All businesses have weaknesses, strengths along with opportunities and external threats so if you want to sustain and grow your business, it’s imperative that you identify and manage these effectively especially when looking to achieve long-term success.
A Business Health Check involves sitting down and asking yourself some key questions about your business and as most business owners are extremely busy working on various parts of their business wearing many hats to keep going, regular check-ups can help you plan and manage for future success. The following provides a list of the key areas of your business to health check on a regular basis.
- Sales & Revenue
Sales and Revenue is the amount of money your business earns before any expenses are taken out. Without sales your business will not earn a profit and stay viable. Setting realistic and measurable monthly and annual sales targets will help you stay focused and goal orientated. Evaluating outcomes especially if you missed your goals, gives the opportunity to ask yourself what do I need to do to adjust going forward. If you hit or exceeded your goals ask yourself what did you do right and how can you do more of that in the future?
Do you have any customers who drain you of energy? The ones who constantly ask for discounts or scope creep? Maybe it’s time to cut them loose. When it comes to your revenue, they may be costing you more in lost time and motivation than they’re worth
Conversely, maybe you have one great client who accounts for the bulk of your revenue. This might seem good but what would happen if that client went out of business tomorrow? In that case, you must never stop looking for ways to diversify your client list. Having multiple revenue streams is a good thing, but it’s important to dig deeper and determine which source of revenue is most crucial, making the most efficient use of your resources represents the greatest potential for growth and ask yourself what you can do to ensure that you focus the majority of your time and attention there.
Don’t be behind the door when it comes to asking for referrals from your satisfied customers. Some people find asking for referrals uncomfortable, but you should get in the habit of asking every satisfied customer for one. Simply ask if they know anyone else who might have a need for your product or service.
Continually monitoring your business expenses provides an accurate record of how money is spent and helps you chart a future course of action with clarity and confidence. Take a look at your expenses and determine the ones taking up the bulk of your cash flow. If you’ve been in business for a while, some increase in expenses may be due to healthy growth, but some may have spiralled out of control when you weren’t paying attention. Carrying out a regular health check on your expenses will help you identify ways to save money.
Things you can do to reduce expenses include always being on the lookout for the best deals on office supplies, equipment and utility tariffs that best fit with your business hours. Also be sure to employ the services of a good accountant who will know the full list of expenses write downs and tax breaks.
Accounts receivable is the money that your business is due to receive because it has provided customers with goods and services. It is important for companies to closely monitor receivables to make sure customers pay their bills within the specified agreed time frame. Chasing up on outstanding payments can be an arduous task but it is vital for a small business to receive payments in a prompt time frame to stay financially viable. Ask yourself, are you doing a good job of monitoring receivables and following up on outstanding invoices? If not, this could be negatively affecting cash flow and putting your business in jeopardy. Remember, your business is not a bank so don’t be embarrassed about having a clear policy on overdue accounts and follow through on collections, even if you have to outsource it.
A good tip is to consider having a written agreement with all your customers. This agreement should establish clear expectations for when payments are due and what happens when payments are past due, such as charging interest or referral to collections as this will avoid any awkward moments. You should also consider collecting deposits especially from new clients until they prove their promptness in paying for your goods or services. For those who are chronic late payers, then an agreement is a necessity.
Marketing is an essential component of the internal business operations. Without a steady and ongoing marketing strategy and calendar of events, potential customers won’t know your business exists. Marketing is about matching your product or service to the needs of the consumer and continuously adapting to meet those needs. In business, you can never stand still because if you do, your competitors will swoop in and entice your customers with the latest marketing techniques. Have you identified who your customers are? Do you have a plan to target new customers? Are you measuring your existing marketing tactics? These are all questions to ask yourself when checking the effectiveness of your current marketing strategy.
Success comes when you settle on one single area of strength and turn that into a USP. How well are you conveying this message and is it yielding revenue? Are you making the mistake in assuming you don’t need to market your business? Marketing involves using social media, networking and engagement as well as maintaining an informative website that is updated on a regular basis.
If you need assistance with carrying out a health check for your business then contact MentorUs Business Solutions today.