Regular Health Checks Critical to the Success of Your Business
Regular health checks are critical to the success of your business. According to the SBA (US Small Business Administration), over 50% of small businesses fail in the first five years of trading, and when the figures also include larger scale companies, this figure rises to a rather bleak 60%, or 6 out of every 10. Recent assessments of failed businesses have revealed the main reasons as to why these companies cease to trade, revealing strong patterns amongst failing businesses. Common reasons provided include insufficient capital, poor management of funds, over-investment in assets and poor management of inventory. To any existing business owner, the list no doubt inspires a sense of recognition. After all, what business does not struggle with managing funds effectively, raising suitable capital and juggling the fine balance between cash solvency and necessary assets? Yet the fact of the matter is that, with the appropriate level of planning, forecasting and ‘health checking’, many of these potentially devastating business issues can be avoided. If you are unsure as to where to start, here are a few tips to help you begin the process of checking that your business is in tip-top condition.
Poor money management is one of the most common areas in which businesses are liable to fail. Of course, this can include a wide range of issues; from investment in physical assets to proper profit margin management, and as a general rule, it is a good idea to;invest in the services of an expert to help you manage your finances as effectively as possible. However, there are a few measures you can adopt yourself to check the financial health of your company. Forbes.com recommends six key ways in which you can assess your business performance, including effectively managing net profit margins, liquidity within your business (i.e. focusing on current assets and current liabilities), inventory movement and paying accounts.
One of the most devastating problems that businesses can come up against is liabilities claims. Without the necessary protection and preparations in place, a single liability claim can cost a business thousands, if not more, and in many cases, it is enough to force a company to close its doors. If you are confused as to what exactly you, as a business owner, are liable for, Entrepreneur.com outline basic liabilities very succinctly, outlining responsibilities towards employees, maintaining premises and manufacturing liabilities. It is an extremely good idea to invest in suitable insurance, which will help cover your company should the worst happen, and to also consider undertaking; professional assessment of the premises; and working conditions, to make sure you are operating within the law. This is particularly pertinent if you are working in a high risk environment, such as construction, medical research or working with chemicals or harmful substances. It is important to recognize that accidents and errors do happen within the workplace, and to make sure to protect employees, customers and of course, your business, as best as possible.
Keeping people happy
As a business owner, you will no doubt already be familiar with the importance of keeping the client happy. However, it is a sensible idea to give your customer service protocol a review once in a while, to ensure that you are providing a service that is deemed not just adequate, but worthy of repeat custom. An expert business assessor can help greatly in recommending excellent practices to encourage repeat business, and can also help with another aspect of ‘happiness maintenance’ which is every bit as important; namely the happiness of your employees. Never underestimate the value of staff satisfaction and retention. Fostering an environment where staff feel valued, content and satisfied with their role within the company is highly conducive to not only staff loyalty, but improved service and commitment to the role. Sometimes, making a member of staff feel value may include an incentive or gift for their efforts; but often, it can be a simple case of making them feel their voice is heard and their opinion appreciated.
Take the time to ‘Take the Temperature’ of your business
Taking the time to review finances, liabilities and practices, not to mention customer and staff happiness, can sometimes feel like a difficult task. However, it is important to recognize that continual assessment of your company is an integral part of its success, and in certain cases, can even save it from closure.
This article is a guest contribution from Melissa Barry.