By Richard Bosworth

So you and your business have survived the Great Recession.

However, how healthy is your business – and how are you going to plot your way ahead?

As a business strategist and executive coach I have found Warren Buffett’s four key tests below to be a very valuable set of measurable criteria to plot and chart the progress of a business against.

1. Clear, durable competitive advantages
2. Proven management
3. Healthy return on assets
4. Strong intrinsic value

1. Clear, durable competitive advantage

Does your business have a unique product or service which customers consistently need? – or are you a low cost buyer and seller of a product or service the public consistently needs?

Do you enjoy high gross margins from a strong brand with pricing power – or is your business ‘personality based’ and vulnerable to whims and vagaries of the top performers?

The key question is what are you going to do to improve and strengthen the gross margins in your business?

2. Proven management

How good is your management – and what proof do you have of their ability?

For Warren Buffett there are four bench mark criteria where management is concerned.

Has your top team achieved consistent sales growth throughout all economic periods?

Are there consistently low levels of debt, or no debt, in the business?

Does the management consistently spend low levels on R&D to keep the products and services up to the mark – or are there large swings in the levels of spending?

Has there been consistent profit growth for the past five or ten years? If your top team has under performing you have some tough decisions to take. Remember, if you can’t change the people then change the people.

3. Healthy return on assets

Achieving a consistent return on assets of 20%+ is a benchmark of the company’s productivity and how in control the management is. Yes things have been tough, but don’t let people persuade you to lower the bar because it easy to do but very hard to recover.

4. Strong intrinsic value

Does your business consistently generate cash?

Having strong intrinsic value is critical for the long term survival of any business and cash generation is one of the key issues. Many businesses are profitable but they do not generate sufficient cash to sustain operations and in the past two years many ‘good’ businesses have failed because they were too reliant of the banks to cover their cash short fall.

By Reed Slidell

Anybody can come up with good business ideas. We come up with different ideas for the markets and this can go on for days, but most people never get down to the product delivery. I recently put together a product that I sell online.

Will it be a success or just roll along getting a sale here and there? I don’t know. I just have to do my best at marketing the product. I do know one thing; the website will not flop because I did my market research before I launched it.

All the market research that I did won’t tell me how successful I’ll be, but it helps me avoid a huge amount of time when it comes to doing certain tasks. There is a big similarity in trading in the market when you design your system to designing your SEO plan.

The fundamentals are the same. The difference is one is trading in the market and the other system in working with your business. It is important that you design a good marketing system to promote your website. The way you go about it with these two examples with the tactics are different. The tools that you use are different, but at the end of the day, it’s the research you do that brings in the traffic. Now you have to figure in the conversion rate when you start moving the product.

It’s only human nature to want to participate in the business world. You could even apply poker strategies to buying a business. Let’s say you’re in the business of buying businesses, so then you go out and buy them. There are many people who are risk takers and in reality their not risk takers at all. They just designed a business plan that helps them buy businesses so that they will be successful.

I know some people that all they have to do is attach their name to a business and it will be successful. That’s awesome if you think about it. Those kinds of people have no risk whatsoever. Course the opposite is true, if this person attached his name to businesses and they flopped, his brand along with his name would go down over a certain period of time.

All these people have one thing in common. They have a system in place that allows them to say no. They have different techniques to follow, but they don’t call them a system. They call them all sorts of names. One person might call it a process and the other person will call it a gut feeling. I don’t really care what you call them. They are all the same thing. They are all about keeping you out of something where you don’t spend valuable time and energy on something that won’t give you results. In the end it’s all about you coming up with good business ideas.