How healthy is your business
How healthy is your business
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How healthy is your business?

How Healthy Is Your Business?

When you look at small businesses, it’s really difficult to judge whether they are healthy or not from the outside. But we often have a kind or sixth sense of a company’s health when we interact with them. Sometimes we can just tell that something is not well, but we can’t always put our finger on it.

But if we think of a business the way we do humans then that gives us an indication of where to start.    

The first important thing you can do is to assess the health of your business in its current state. In particular, we will focus on how your health as a company could be affected by a number of factors, such as age, health, employee age (or entrepreneur age), location, etc. 

I will also cover off some tips on what to do and how to do it.

Of the four metrics, however, the profitability of a company is perhaps the most obvious metric to measure. We all know our personal health can be improved, so vice versa so can the health of your company.

Your company’s profit is a measure of how well your company has performed over time. Profit margins are also useful to measure the performance of your business at a particular moment in time. But money is not the only indicator of business health.

The analysis of cash flow will help you understand what your company might look like in the short and medium term. If numbers are not your strong point, then I would certainly suggest getting a business coach in to take a look. Even having an external pair of eyes look assess performance can help assure you that you are on the right track. After all as entrepreneurs many of us are so deep in our day to day we can neglect these crucial long term strategies.

Having a business consultant analyze your base rates can help you assess how healthy your business is, diagnose potential problems and help to nip them in the bud before they become a real issue.

Think like a big business

Ayse Durmush

When you think of takeovers, the first thing an organisation does is analyze a company’s financial metrics which allows lenders to see how it is doing in comparison to its competition.

Imagine, for example, that these metrics belong to a single company, but you can see how calculating these three metrics alone can enable a quick health check of the company. A potential small business lender will take all these metrics into account when assessing the health of its business and other factors such as sales and profits. [Sources: 11, 13] 

You can promote economic growth by continuing to work with partners who can help your business succeed.

As well as the money side. I like to look at the health of the people in the business. Are people happy in their work or stressed, overworked and dying to shut their laptops?

In these cases, some form of mental and phsyical care needs to be incorporated into the business. Be that a ‘personal day’, where employees are allowed to take a day off to do whatever they wish and not have to be sick for example.

Or for small businesses, connecting with organisations or apps that offer mental health services. Such as the service offered by Calm. Bringing meditation and mindfulness into the workplace.

It is also helpful to think about behavioural changes by helping your employees to set personal goals and develop healthy habits. [Sources: 17, 18] These are absolutely crucial for the mental health of your employees and yourself. Clarity on the direction of your own goals and the direction of the business help to not only ensure you are all on the same page but also help with communication and overall vision.

Regularly reviewing the health of your business is an essential part of governance that unfortunately gets pushed aside in the drive for profits for many small business owners. And I get it, you’re so busy in the day to day how can you begin to take a step back and look at this stuff. But that’s where you need external help. Get a consultant to assess your business, the intrusion will be minimal but the benefits can potentially save you from ruin.

Obviously you need to have enough revenue to support your current targets, but also consider the requirements for future growth. If you’re a sole trader and you want to grow your business, you’re going to need to factor in the costs of support, even if that’s just a part-time employee on weekends. But that extra cost needs to come from somewhere, perhaps with that vision in mind, you simply set aside a weekly sum to be able to pay someone in future. Just taking time to sit and think through the ideal scenario can help you plan your business future with much more control.

The truth is most small businesses are reactive and not proactive and that’s why so many have a high fail rate. There is way too much information on the internet about how to create funnels, and landing pages and nowhere near enough information on how to effectively run your business with a long term vision.

Knowing your underlying operating profit margin and getting comfortable with your profit and loss sheets. Planning the budget and creating a vision of the long term goal should be the starting point for many small businesses. And these metrics need to be assessed on a regular basis, to ensure you are on the right path.

Don’t be one of those entrepreneurs who neglects the essentials of your business health. Set a vision, i.e. your long term goal. Assess the performance of your sales, and your products. But also your own mental health and wellbeing whilst working, set healthy boundaries so you can operate your business with professionalism and integrity. Plan for the future and your business cannot help but thrive with the proper care and attention.























Simple, relaxing practice for entrepreneurs
Simple, relaxing practice for entrepreneurs

What do you think?

Written by Ayse Durmush

Ayse Durmush is The Transformation Expert. Ayse has transformed the digital, strategy, lead generation and operations of countless businesses and consulted for high profile brands. She is not just passionate about business but also has a passion for the dynamics and ideas behind personal transformation too.

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