“There are no secrets to success. It is the result of preparation, hard work and learning from failure…”
Colin Powell
Author: Leigh Risby
Running a business is hard work and the daily to-do list can leave little time or energy to focus on anything else. Keeping an eye on the ‘health’ of the business is something many business owners put on the back burner.
Most of us have at some time gone to the doctor for a check-up or in response to a health concern. We undergo a thorough examination and if the results are outside the normal healthy range, we are advised to make changes to improve our health, or to seek further investigation. In some cases, the check-up is too late for preventive measures to work and drastic corrective action must be taken.
Business is not that different. If we don’t perform regular business health checks, leaving our unseen ailments to fester, it can be difficult to come back to a place of wellbeing.
DON’T LEAVE IT TOO LATE TO CHECK THE VITAL SIGNS OF YOUR BUSINESS.
You can steer towards a healthy and profitable future by taking charge of your business’ health. No matter how big or small your business is, or which sector it operates within, you can always make improvements – IF you understand the diagnostics of your business and monitor its performance.
NOW is always the best time to get a handle on your business’ vital signs.
Consider these questions:
- Do you know how many days, weeks or months your business can pay its bills if its income dries up?
- What amount of decrease or increase in income will require you to take a cost-related action?
- What would you need to do if your customers’ demand increased dramatically overnight?
- Do you know what your debtor days are?
- Do you know what your customer churn is?
- Do you carry stock (materials or finished goods)?
- What is your stock turn?
- What stock lines move the fastest?
- How much value/cash is in your stock?
- Do you have Work in Progress (WIP)?
- For how long?
- How much is this costing you?
- Has this been built into the quote?
- What affect will this have on cashflow?
- Do you have a clear forecast of your cashflow?
- What is your cash cycle?
- Do you need help with cashflow?
- How often do you monitor your Profit and Loss?
- On a monthly basis.
- When the accountant calls me.
- Couldn’t care so long as there is cash in the bank!
- Tax time.
- Are the assets the business owns fully utilised and returning value for their invested and ongoing cost?
These are only a few questions a health check would cover. Your answers and business figures would determine where you need to focus attention and build resilience for a more sustainable future.
Large businesses that have been operating profitably for years benefit from regular and independent health checks. Sometimes we avoid asking the questions of ourselves about our business health because everything seems to be ticking along OK.
Small to medium size businesses often cannot afford to ignore the vital signs of their business, yet may struggle to identify and learn what they are. In this category of business, the founder and owner are usually technical experts in their product or service. They haven’t had the time, inclination or opportunity to train in the skills of running a business, which makes them high-risk businesses that need some support.
Rest assured that every business can improve and often we just need someone to ask the right questions to help us reveal these opportunities.
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ABOUT THE AUTHOR:
With over 30 years’ experience of working with Global organisations in multiple markets and small local businesses, Leigh has developed the practical skills and knowledge to assist companies of all sizes. Through strategic planning, execution and structural alignment Leigh can assist businesses to become lean and progressively sustainable whilst delivering customer value and profit. Whether working with individuals or teams Leigh adapts and listens to the needs of the customer and offers structure to solution building and sustainability.