In collaboration with NuLevel Strategic Solution, the National Minority Supplier Development Council (NMSDC) is offering a new set of online business tools to its certified Asian, Black, Hispanic and Native American minority business enterprises (MBEs) to assist them in assessing financial operating capacity, business health and value relative to their respective industries. These assessment tools will be part of an on-going series called the “Biz-Fit Challenge.”
The Biz-Fit Challenge was designed to stimulate more critical thinking around the areas of the business that often lie dormant, but have serious long-term consequences on the firm’s ability to raise capital and access market opportunities. The key underlying driver of failure in these two areas is the failure to prepare. Each “Challenge” will help business owners better understand the financial condition and health of their businesses’, while simultaneously outlining strategies for improvement. The knowledge gained through these exercises will hopefully better prepare firms to attract the right capital and market opportunities.
The first phase of the “Biz-Fit Challenge” will consist of three challenges, the first of which will be the “Biz-Health Analyzer.” This challenge will allow MBEs to assess their business’ health relative to profitability, liquidity, solvency, leverage and efficiency—the most common factors considered by capital providers. The tool will also help MBEs better assess how they are performing relative to their industry peers.
The second challenge is the “Breakeven Analyzer.” This tool is designed to help business owners determine the company’s current breakeven revenues and its five-year projected breakeven revenues. MBEs can also use this tool to determine their minimum revenue requirements on an annual, monthly, weekly and per unit basis. Understanding Breakeven is extremely critical to business development, pricing and managing operations. As such, MBEs are encouraged to utilize the data obtained from this exercise as a baseline for improving in these three areas. Many firms also use this data as a core component in implementing long-range or strategic plans.
The third challenge of the first series is the “Valuation Analyzer,” which is designed to give businesses a rough fair market value estimate for their company, based on applied industry-based valuation multiples. Upon completion, a supplemental summary report will be generated that will offer a more robust discussion on business value. This discussion will include an overview for various valuation methodologies and approaches to building business value; translating value into wealth; interpreting business value; and understanding business value drivers.
With each of these challenges, MBEs will use data from their current 12-month ending financial statements to generate a comprehensive report that takes an in-depth look at the challenge topic. In addition, participants will be asked to complete a short survey at the conclusion of each challenge to determine their overall effectiveness and any improvements that need to be made.
The assessment tools are an integral part of a comprehensive NMSDC capacity building initiative for minority business owners, with funding through a major grant from Macy’s, Inc. Online courses will be added to NMSDC’s Web site on business plan development, business strategy, finance, marketing and business development, for example. Currently, NMSDC’s capacity building activities include Centers of Excellence at several NMSDC-affiliated Councils as well as the Advanced Management Education Program at Northwestern University.