Your Business Health Check
It’s still early in the new year, and I’ll bet one of your New Year resolutions was something to do with health – exercise more, eat better, diet, go to see your doctor for a health check?
Well I don’t know how well you have been keeping to your resolutions nearly three weeks into the new year, but why don’t you check your business in for a health check?
The website teikoh.com has free resources available for download and these include health checks or “audits” for your business. It would not be a waste of time to spend an hour or two going through these for your business. When I conduct these for my clients, I charge up to $2,000 a session. True, this come with my personal 30 years’ experience in business and my interpretation of diagnosis and medication, but you can at least spend some time to look over your own business to see what areas you will need to work on in 2016.
I would suggest you organise your review into three areas – the management of the business (how you organise it), the operational processes of the business (how you run it), and the finances of your business (how you are – or not – making the right kind of money).
In the area of management, check if your business has a basic plan at the very least. Have you defined your business Vision, Mission and Values? This sets the “brand” or “culture” of the business as a promise of what your business does, how it does it, and what it stands for. All your organising and operating should reflect this set of statements, or else you don’t have a consistent business, you just have a jumble of parts that tries to sell something somehow, anyhow, and no different from your worst competitors who don’t strive for greatness.
What are your goals and objectives for 2016? Are they written down clearly, and do they have a set of measurements alongside them so that you can monitor your performance as you proceed.
A goal to increase sales is not a goal but a wish or a desire. However a goal to increase sales by 20% for the year at least has a real target and timeline. How about a goal to “Increase sales by 10% in the first 6 months, and then by 20% in the second half”? This sets up milestones you can check yourself against as the months go by, adjusting your strategies as necessary.
Do you have an annual budget that reflects the costs and expected income from achieving your goals? Without a budget, you are entering the year blind. You know your New Year’s resolution to lose 10 kilos? What if you don’t own a set of scales – what do you think your chances of getting to your goal weight is?
Another management health check is how your business organises employees. Do they know who they report to and what is expected of them? Can they refer to an organisation chart? Do they have a written job description? Are they provided regular feedback and any training necessary? If your answer to these questions is “no” then ask yourself how your employees can work effectively and efficiently? You may have answered your own niggling worry about why your employees are always unable to make decisions for themselves.
In the area of operations, your business health check should review your production and your marketing processes.
In production, are your processes written into some sort of manual or procedures? If not, is that why you spend so much time showing new staff “the ropes”? Do you have good relationships with your suppliers, and even if you did, do you have alternative sources? Do you know your suppliers well enough to know in advance if and when prices might change, or if they are about to go out of business?
In marketing – do you have a basic marketing plan? How well can you describe your customers and what they want, and if you are actually meeting all of their[resent and future needs? What about your competitors – how well do you know what they are doing and how? Do you have sales targets for the year or are you just selling whenever someone walks to the door – not the best forward-looking process for sales.
Finally you need to review your financial systems.
Are your books up to date and accurate (and this includes all your tax filing)? Do you get periodic financial reports showing you how you are going against last year, and against budget?
Oh, and if you do – do you actually understand them or do they just get filed?
You need to understand your finances (you cannot rely on your external accountant who has to deal with 300-400 other clients) and you need to review results against plans and budgets so that you can react before it’s too late. Don’t be the business that didn’t make budget because you didn’t care rather than didn’t try.
Finally in the area of finances, do you do any financial planning – do you know what your cash flow indicates, when you might need loans or to make investments of surplus funds for the best return?
As I said at the beginning, we all make New Year resolutions, but very few of us make resolutions about our business. We might write down a few goals, but unless your business is healthy – in all areas – you will find it hard to get to your goals.
There are various checklists available on the website teikoh.com so get over there and have a look at the free resources.
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