Recently, at the dedication of Kennesaw State University’s new Entrepreneurship Center I got asked the question, “Without hiring an MBA to do a Return on Analysis calculation, how do I know where I should put my money in my business to get the biggest payback?”
That is a very good question and we all wrestle with that issue because every organization has constrained resources – limited time, money, and talent.
I have found that a great tool to use for making funding decisions within an organization is a Critical Success Factor analysis.
Critical Success Factor Analysis
What is a Critical Success Factor?
They are the most important areas in your organization because they the things that will either make or break your business. They are the things that you must absolutely do, and do correctly. No two companies will have the same Critical Success Factors because they are unique to your particular organization.
The first step in determining your Critical Success Factors is to analyze your company and look for things that must be done correctly and if they are not, your organization will actually fail—they are indispensable to your success.
These are not just nice things to have or do in your business; they are the items that will either make or break your specific company. That is, if you accomplish your organization’s Critical Success Factors and everything else in your operation “falls apart,” will you still be successful.
If it is not a make-or-break item, it does not belong on your list. For instance, re-doing your reception area most likely would not be Critical Success Factor whereas developing and implementing a comprehensive marketing plan or investing in new software to ensure you deliver your products to your customer on-time could very well be a Critical Success Factor for your company.
An attribute to look for in a Critical Success Factor is that it is a leverage point within your organization and if done correctly it will enable you to scale up your company.
Where Are Critical Success Factors Found in Your Organization?
In identifying your Critical Success Factors bear in mind that you must address all six areas of your company. These areas are:
1) Vision and Leadership – What is your Vision for your organization and what Leadership are you providing to drive your business into your Vision?
2) Marketing and Sales – How are you going to market your products/services and what will your sales process be?
3) Production – How are you going to produce what you are marketing and selling?
4) Finance and Administration – How are you going to manage your finances and handle administrative activities?
5) Human Assets – How will you best manage your “Team”?
6) Information Technology – How can you leverage your internal information technology area so that it provides you a strategic competitive advantage?
Critical Success Factors Identify Company-Wide Goals
Because your Critical Success Factors are defined as the things that you must accomplish to achieve your 
Vision for your business, they are automatically focused on your company-wide goals.
Without a clear and holistic analysis you may end up achieving various objectives in your enterprise, but not necessarily bringing it closer to your ultimate objective: the fulfillment of the Vision for your organization.
By using a Critical Success Factors analysis approach, you avoid being overly focused on one or more areas of your business that are in reality not as crucial as some other areas of your company.
Utilizing a Critical Success Factors analysis enables you to concentrate your efforts on things that will affect your entire entity allowing you to prioritize the use of your business assets and put first things first in your company.
Critical Success Factors Provide for the Proper Allocation of Resources
Since the Critical Success Factors approach is a holistic approach, you are examining all of the areas of your business to ascertain each of the “make-or-break” areas of your company; all areas are put on a level playing field with respect to what will result in accomplishing or not accomplishing each Critical Success Factor.
The allocation of your organization’s limited resources becomes more properly weighted than if your try to allocate your resources without first identifying your firm’s “make-or-break” areas. Conversely, if you follow a “the squeaky wheel gets the grease” approach to allocating the limited time, money, and talent that your business possesses, you may not utilize your company’ resources most advantageously.
If you need assistance with identifying your Critical Success Factors so that you can most effectively allocate your organization’s resources, please contact us. We can show you how do this in an easy, straightforward way as a result of using a Critical Success Factors analysis.
Fountainhead Consulting Group, Inc. is an Innovation and Business Planning firm. During the past 17 years we have shown over 1,200 companies how to achieve the goals for their business by using our unique, comprehensive and systematic business planning and growth methodology, the Structure of Success™ so they can Work Less, Make More and most importantly Have Fun in Their Business. Using our Structure of Success™ methodology each month we examine one of 12 areas of a business or organization.
Office phone: (770) 642-4220
www.FountainheadConsultingGroup.com
George.Horrigan@FountainheadConsultingGroup.com
