A business audit takes an ant’s & bird’s view of a business & ascertains its strengths & weaknesses.Such an audit is done by a management expert. The management expert (or consultant) cannot add value without the audit. Such an audit can take upto 3 months.

The audit requires the willing cooperation of the management team. Later, the auditor suggests the improvements required. Carrying out the improvements is the responsibility of the CEO but hand-holding is an important role of the expert.

During the audit phase, it will become clear whether the client & the consultant are able to form a trust & are ready to work as patient/doctor.

There may be no magic wand but many new insights (eureka moments) will be discovered.

The consultant’s job will be improvements. The consultant should ideally behave like a shadow CEO & find new paths.

The auditor looks at:

1. The mission & vision

2. The true & fair picture of the books of accounts

3. The team & level of trust

4. The spirit of improvement

5. The attitude of the leaders. Their level of commitment/obsession/sacrifice

6. The importance given to human beings

7. The spirit of learning & teaching

8. Whether the careers of all team members is addressed

9. The level of delegation (Don’t hire a dog & try to do the barking)

Just as an automobile needs a number of dials on the dashboard & also needs to have its tyre pressures checked periodically, a business needs a number of “dials” to have control. But the number is small. Five such “gauges” will tell how a business is doing & whether it is moving in the right direction.

1. The first true measurement of a company is its standing in its markets. Is market standing going up or going down? And is the improvement in the right markets.

A company also needs to know how its products or services are doing in respect to market share compared with alternatives of customer satisfaction.

2. The second “dial” on a company’s “instrument board” measures innovative performance. Is the company’s achievement as a successful innovator in its markets equal to its market standing?

3. The third is productivity. Ideally, the productivity should increase steadily.

4. The 4th dial shows liquidity & cash flow. It is old wisdom that a business can run without profits for long years provided it has adequate cash flow. The opposite is not true. Liquidity is easy to measure & highly predictable. An ordinary cash-flow is usually all that is needed to identify cash flows & cash needs.

5. The final “dial” should measure business profitability.

These measurements of performance give control. They should regularly be on the desk of senior team members.

The consultant will try & change the culture. This is very difficult.

Culture, more than rule-books, determines how an organisation behaves. If you have a good culture, the rules can be pretty simple.