Businesses are very much like human beings. If you feed, nurture and care for them properly, they grow and blossom. If we neglect vital aspects of our lives such as exercise, diet, sleep, etc. our bodies become weakened and susceptible to attacks (disease). We may not notice that something is out of place at first, but as time goes on, our body begins to wear down and we are finally where we don’t want to be- the Doctors office.
Businesses work the same way, they need care and attention. We need to check our financial statements regularly- is your balance sheet showing a healthy cash balance in relationship to debt? Is your income statement reading a profit or a loss, how are you getting cash to fund operations? You should also review other aspects such as
- Operations: Are your business processes accomplishing your goals( effectiveness) or are they accomplishing your goals and saving you some money at the same time( efficient)
- Human Resources: How efficient is your hiring process? Do you have the best people on the job? Are they making or costing you money? Are they under or over utilized?
- Swot: What are your company’s strength and weaknesses? Are there new opportunities out there for your products/services? Are there new threats you need to be aware of?
- Internal Control: Are there any cracks in your systems and processes where cash, inventory, receivables are payables can slip through unnoticed?
This list is non-exhaustive as there are so many other aspects of a business that should be reviewed. The timing for a ’Check-up’ depends on the small business owner or manager, quarterly, bi annually or annually; the important thing is to do it.
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