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Making sound judgements is one of the keys to success in the business world. Evaluating different organizations is a big part of this. It’s important to do research when deciding where to invest, or who to work with. However, it’s also crucial for entrepreneurs to find a way to see the businesses they run clearly. Coming up with an objective system with a track record of success is a good way to do this.

The first step in assessing a company is to look at the people who do business with it. If it’s a B2B operation, what do clients and customers have to say about service? If it’s a B2C business, what does the public have to say about them? If a company has a lot of fans, that’s always a good sign. That means that the business is delivering on the promised goods and services, and customers are satisfied.

Another key indicator to consider is profitability. Now, profitability is not everything. Every business goes through growing pains. It can be normal for new businesses, especially in some industries, to lose money for the first few months or even year. But unless a startup has a very committed angel investor, losses are not sustainable for long. People go into business to make money, not lose it.

If the business is turning a profit, consider what’s happening to that money. Is it being reinvested into the operation? Are suppliers and employees being paid in a timely fashion? These are all very important things to consider. Another thing to consider is reinvestment in the company. By continuing to innovate and research effectively, companies can continue to be profitable for years to come.

Lastly, think about who is at the core of the business. Is it one executive or one designer? Consider the distinctive look a company like Apple cultivates, and how central that is to sales and marketing. Or consider suppliers. If only one supplier in the world makes the widgets needed by a company, a raise in their prices could have significant impacts on sales to end users. Determining as much as possible about the amount of knowledge sharing, inputs and diversification is key in deciding whether to deal with a company.