Business health check: What you can't see can still hurt you
As human beings, we are heavily influenced by what we see.
To correctly assess the health of your business, you need to find the information you can’t see.
If we spot something dangerous, we immediately ready ourselves for ‘fight or flight’. If we find ourselves in a peaceful environment, we tend to relax. And looking at the state of our home quickly tells us we have a lot of housework to catch up on.
By looking at a given situation we can see how ‘healthy’ it is, and what needs to be done to make things better. Almost like a visual health check.
The same goes with your business. Empty shelves can alert you to possible problems with your suppliers. Seeing the same customers in your business each week means you’ve probably won them over with your goods and/or service. And a pile of overdue bills could mean you’ve got a cash flow problem.
What you can’t see can hurt you
Unfortunately, some of the tell-tale signs your business is in trouble aren’t so easily spotted. In fact, they may be practically invisible. But just because you can’t see the problems doesn’t mean they don’t exist. And unless you deal with them quickly, your business’ health will begin to suffer.
So how do you find out what you don’t know?
Imagine you’ve just come across someone who’s been injured in an accident. Before you can even think about treating them, you need to assess the situation, and get information about:
the injured person
the other people involved
any signs of injuries that need urgent treatment.
Find the hidden information about your business’ health
Of course, treating your business is a lot different to treating a person. But you still need to assess the situation, and gather as much information as possible. And that means finding out about not only what you can see, but also what you can’t see. You need to learn what you don’t know, and make the invisible visible.
You can get a lot of this ‘invisible’ information from your business’ accounting system, providing it’s fully reconciled and up to date. Fortunately, modern cloud-based accounting systems such as Xero make it easy to keep your accounting information up to date.
At a minimum you should know:
your outstanding debtors (money owed to you from customers)
how much you owe to suppliers
how much cash you have
your stock or inventory
who your customers are
what they buy from you (and when).
A health care plan for your business
Now that you have the information you need, it’s time to find out what it all means, and come up with a recovery plan for your business.
Fortunately, you don’t have to do it yourself. Just as ambulance drivers and doctors and trained to assess and treat a patient, finance professionals can use the information you’ve gathered about your business to come up with a plan to get it back on its feet.
That’s where tools such as our Business Assessment can help. It can help you understand where your business is right now, and even tell you where to look for the ‘invisible’ information you need.
If you’re concerned about the health of your business, and need someone to create a health care plan to get it back on its feet, don’t hesitate to get in touch with us.
And start enjoying that peaceful environment you find so relaxing.