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Red Flags Assessment

“The measure of success is not whether you have a tough problem to deal with, but whether it is the same problem you had last year.”
– John Foster Dulles

The human spirit is delicate and resilient at the same time. Sometimes we allow ourselves to get accustomed to circumstances that we don’t like – great or small. Especially if we see others accepting things “the way they are.”

It’s easy to get caught up in the day to day. You don’t realize you are off track until you’re faced with the truth by a simple question like, “How long have you had that problem?” or “How much cash do you have left on hand?”

As successful leaders, we all think we can solve that nagging problem or handle the next challenge. We just need time, or money, or even more time. Asking for help doesn’t even enter our minds because we’re used to being the ones who fixes things for others. When the challenges pile up, suddenly we don’t know which to tackle first – or which fix would make the biggest difference.

One of the hardest parts of creating a business strategy to change or grow is figuring out which issues are very important and which are not as urgent. Often outsiders, like consultants, are good to include in the process because they can provide guidance based on experience with multiple companies and industry best practices.

This idea of how to indicate what issues signal a big problem led us to develop a list of “Red Flags” in managing a business – the issues that are vital enough to warrant serious and, possibly, immediate action.

We have broken the list down into two types of red flags:

  1. Red flags that can stand alone. They are of such importance that the presence of this one indicator requires immediate consideration.

  2. Red flags that compound. These flags are slightly worrying on their own, but indicate a greater problem as they pile up. It’s time for a deeper look if you score two or more of these in a category or a total of more than five.


Based on our experience we have developed a list of red flags. Click here to complete the assessment.  By completing this simple exercise, you will now have a document of the areas of your business that you find most troubling. Armed with this information, you can start a conversation with your management team or outside advisors about the issues that you find troubling. A good next step would be to develop a strategy to improve that area.

First, figure out how to prioritize the issues based on impact on the business in dollars and time to realize results. For example, if you’re having an issue with poor performance on quality or incorrect shipments, what EBITDA increase and revenue growth could be realized by correcting it? If you’re constantly fielding customer complaints and sending out replacement parts, what is the cost of customer service and overnight shipping? If quality improved, would those decrease? What business aren’t you winning because of quality issues? Can you quantify that impact? How quickly can I expect to realize financial impact – is it a quick fix or a longer term gain?

Prioritizing is made easier by having a common measure based on facts. And the most important facts in business are money and time.

Once you have a better idea of the impact of improvements, think about how they might be connected. Is quality affected by a lack of training? If so, think about tackling those initiatives together with a phased approach.

The red flags checklist was compiled from our personal experience – 17 years of helping middle market business owners unlock the potential in their business and improve performance.

If you have any to add or wish to discuss them further, we welcome your comments at info@forteone.com.