Methods used in Business Impact Analysis
There are different Business Impact Analysis methods used by various organizations. The method that we are going to follow is a step-by-step analysis that will help to determine the impact of a new business opportunity.
STEP 1: Measuring the Business Opportunity
This step will help to measure the business opportunity that the company can garner if it decides to get into this business domain. It is a simple measure that takes into consideration 3 broad parameters. It considers the number of business inquiries, the average percentage of people who will actually buy the product and the margin that can be generated. Let’s look at a simple example. If an E-Commerce website decides to sell books it will calculate the number of visitors to the books section and multiply it with the percentage of people who will buy and the average profit per book to come up with an effective number analysis.
STEP 2: Loss of Opportunity Because of Employee Factors, Customer Service, etc.
Not all business opportunities can be converted to real business ideas. Some ideas can be lost due to poor customer service, employee factors, and limited merchandise. So, business consultants often calculate a factor that will be lost from the overall opportunity that we had measured earlier. This factor, when multiplied by the business opportunity, leaves us with the actual impact that this opportunity can have on the business.
STEP 3: Take Steps to Minimize Losses Due to Employee Factors, Customer Service & Efficient Merchandising
Businesses take steps to minimize the impact of a lost of opportunity. This can include training for employees, improving efficiency with better systems, etc. The cost associated with these efforts will need to be deducted from the overall business opportunity. However, the benefits derived from these efforts will get added to the opportunity within a couple of years of successful operations.