The Business Analysis

Why IPA?

More about IPA
What do we do for our clients?
What takes place during the performance of a business analysis?
What are the steps in the analytical process?
What areas of my business will be analyzed?
Is there a guaranteed increase in profits after the analysis?
Will the Senior Business Analyst be an expert in my industry?

More about IPA

We are the largest management consulting company in the world serving small and medium-size businesses with operations throughout the United States and Canada.

In its most recent rankings, Crain’s Chicago Business ranked IPA at the 6th largest management consulting company in Chicago. IPA, and its related companies, had revenues of $224 million in 2008. Crain’s also ranked us as the 144th largest privately-held company in Illinois in 2008.

On a global scale, Consultants News ranked IPA as the 61st largest consulting firm in the world in its June 2005 rankings, and Management Consultant International ranked us as the 52nd largest consulting company in America.

We have 1,100 employees and are regarded as the fastest growing management consulting company serving our market segment in the history of American business.

As the largest management consulting company in our market, we have more experience in providing consulting services to the owners of small and medium-size businesses than any other company. We have analyzed more than 200,000 businesses and provided service to more than 100,000 owners of small and medium-size businesses. It is widely held that we are the only management consulting firm in the world that delivers such a broad array of professional services to the small and medium-size business marketplace.

What do we do for our clients?

We provide an objective, third party comprehensive analysis of the business to give an unbiased view of its strengths and weaknesses. The business analysis takes approximately 1 to 3 days. Our target market is businesses that range from $700,000 to hundreds of millions in annual revenue. We have more than 200 analysts with different backgrounds and experience. In order to ensure a successful business analysis, the Senior Business Analysts are assigned based on their background and expertise as it relates to specific client needs. During an analysis, the Senior Business Analyst will review, among other things, company financials and compare them to those of other companies in the same industry, interview key employees, review the business operations, and review goals and objectives. The Senior Business Analyst will determine if you are on track to meet your immediate business objectives and your long-term business and personal goals, including financial security.

In addition, the Senior Business Analyst will discuss with you and make recommendations about how to improve business operations, increase productivity, make the business run more efficiently, improve ease of operations, increase profitability, develop productivity-based excess profit incentive plans for employees, decrease your tax burden with proven tax reduction strategies, develop a succession plan, improve business value, develop greater employee accountability, reduce the stress you feel as a business owner, and review all other business issues of interest to you. Our No. 1 goal is your satisfaction!

Although 80 percent of the work we do is operational and 20 percent financial, we do conduct a comprehensive review of financial performance in order to provide a return on investment calculation tied to implementing our recommended business improvements.

The Senior Business Analyst assigned to your business will perform the work onsite and will be in consultation with a Survey Services Director, located at IPA headquarters, who has access to all company resources. The resources include, but are not limited to, business and financial data, comparative business performance benchmarks provided by the Risk Management Association (RMA), and our prior consulting case studies. Furthermore, our headquarters team of Survey Services Directors have an extraordinary range of experience and expertise and are available for collaboration in developing recommendations to address any business problem.

What takes place during the performance of a business analysis?

Every Senior Business Analyst is bonded for $2 million and performs a quantitative and qualitative analysis of your business:

• conducts an objective analysis of every aspect of your business
• provides you with a "new pair of eyes" to recognize the problems affecting profits, providing a fresh perspective of the operations from an outsider with no emotional or financial investment in the business
• performs a functional analysis rather than a technical analysis of the business
• examines all areas of the business that have a direct and indirect influence on profits – cost controls, marketing, management, operations and finance
• provides immediate benefits from the analysis by identifying the problems, the true cost of those problems, and the effects of those problems on daily operations as well as their long term effects on the business
• offers direction on how to reduce costs and generate greater revenues while increasing bottom line profits
• provides financial and analytical tools to maintain a competitive edge
• provides a tax illustration identifying potential tax savings for future years
• discusses business valuation needs, if appropriate
• is contractually obligated to maintain confidentiality
• discusses our services with you which are provided to you on a project-basis rather than retainer-basis; and
• works exclusively for you during the analysis.

What are the steps in the analytical process?

• Opening conference (1 1/2 to 2 hours)
• Financial trend analysis and operational review
• Employee interviews and questionnaire
• Review and discussion of short and long-term goals and objectives
• Review of agreed upon issues
• Ongoing discussion with owners, managers and key personnel
• Closing conference (2 or more hours)
• Oral presentation of the findings, results and recommendations of the analysis

What are the steps in the analytical process?

We analyze all the applicable areas listed, and any other areas agreed upon by you in the opening conference, to appraise their effect on the revenue and profit of the business. Examples of what the Senior Business Analyst reviews include:

• Operations: How often do you receive operating statements and what key information is tracked and utilized to measure productivity?
• Administration: Is there a developed percentage basis budget? If so, how are the results tracked? Do administrative systems and procedures meet current requirements? If not, what are the ramifications of non-compliance?
• Material Cost: What effects do waste and rejects have on material costs and how do these affect margin contribution? Who is responsible for negotiating material contracts, managing costs and overrun controls? How are these employees measured and held accountable in the performance of their jobs?
• Labor Cost: How does labor cost fluctuation affect production scheduling? How do you compensate for work center loading? What effect does overtime have on profitability and how does this factor in the decision to add or maintain personnel?
• Overhead: How is overhead application accounted for in the pricing matrix and what methodology is used to track and measure the implications of adding overhead costs to cash flow requirements and profitability?
• Incentives: Is there a productivity-based excess profit incentive plan? If not, how are employees rewarded and how is the effectiveness of those rewards measured in profit and productivity?
• Productivity: Are there established quantifiable productivity standards? How are productivity based performance standards measured?
• Cost Controls: Are costs measured and compared to predetermined standards? What systems or procedures are in place to control costs and quantify results?
• Material Flow: How is material throughput analyzed and what effect does it have on productivity and waste? Does a perpetual inventory record for raw materials, supplies, work-in-progress and finished goods exist and how is it maintained?
• Break-even Utilization: Is there a break-even analysis by product group, sales personnel or service offering? How are break-even calculations used and how is it utilized for bidding, pricing and market strategies?
• Cash Flow Management: Is there a system in place to forecast and manage payables and receivables to maximize current assets and increase vendor leverage?
• Tax Planning: Is after-tax income maximized with proper planning? Is your estate plan structured to minimize estate taxes?
• Organization Re-engineering: Is the company set up on a functional basis and do all employees have a clear understanding of their role in the success of the business? Do you, as a business owner, have a clear understanding of your responsibilities to create a positive cash flow, generate a substantial profit and create a good quality of life for you and your employees?
• Sales and Marketing: Are you able to determine margin contribution and operating profit by salesperson, product, product line and territory? Are you getting a reasonable return on your advertising and promotion investment? How do you quantify your return?
• Website: How does your Web presence enhance marketing objectives? How is the success of those efforts measured?
• Any Other Unique Concerns: What other issues impede your ability to create a good quality of life for yourself and your employees?

Is there a guaranteed increase in profits after the analysis?

While no one can guarantee a business analysis will automatically increase profits, we do identify the business problems that stand in the way of achieving positive cash flow, ease of operations, and a mandatory minimum level of profitability. We discuss with you necessary changes that must be made in the business in order to achieve its maximum potential.

Our Senior Business Analyst provides a comprehensive and exhaustive business review, both from the perspective of how the business is performing in relation to prior years, and how it is performing in relation to other companies of a similar type and size. You will see your business as you have never seen it before. From this comparative review a business owner is able to clearly understand the obstacles standing in the way of achieving the business’ maximum potential. More importantly, the Senior Business Analyst will discuss with you what methods, systems, procedures, controls and incentives are needed in order to reach your goals and objectives.

What you do with this important knowledge about your business is up to you. The Senior Business Analyst is not going to solve your problems, but will give recommendations to resolve identified problems – and present you with four options: 1) you can try to fix the problems yourself, if you have the skill and the time; 2) you can retain us to address the problems for which there is an hourly fee; 3) you can try to fix some of the problems, if you have the skill and time, and retain us to fix the others; or 4) choose to decline all recommendations and do nothing at all.

The Senior Business Analyst will discuss all costs associated with any consulting services we will provide so that an informed decision can be made based on the company’s best interest.

Will the Senior Business Analyst be an expert in my industry?

Not necessarily, and for good reason. The Senior Business Analyst will focus on what we call "the business of the business." A comprehensive review of operational and financial performance over the last four years will be conducted to identify variances in key areas. This review is an X-ray of the business and much like the review a Wall Street analyst undertakes on publicly-held companies to determine financial strength or weakness. One is not required to have experience in the construction industry in order to identify the weak foundation of a construction company.

The role of the Senior Business Analyst is to identify problems and provide recommendations. Once the Senior Business Analyst identifies the problems, specific recommendations regarding what is needed to resolve them will be provided. One of those recommendations may be to bring in one or more experts from our Consulting Services Department, or if it is a tax-related issue, one of our consultants from ITA.

And keep in mind: your Senior Business Analyst is not working alone. Every Senior Business Analyst is assigned to a Survey Services Director at our headquarters who has had years of experience in analyzing thousands of businesses. The Survey Services Directors have the entire resources of the company at their disposal during the course of your analysis.



Still not convinced? Read our FAQ about your IPA Consulting Project.