Just like you keep yourself healthy, you must also keep your business healthy. It is important to have a business that is financially healthy to have success over the life of your business, and there are many elements to that. Do you know what key indicators to look for in your business when it comes to your finances?
One of the really important things about small businesses, the business world, and the markets; is to not remain static. No matter how great everything looks on the surface there could be areas within your business that could be changing that you need to be on top of no matter what stage of business you are at. To hit your profitability, you must go into the cash flow planning side of things, for when there are changes such as new competitors in the market, a change in the productivity of your employees, etc.
There are quite a few things to keep an eye on when it comes to your business health. Operations are one of your key indicators. That is something you should be planning for constantly. There are some other areas within the business as well that you should be keeping an eye on to maintain your financial/business health, such as the productivity of your workforce (are your employees productive and generating the levels of revenues that they once were), ensuring all your assets are working as hard for you/the business as they possibly can and looking at the volatility of your revenues as well.
Knowing you are going to make X amount of money coming into your business before you open the doors on a Monday morning is having that real confidence in your business and the revenue that you are generating. But you also need to be confident that your business is producing a return on your initial investments. To do this you need to track and evaluate your business over the long-term with things like your cash flow, KPI’s, etc.
At the end of the day what it all comes down to is profit and loss, but overall, you want to know that you are looking after your customers; That business relationship that you are building up, the staff morale, the repeat business, client reviews. The dollars and cents are great, but what is truly important is checking those reviews and identifying those sorts of opportunities with your customers, because without your customers, your repeat business, your sales/profit, you will have no business to keep healthy.
This blog is based predominantly on the information given by Andrew Paton-Smith from Jazoodle during his appearance on Money Matters – Planning For Business Survival: A Stronger Than My Excuses Show. Watch the full show here