Doctors regularly advise people to have an annual physical and for good reason; finding out early that you have a health issue can occasionally be a matter of life and death. Even when it’s not and your exam just discovers something that needs monitoring, you can minimize issues down the line. It’s the same with our business; keeping it healthy can be a simple matter of giving it a regular checkup. Think of it as corporate Medicare.
1. How are your overall vital signs – the pulse of your business. Does it feel like it’s working well? Does it feel healthy? Are you always fighting fires? What’s your personal stress level? What is the company’s stress level? Do you know how many units, or hours of service, you need to sell next week? If the answer is no, then you haven’t got your finger on the pulse of the business.
2. Is your business plan up to date? Do you have one? If you haven’t, start pulling one together. Seriously, would you go on a long journey to a distant land without planning it? Dwight D. Eisenhower said, “In preparing for battle I have always found that plans are useless, but planning is indispensable.”
3. How strong and secure is your cash flow? Do you have more money coming in than going out? Are you able to pay your bills on time? What about in six months’ time?
4. Do you know how many sales (revenue) you need? This week, month, quarter, year? If you are not on top of sales, then you are not on top of your businesses health.
5. Are you making money? Sounds simple, but many business owners don’t know if they are making a true profit. They may be paying the bills, but what about a healthy net profit? If, for instance, you are making a profit as long as you only pay yourself a pittance, is that realistic? Analyze your financials with your accountant and see whether you are truly making a profit. Is it in line with industry averages?
6. Do you know your cost of doing business? If you’re not in control of your expenses, then how do you know if your business is healthy? The cost of running a business can be crippling, but don’t accept what you are currently paying for anything – negotiate everything! Keep up to date with technology; it’s reducing costs across the board.
7. What percentage of your revenues come from existing customers? It’s far less expensive and healthier to retain customers than to keep finding new ones. If you’re not keeping customers, why not? Is there a reason they are not coming back?
8. Are your staff happy? Unhappy employees and low morale is a key indicator all is not healthy in your business. Happy employees are more productive and provide better customer service – all of which contributes to a positive bottom line. Ask them!
9. How much are you promoting your business? Sometimes being healthy means taking action even if it hurts. Ask yourself, when did cutting back on marketing expenditures ever increase sales? Ever? If you simply don’t have the money, then find other ways to market the business – just don’t cut your businesses life support system.
10. Get a second opinion from someone outside of your business – getting a new perspective is vital. This can be a business advisor, or even your bank manager. Often we forget that a bank account manager is an asset to be used. What you are looking for is someone who is qualified to take a look at the vital signs of your business and ask a few penetrating, often uncomfortable, questions.
Business health is like your own personal health, it’s easy to let things slip. First you stop watching what you eat, then you exercise less, drink too much and do other things that are contrary to being healthy. You may feel it happened overnight, but in reality the signs were there for a while. Hopefully, your business is just a little out of shape. A few hours every week dedicated to getting it fit again will be all that’s needed to make it healthy and profitable.
This article is provided by Community Futures Okanagan Similkameen. Questions about your business? Contact their office at 250-493-2566.