We are constantly reminded by our loved ones, media adverts and our own conscience, that it is important to take care of your health and also ensure doing regular screenings when we reach certain age milestones. Why not apply the same principle when it comes to the running and managing your own business?
Perhaps the best way to look at this, is setting aside a certain month every year when you take a step back and evaluate the health status of your business. For instance, you can plan it around a time when you are less busy - perhaps you provide a seasonal service and Winter might be ideal to take stock and evaluate whether your business is fundamentally sound enough to survive another financial year.
Consider these five steps when doing your business health check:
1. Re-evaluate your goals
When owning and running a business, you most likely have a few milestones in the back of your mind you would like to achieve. The most obvious being to increase your profit margins, motivating your staff to become more invested in the business, expanding your service area etc. It is crucial not to lose sight of these goals and even more important to continuously re-evaluate them because the business environment constantly throws us punches when we least expect them. Currently we are facing a potential world-wide recession as a ripple effect of the COVID-19 crises, which no one saw coming. If you haven’t re-evaluated your goals yet, it is seriously time to do so and one thing we can all learn from the current situation is that we should be prepared for any scenario when it comes to business. Having a business roadmap for the future is important but it is even more essential to constantly run a business health check by measuring up your profitability and productivity against a potential financial crises.
2. Money mastery
You don’t need to be an accountant to understand profit. For any business to grow, it needs to make money and if you don’t have a good grasp on the expenditure vs income of your business, you might never be able to retire or sell your company when the time comes. That is why, you need to understand that business is essentially about making sure you deliver profitably, productively and with enough information to make great decisions. Understand how many sales, customers or dollars you need to make every day in order to break even and eventually hit those profit goals you are aiming for. This is probably the most important aspect of your business to check as part of your evaluation process.
3. Take stock and know your numbers
Most companies will run a comprehensive stock take exercise annually but essentially this should be more than just checking tangible assets, it should include measuring where your business is at any given time with regards to marketing and business growth efforts. You need to find a way to test and measure your average dollar sale by monitoring it over a certain period and keeping record. This way it will be easier to establish whether your business is growing or not when the time comes for your business health check annually. This will enable you to monitor your key performance areas (KPI’s) and establish whether the strategies you implemented over the past year have been yielding results. If not, you need to identify the problem areas and make some changes, for instance adapting or increasing your marketing efforts or working on customer relationships etc.
4. Productiveness - the essence of success
For any business to grow, it is crucial to ensure it is running at optimal productivity. Time is probably the scarcest resource when it comes to managing a business and for that reason it is so important to ensure that all your staff are as productive as they can possibly be. If you invest time and effort to help your people become more industrious, it will not only increase your profits but will free up your own time as business owner to focus on putting systems in place that will ensure your business is recession-proof for when the going gets tuff. Essentially you will help to secure every staff members’ job and be able to hold on to your business when it is needed most. Check in with your staff on a regular basis and make sure you evaluate performance vs effort.
5. Find your niche and make sure you own it
If you are in a position to offer a unique service or product to your customer base, it is important to ensure that you take full ownership of it. This is what sets you apart from the competition and if you don’t know what that is yet, it might be a good idea to pull in the help of a business coach or mentor who can assist you to identify your Unique Selling Proposition (USP). Once you know what your differentiators are, use the right marketing tools that will help you to take full ownership of it. You are now one step ahead of your competitors so make sure your marketing efforts count. Most business owners are not very confident when it comes to marketing their services or products and once again, a good business coach can help to test and measure a variety of marketing opportunities that will help increase sales and ultimately grow your business. This quote by Brad Sugars taken from his book, Billionaire in Training, rings so true: “People are willing to pay for service, when it’s the service they desire. If the service exceeds their expectations, they will stay with you and they will say good things about your business.”
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