When you're assessing a company, how do you know it is a healthy business that is going to grow?
If you're a banker of venture capitalist, you look at all sort of measurements, mainly financial. But what if you're not privy to the balance sheet?
Here's a handy list of non-financial indicators that often I use to divine the prospects for entrepreneurial businesses. Take a look to see if I'm missing anything:
Eight indicators that a business will thrive and grow
1) Written business plan, reviewed and updated at least once a year
2) The company exists at the convergence of two or more compelling trends (e.g. iPod: storage technology, great design, miniaturization, digital-music management);
3) Management is a partnership of experienced people with complementary skills (i.e., finance and technical)
4) The company targets niche business-to-business markets that have money to pay for innovative products
5) The company’s product offers a clear solution and a unique selling proposition (i.e., we can help you manage your geophysical data faster than anyone else)
6) The company is well capitalized in anticipation of future financial needs
7) Management is constantly (and willingly) developing new administrative processes to help the firm “keep its edge” as it grows
8) Presence of a paid board of directors (consisting mainly of outsiders) or a board of advisors
If I left out any other essential factors, feel free to leave a comment here.