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How To Perform A Business Health Check

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Small business owners struggle to stay on top of some of the most essential checks for their business. After all, you’re out there every day trying to grow your business and take care of your employees and clients. There aren’t enough hours in the day. Unfortunately, if you continue to neglect signs of trouble, you’ll soon have bigger problems to contend with. A business health check doesn’t need to take too much of your time, and it can help to pre-empt potential issues:

Revenue Vs Spend

One of the first things to check is the proportion of your revenue that is spent each month. Ideally, all of your costs will be easily covered by your minimum revenue each quarter. There should be a healthy profit left over at the end too. It’s important you’re carefully managing your business finances. If you see disappointing figures, act quickly. Don’t wait for the next quarter to pick up. 

business graph

A dip in growth or a reduction in profits must be caused by something. Do your research. It might be environmental so do some market research. Perhaps you’re issuing more refunds this month? Why? Are the products lesser quality, or is it the customer service? Find the problem and fix it as soon as you can so you don’t suffer any more losses.

Audit each of your expenses each quarter. Can you shop around for less expensive alternatives? Where can savings be made? It’s not always easy to figure out if you’re paying more than necessary. Start by listing all of your essential bills like energy and insurance. Make cuts where possible and look for better deals elsewhere.

Key Personnel

Most of your key personnel are likely to be on the payroll. But many businesses nowadays can’t afford to hire. After all, you have all those taxes, insurances and pensions to pay out on top of the salary. Instead, freelancers or contractors are engaged. This might be cost effective, but you must make sure your company is covered.

business

Key person dependency is often necessary, but it’s not a healthy option for your business. It’s best to have another person well-versed in how each part of your business runs. This is essential if you were to fall ill. The same goes for every department and job in your business. At this stage, it is unlikely you’re hiring above and beyond the very bare necessities of your operation. Ensure you can fully operate with them should any employee fall ill or quit.

There are many different types of liability insurance out there. It will depend on the type of business you are in. You should ensure the cover you have is gap-free and suitable for your needs. There are many different levels of cover, so shop around to determine which policies are right for your company. You might also consider some personal coverage if you are not a formally registered company.

Room For Growth

If you see growth, then it’s time to plan for the future. How can you keep that growth momentum going? Diversifying is a natural next step. How will you select the products or services you will offer in the future? It’s generally a good idea to conduct regular competitor research to help you position your offering. This research will help you identify those gaps in the market that you can exploit. Most importantly, it will help you stay on top of market shifts and developments.

business health check

Keep an eye on your market share as well as your share of voice from your promotions and advertising. You should aim to see consistent growth here as you would from your sales. Don’t be afraid to dip your toe into other media or campaigns to experiment with effectiveness. All of your marketing campaigns should be measurable. If they’re not, you have no way of determining if it’s money well spent. 

Staying Current

Beyond your competitor’s marketing efforts, you should also keep an eye on technologies and political shifts. These too might affect your business. Yes, this is extra work that will take long hours. If you don’t keep abreast of developments, you may find you are constantly reacting instead of responding appropriately. Plan your moves and consider your strategy. Knee-jerk reactions are often wrong and costly.

There are many things to keep on top of, and several areas you should be aware of when you’re performing your business health check. Good business health relies on vigilance and careful planning in response to market indicators. It refers to financial health, employee health, and market health too. Is your business in good health?