Assessing the health of your business
What constitutes a “healthy” business? When you set out to assess the health of your business, you need to look through a wide lens and capture the entire picture. A periodic business health assessment should be a staple of your ongoing business planning cycle. A proper assessment will help you to determine the direction of your business, moving forward.
In this blog, we can assess your business health. When assessing your business, there are a number of questions you’ll want to take into consideration. Keep your answers honest and accurate — it’s imperative that you create a true picture of your business. Once you’ve answered all the questions, take the time to determine where your deficiencies lie. Whether you’re constantly chasing your customers for payments or you find that you’re spending a large amount of time and resources on equipment repairs and maintenance, addressing your deficiencies is the first step towards the coveted “clean bill of health”.
Your business is a direct reflection of who you are. Examine your qualities, both positive and negative, and determine your impact as a leader and manager.
- What are your strengths and weaknesses?
- How can you improve your skills to better manage your business?
- How much you are spending time for planning?
- You taking decisions with data support or not?
- What are you doing to improve your network?
- How do you update your business knowledge?
Your Management Team
Ideally, your management team works well as a unit towards fulfilling your vision for success. Great management teams boast members with diverse skills that complement one another. Analyze your team and determine its value to your business.
- Who are the members and what do they bring to your team?
- Do their strengths and weaknesses create a strong balance?
- Did they use their Knowledge, Skill and Ability (KSA) for the betterment of the organisation?
- What training can you offer them (internal or external) to complement their skills?
- How they are monthly planning the organizational targets/goals?
- What reports them submitting as monthly achievements?
Employees are the lifeblood of your business. Make sure that you recruit and manage your employees with a focus on organizational vitality. Employability of the employee is very important when considering the health of the organisation if the capable employee with optimum utilization increases the health of the business.
- Do you employ the “right employees” with defined Key Result Ares (KRA), each of whom contributes to making your business run smoothly, or are you forced to rely on a small percentage of key employees to get the job done?
- Do your employees know what is expected of them?
- Do you asses the employee performance periodically?
- Does your business suffer from a high employee turnover rate?
- Did you provide any training for employee performance improvements?
Your products and services
You are what you sell. Take the time to analyse how each of your products and services performs in the marketplace. Remember, each product and service that you sell is only an asset if it brings value back into your business.
- What is the unique selling points (USP) of products/services?
- Which of your products and services are the most and least profitable?
- Which of your products and services do your customers favour and why?
- Do any particular products or services cause frequent customer complaints regarding their price or quality?
- Do any of your products sell out particularly fast, or do any seem to linger on your shelves? If so, do these situations occur during certain months or seasons?
- What do you do with unsold stock?
- How you are updating or researching on the side of products development?
Your Market and Customer
A viable market makes your business profitable. Review your sales patterns and recognize the areas in which you’ve flourished and floundered. Examine new possibilities for growth. The health of the business will depend on how you observe the markets and customers, the market conditions and customer preference and habits will change situation to situation. So a healthy organisation strictly follow the market and customers regularly.
- What are the demographics of your market: who are your customers?
- What is the actual need of your customer? Any changes in customer needs?
- What portions of your customer base are most and least profitable?
- Do you anticipate entering new markets?
- What is your customer feedback? How are you delighting your customer?
- Do you have a large customer base, or are you dependent on one or very few customers?
- How is your net promoting score?
- Do you have an effective Customer Relationship Management system in place?
If you run a successful business, you will always have competitors who want a share of your market. Rather than upset over competing businesses, examine them and use your knowledge to determine where you can make improvements.
- Do you know who they are, and what their strengths/competitive advantage are?
- How do your customers perceive your competition?
- Have you used benchmarking tools to see how you measure up to your competition?
- How would your customers compare you with your competitors?
- What are your competitors marketing strategies?
- Have they enjoyed any technological advantage in their business to success?
Your marketing strategy
With the wide range of media at your disposal, it’s important to recognize the marketing streams that best attract your customers. Evaluate the methods you currently use and examine new marketing strategies to determine the most effective approach.
- Is your marketing strategy providing enough return on investment?
- Do you survey your customers to find out which of your marketing efforts are most effective?
- What methods do you use to attract new customers?
- Did you analyses the current marketing strategy conveying the expected messages to customers?
Your Finance Management
As a business owner, it is absolutely crucial that you effectively manage your finances. Finance is the backbone of every business, keeping detailed financial records and accurately forecasting future cash flow will allow you to keep a firm handle on where your business is and where it is going. If you manage the finances correctly your business will stand strong in any situation.
- Do you consistently forecast upcoming sales, cash flow and profits?
- Are your forecasts reasonable and accurate?
- Do you keep detailed financial records that allow you to monitor performance?
- Have you noticed a decline in sales this year compared to previous years?
- Have financial difficulties caused you to:
- Get behind on payments for supplies or taxes?
- Get turned down for financial assistance from the bank?
- Are overhead costs outrunning your profits?
Your accounts receivable
Offering credit to your customers can act as an incentive for them to make larger purchases. It can also attract new customers, but extending it does not come without risk. If you do offer credit to your customers, ensure that you take every measure to minimize your personal risk.
- Do you offer credit to your customers?
- Do you have a structured credit policy and follow up mechanism?
- Do you conduct thorough credit checks before extending credit to customers?
- Do you keep detailed records of accounts receivable?
- Do you have outstanding debts that have been owed to you for an unreasonable period of time?
You depend a great deal on your suppliers. Your management of supplier relationships can deeply impact the efficiency with which you do business. How strong your supplier’s relationship it will reflect the health of your organisation too.
- How strong your supplier database? Do you have alternatives in each area of supply?
- Do you have an agreement between suppliers?
- Do you have a strong working relationship with your suppliers?
- What are your suppliers’ strengths and weaknesses?
- How could your suppliers improve their service?
Your Information System
Employees are the lifeblood of your business information system helps the organisation to flow the bloods to each corner of the business if the blood not flouting it will create problems in your health like without proper information system organisation will face any issues.
- What is your organisation communication channel and how you’re getting information from your team?
- Do you get the right information at the right time in the right place for decision making?
- How you are utilizing the technology for an information system?
Your Equipment /Resources
The right equipment/resource for your business can increase productivity and, therefore, profits. On the flip side, inefficient equipment/ resource can slow or halt production and drive profits down. Examine your equipment/ resource needs carefully and research the best options for your business.
- Do you utilize your resources optimum of capacity?
- Do you spend a large amount of time on equipment repair?
- Do you have the best equipment/resource for your needs?
The location of your business should not only allow you to thrive in your current situation but should also offer you room to grow. Don’t let your location prevent you from achieving your business goals.
- What does your location have to offer?
- Can your location handle growth to your business?
- Does your location cause any operational deficiencies?
Now we are gone through many areas of your business with different questions, read all questions carefully and answer the question with honestly because all of the questions are very relevant for your business after writing all of the answer you can assess the health of your business. It may difficult for you to scoring or ranging the health of your business but you can understand the health position of your business.
We paddle business consulting assessing business health by years of expertise with the support of scientific tools and methods. If you need to check the health of your business with expert register our Free Business Health Check-up