There’s no denying that small businesses are an essential part of Texas’ economy. These businesses are often created by people who are passionate about their services, products, and communities.
However, one area that small business owners may have less experience with is understanding the health of their business.
Just like each of us needs a regular check-up with our doctor, small businesses also should be monitored for both health and growth over time. While a professional business consultant can help ensure that your check-up is sufficient, and that your follow-up work is effective, you can also learn how to plan and conduct your own business health check.
To learn more about how to optimize your business for success, consider seeking the input of a business coach and other professionals. You can learn how to develop all of the skills you need to reach your small business goals with Founder's U, ActionCOACH's newest, highly specialized coaching program.
Just like a person might take medicine and get check-ups, businesses also need to be cared for to ensure that they stay healthy. In order to determine what sort of added care your business may need, you will need to undergo a small business health check.
A small business health check can identify a business’s strengths, weaknesses, and areas that need to be addressed. These tests can also give business owners an idea of where their business should be or will go in the future. Specifically, a business health check analyzes certain business metrics, including revenues and expenses to determine a path forward.
Business health checks are absolutely essential for any business owner interested in growing their enterprise. A business health check-up can provide the following benefits:
As you can see, there are countless benefits to be had by conducting a business health check, and this list doesn’t include every potential benefit. In its most basic terms, a business health check lets you find problems so that you can address them.
A business health check can generally be broken into two phases: analysis and solution building. Usually, you will want to verify your solutions with an experienced business consultant or business coach. This will ensure that your solution is free from undue outside influence. Once you’ve been presented with a solution, you can work together with your adviser to fit the plan to your needs and management style.
The three primary areas which will be analyzed during a small business health check are expenses, revenues, and receivables.
Your revenues are what allow your business to stay profitable and viable, and can be defined as the amount of money your business earns, before expenses. Your analysis should include evaluating your annual and monthly revenue goals, whether or not you are meeting those goals, and what you can do to improve your revenue stream in the future.
This step may include making a budget, creating spreadsheets, and looking for shortfalls. Specifically, you can determine whether you have excess money, or if you need to start looking for new sources of revenue to stay viable.
In general, you will want to have multiple reliable revenue streams, but you shouldn’t shirk one source for the sake of diversifying. If you’ve identified a shortfall in your budget, you may need to eliminate a revenue source to streamline your business and cut expenses.
Identifying your expenses and where the majority of your money is going is a key step in the business health check process. Identify the areas in which your expenses have increased, and determine whether that increase is under control or needs adjustment.
During your health check, make sure that you are receiving the best deals on your needs. However, be careful of cutting staffing in order to reduce your costs, as these sorts of cuts can have a serious negative impact on your business overall.
Accounts receivable is the amount of money that your business earns through selling goods and services. Monitoring this metric ensures that all customers are paying their bills and that your business isn’t losing money. Make sure to keep up with your invoicing, and hold customers responsible for what they owe.
In particular, consider entering agreements with your customers to clearly establish your expectations, and use interest rates and collection referrals as needed.
Any small business owner will tell you that running a business isn’t easy. With so many moving parts, there are endless things that can go wrong.
To help ensure that your business is on the right track, reach out to ActionCOACH’s business consultants today to plan and conduct your own business health check. Your business will be on the road to growth and greater success before you know it.
If you want to learn more about conducting a health check for your small business, as well as other skills you’ll need for success, join our newest coaching program: Founder's U.
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