What business owners want most is a healthy business. Wellness has two parts – financial and organizational. To determine the health of a business, owners should ask themselves, is their business profitable, sustainable, and fit for work? Here are some steps to follow and questions to answer when assessing the health of your business:
Set and effectively share goals and objectives. Do you have a business plan to share with your team without involving semantics? Have you set quantifiable and measurable long-term and short-term goals? Have you communicated your goals throughout the organization so that everyone knows what to expect from operational performance?
Is employee morale high? Do your employees operate as a team to achieve organizational goals and objectives? Do your teammates value their position and demonstrate it with low turnover and enthusiasm for the organization?
Do you show strong leadership? Are your decisions in the best interests of employees and the business? Have you assembled the best possible team to achieve your stated goals? Are you setting an example for your team as an authentic, transparent and value-based communicator? Do employees feel appreciated? Are you leading by example or managing on demand? Is your team willing to follow you?
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Is your policy formal, clear and communicated? Are the organization’s policies and procedures well documented and communicated? Do all members of your team have access to the organization’s policies and procedures? Do they have the opportunity to ask questions of leaders to ensure they understand the performance standards that underlie the business?
Are you managing poor performance? When recognized, do you address underperformance quickly and efficiently? Does your team value your leadership in identifying corrective actions? Are you investing in employee training and education to address deficiencies?
Do you offer ongoing training opportunities? Does your organization have room for upward mobility when team members are trained? Do you offer them this opportunity through webinars, courses at Cape Cod Community College, or outside professional organizations?
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Have you demonstrated the importance of lifelong learning? Do you provide ongoing training for yourself and your team to improve skills and learn new ones? A healthy business never stops learning, formal or informal.
Are you adapting to change? Is your organization opportunistic? Are you seizing the opportunity to grow and expand your reach? Are you adopting new technologies to improve business efficiency and effectiveness?
A financial audit is also required. Do you have steady income growth? Do you have steady and predictable growth in your income? Which revenue streams are growing, which are stagnant, and which are not growing at all?
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Is your debt ratio low? When you check your income – do you show signs of health compared to what you owe? See how your debts (what you owe) compare to your assets (what you own). Healthy businesses have a 2:1 gearing ratio. What is yours?
Are your expenses under control? Just like looking at income, you need to focus on the expenses of running your business. Are your expenses growing faster than your income? If so, it’s an indication of an unhealthy business. If your expenses are flat and your income is increasing, you have a healthy business.
How many new customers have you attracted? Loyal customers are the key to most businesses. However, new customer acquisition is the lifeblood of a business and an inevitable sign of business health.
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Do you have cash in the bank? In the beginning, businesses need to reinvest in themselves, but in the long run, having cash in the bank is a sure sign of business health. Being able to use reserves to address emergencies is important for sustainability.
Just like in personal health, regular check-ups or check-ins can keep you healthy and sustainable, with the potential to make adjustments if necessary.
Courtesy of SCORE Cape Cod and Islands. Marc L. Goldberg, SCORE Cape Cod & the Islands Certified Instructor. www.capecod.score, email@example.com, 508-775-4884. Source: Rose Johnson, January 29, 2019, CHRON; 7 Components of a Healthy Business, Alexander & Co., September 21, 2018; 5 Big Signs Your Business Is Financially Healthy, Aldridge Borden Company.
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