We are fast approaching the end of the first quarter of 2015. And for many business owners, the health of their business will be based on whether they are making any money at all. As the statistics tell us, of the 28 million small businesses in the country roughly 90% of them aren’t yielding $100,000 or more each year. One might make the declaration that small businesses in this country are sick – or, anything but healthy.
As I considered this week’s episode of Incredible Factor TV, I definitely took that thought to heart. You see, my entire existence as a business optimization strategist and consultant is to help business owners experience healthy, thriving businesses despite the statistics, and we’ve done a pretty good job (if I do say so myself :-)). Which is why I couldn’t wait to weigh in on Grace’s question. Check it out:
“Hi Darnyelle. As we round out the first quarter of 2015, I am really focused on the health of my business. What can you offer to help me give my business a check up from the neck up?”
See my response to Grace’s question in this week’s episode of Incredible Factor TV:
As I share in the episode, my hat goes off to Grace for being so focused on making sure that her business is healthy. To me, this is always a good sign that I am talking with someone who is in business to experience the best that life has to offer and they are concerned about ensuring that their business serves them.
When I think about determining the health of a business I think about the following:
1. The business solves a viable problem to which others are ready to pay for a solution. I go frequently back to the Universal Law of Business, and a healthy business is one that solves a problem for a group of people ready, willing and able to make an investment to have that problem solved.
2. The business is financially positioned for growth and profitability. The way to determine growth is by looking month-to-month, quarter to quarter and seeing the profit margins of the company accelerate. If you’re in business to break even, you’re not in business to grow. Each month and quarter, you should see an increase if the business owner is setting goals, tracking their results and acting consistently toward the achievement of the goals they set.
3. The business is bringing in more than it cost to run the business day-to-day and month-to-month. Again, breaking even is not the sign of a healthy business. It means you are just getting by and who (really) goes into business just to get by? No one, that’s who. Business owners solve problems for profit and profit is the way we measure the growth and health of a business. Trust me, investors don’t consider businesses that are breaking even as good investments.
4. The business is clear about their industry and their strategic focus over the next three to five years. Knowing your industry and having a clear strategic growth plan of how to increase market share in your industry is a key indicator of a health-conscious business owner. When business owners think ahead, they demonstrate the effectiveness and longevity of their brand.
5. The business owner knows and tracks their Key Performance Indicators. Being conscious of your KPIs – Key Performance Indicators – is the key to determining the health of your business. While these vary per business, they include: client acquisition costs, new client totals, monthly burn rate, new consultations/prospects, marketing list size, etc. To learn more about KPIs see my previous post specifically about them.
If you are clear that each of the above is working for you, then you are on your way to having a healthy business. To deepen the health of your business, I recommend completing a SWOT Analysis each quarter in your business. Evaluating the Strengths, Weaknesses, Opportunities and Threats of your business quarterly will keep your company strong. Be it a specific product or service offering or your entire business, it’s a valuable way to identify holes that you can plug through an understanding of what is going on and what you need to see/desire instead. Check out the post I wrote recently about SWOT Analyses.
Additionally, you should do an expense audit at least twice each year. By evaluating your expenses, you can reduce unnecessary expenditures and increase your overall profit/health.
Now I want to hear from you, what’s your two cents?: What did I miss? What else does Grace and other business owners need to look at to ensure a healthy business?
To learn more about positioning your business for profit, consider joining us on tour as we visit three cities this month. To learn more, visit http://www.PositionedToProfitTour.com
©2015 by Darnyelle A. Jervey. All Rights Reserved. Darnyelle A. Jervey, MBA, The Incredible Factor Business Optimization Coach and Mentor, is the founder of Incredible One Enterprises®, Incredible Factor University® and the Leverage Your Incredible Factor System®, a proven step-by-step program so you experience financial and spiritual abundance in your life because of your business. For more information and a FREE audio CD “7 Critical Mistakes Even Smart Entrepreneurs Must Avoid for Clients, Connection and Cash Flow!” just fill out the form below.