. The answers may be quite different. For example, the normal fertility and high mortality in the period from birth to weaning are defined. This may occur because of guilt and careless of employees, as a result reduce the effectiveness of the business to “0”.

The structure of the herd is also important, such as in dairy farming inefficient business processes can be caused by irregular structure of the herd, where there is not a high enough % of dairy cows and a large stock of young animals, i.e. we  obtain income from the sale of milk, but we feed the whole herd. As a result, income from milk sales is not enough for the maintenance of the farm, etc.

Technology content;

This section shows how much time is optimal to keep the animal from birth to slaughter, what rules of food provided and what is its composition for different age groups, what weight should reach the animal at each stage, production equipment, labor, medicine, etc. We compare the normative results with actual data of the analyzed companies and determine the deviations and their causes.

Feeding and food supply;

It is one of the most difficult sections for analysis, provided that a proper forage base exists. In this part, the cost of feed in types, the cost of delivery, efficiency of feed are determined, and an analysis of the purchase price of food is also conducted (we consider alternative suppliers and their prices). Analysis of forage will answer the question, what is more profitable in a given situation - to grow food on their own (own cultivation, permitting land resources), or buy.

Implementation of the final product (meat in live weight, milk, etc.)

In accordance with the planned indicators the livestock sales period and the number of animals for slaughter, their weight for slaughter are determined. The data are compared with actual results the company that makes it possible not only to determine the deflection, but also calculate the amount of lost profits as a result of violations of business processes. According to the results of an evaluation of business efficiency directions to a radical change or development, can be defined. On the basis of these results the most effective development strategy specifically for your business is formed.

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