CHECKING THE PULSE ON YOUR BUSINESS MORTALITY
A healthy body demands routine checks and examinations. So does a healthy, thriving business. No matter what stage your business is in, to keep it going you must check its systems, pay attention to any ailments and prevent early death. For the newborn business the risk of business mortality is much higher, but the goals and system checks are relatively simple. Merely staying alive and maintaining your sanity is a measure of success at this point in development. Systems are very limited in the start-up stage because there are usually a handful of people (if that) trying to get capital, find more customers and deliver a quality product.
Three common causes of business mortality at this stage are:
• Atrophy – all capital and funds are dried up
• Neglect – the marketplace does not take to the product or service as well as predicted
• Stress – the business owner cannot take the pressures of running a business anymore and sells the business or closes.
As a business progresses, basic survival is the measure of success. Teetering on the edge of just making enough to survive is hazardous to anyone’s health. At this stage, there are still limited systems and employees; there may be a marginal profit; expenses are covered, and cash flow can and must be projected. Failure to thrive can be attributed to owner burnout, lack of vision, insufficient funds and marketplace factors. Too many businesses get stuck in this stage. These are the businesses that are sold at a loss or just close down when the owner has had enough. Every business should strive for optimum health and try to perform like the Olympic athletes we witnessed in Rio last month.
Now is the time to train your business body and make critical decisions. Are you going to go for the gold or are you willing to settle for being a recreational player? If you are reaching for the gold, then you’re going to have to train your business, assess the weaknesses and attack them rigorously, optimize your strengths, consider growing and expanding your business and reinvest in its success.
This requires constant monitoring.
Not every athlete captures the gold, however, constant monitoring and exercising increases your business’ success and potential for optimum health. We find that when business owners work with us to understand their numbers (and specifically, the key drivers of revenue, profit and cash in their business) and then set stretch targets and monitor both the financial and non-financial key performance indicators every single month, better results are achieved.
You might have noticed similar results with your own body. If you weigh yourself every week, you’ll notice if things are getting a little out of control and you can take action to remedy the situation right then and there. On the other hand, if you worry about what your weight might be and as a result, you ignore the bathroom scales, next time you weigh yourself – perhaps in six months’ time – you might find yourself with a bigger problem than you imagined and it’s much harder to sort out.
At Taggart & Partners, our team of small business advisors can work with you to measure your business’ health and work towards implementing the right structure and cashflow management solutions to grow your business. Please get in touch for more information regarding business mortality and structuring your business for success. We’d be delighted to work with you to check the pulse on your business.