By Andrea Halpin and Bil Murray
Most of us recognize the benefits of an annual physical, especially as a way to identify potential problems. Many business owners will think nothing of going to see the doctor once a year, but ignore checking up on the health of their organization.
January is an ideal time to take an honest look at your company’s health – your accomplishments, assets, liabilities and financial position. It is an opportunity to take stock and determine what you may want to do to minimize risks and get the results you want.
We have identified 10 key aspects of your business you will want to examine. No matter what field you are in, these are important matters. Any of them could derail you if problems go unrecognized or do not get addressed.
- Profitability First and foremost, profits are needed to ensure the long-term viability of your business. Looking closely at your revenues and costs can lead to decisions about where to invest and where to scale back. Making year-to-year comparisons can help you see where the growth is and identify problem areas. Declining profits are sure-fire indicator that something less than ideal is happening and changes are probably in order.
- Cash flow No one enjoys having to work through “feast or famine” crises. Without adequate cash flow, you may have to increase revenue or scale back expenses – or both. Your cash flow statements will show you how long you can keep going with the money you have and when you will have to make some very important decisions.
- Customers If your business is like most, the bulk of your revenue (and probably your profits) is coming from a relative handful of customers. Are you treating them right? Is there a risk they might be looking elsewhere? Meeting with your key clients in the first few weeks of the new year can be time well spent. It strengthens the relationship. It also can let you know of how well you are keeping them happy or if they might have some issues that need to be taken care of.
- Employees If anyone knows more about your business than you do, chances are good it is those who work for you. Early in the year is a good time to take stock of the talent you need and how your team stacks up. It also gives you an opportunity to look ahead and identify times of high demand and when things might slack off. One thing you should be sure to ask yourself is, “What do I need to do to keep my high performers happy?” Your high producers warrant consideration for promotion, expansion of responsibilities or compensation and recognition for what they do for you.
- Vendors Value is a function of quality and service as well as cost and time considerations. Take stock of who is providing you with goods and services. Are they giving you the value you deserve? Have you upped quantities that may give you better pricing? Are there new products or services that you can use to either make more or spend less? Vendors can be a source of valuable information about your customers and competitors. Don’t hesitate to ask them what’s going on in your market.
- Sales and Marketing The changes happening in how things get marketed and sold are astounding. Is your business in a vulnerable position? Is your message getting through? Chances are good that newspaper ad that worked so well a few years ago won’t have nearly the impact today that it had then. If you are not getting the revenues or profits you want, now might time for you to increase your marketing spend rather than cutting back. It might be time to bring someone in to assess the situation and help you make changes for the better.
- Taxes Meeting with your accountant early in the year is always a wise move. With all that is happening as a result of recent legislation, this year it is even smarter. A meeting in January can help you get organized sooner and better able to provide the information your tax accountant needs. It can also help you determine what you might be able to take advantage of and how to do it.
- Banking Comb through your bank statements to see if there are fees you are paying, but perhaps shouldn’t be. Look and see if a different credit card can give you better rates. Meet with your banker to get caught up. Ask for observations and insights that may be helpful. See if your bank has new services or value-added offerings you can use.
- Insurance Most companies need two types of insurance: liability and property damage. This is a good time to contact your agent and to see if you have the insurance you need and that your policies are providing adequate coverage.
- Legal Sitting down at least once a year with your business’s attorney can help you identify issues you might not have considered. A savvy attorney can help you avoid costly mistakes. Her advice may save you money that would look so much better on the bottom line.
Your January business checkup can pay off throughout the year. You might be able to spend more wisely, be more efficient, take on new projects or grow your customer base. It is a chance to see what is ahead, identify opportunities and avoid setbacks.
Finally, take a close look at yourself. Chances are very good you work hard. A business is often, not just a source of income for the owner, but a labor of love. Business owners can be passionate about what they do. At the same time, they can over estimate their strengths and overlook their own personal needs. This includes not getting the help they need, not taking good care of themselves and becoming burned out. Look back and look ahead. What will you do this year to make sure your time and effort is effective? Start with a checkup.