You don’t always go to the doctor when you’re sick. Sometimes you go simply because you want to make sure everything is okay. These visits are called physicals or checkups. Sometimes they uncover issues, but most of the time they offer opportunities to understand your body and what’s going on beneath the surface. In this regard, your business is like your body. With regular business health checks, you’ll give your business every chance to thrive – today, tomorrow, and indefinitely.
What is a Business Health Check?
It’s best to think of a business health check in terms of an annual physical or health checkup that you’d get if you visited your doctor. It’s basically a comprehensive evaluation of the important elements of your business. Every format differs, but it’s usually comprised of different questions, tests, and reports – some simple and others more in-depth.
“This begins with an assessment by you, in your capacity as the owner/manager independent of the business,” William Advisory Group mentions. “It involves a comprehensive diagnostic on the business and the outcome will define the strength of the business while pointing out ways of improving the business.”
There’s no set timetable on when you have to conduct a business health check, but you should do it at least once per year. Anything longer than this and you run the risk of letting issues go undetected for too long.
When thorough, timely, and consistent, a business health checkup exposes issues, uncovers opportunities, and sets your business up to be as efficient and profitable as it can possibly be over the next period.
4 Tasks to Include in Your Business Health Check
No two business health checks are the same. Yours may be short and shallow or extensive and probing. While the latter approach typically yields the best results, anything is better than nothing. Here are some tasks we recommend including on your next health check:
Check Your Emergency Fund
Your business needs an emergency fund of at least six to 12 months of expenses in liquid cash holdings. This is money that you can use to pay for an emergency or unforeseen issue/expense. Without it, you risk failing when unforeseen circumstances arise.
In business terms, an emergency fund is typically referred to as “retained earnings.” When conducting a health check, make sure that you have adequate retained earnings and that they’re properly set apart from the rest of your money. (If you have an inadequate emergency fund, use these tactics to replenish.)
Analyze Your KPIs
Hopefully you have a set of key performance indicators (KPIs) that you’re tracking. Assuming that’s the case, take the time to analyze your KPIs and look for any areas where you may need to improve. Good KPIs to track include operating cash flow, gross profit margin, and leadflow. It may be that you’re still figuring out what to measure, in which case a collection of a sample KPI library can help as a starting point.
Conduct an SEO Audit
It used to be that online visibility was a nice-to-have. Today, it’s a must-have. And whether you run an online business or an offline one, you need a strong internet presence. This starts with search engine optimization (SEO). You can get a feel for how you’re doing in this area by conducting an onsite SEO analysis.
A good SEO analysis – or SEO audit as some call it – will look at onsite factors, indexing, backlink profiles, crawl reports, and even competitor analysis. While you can conduct an audit internally, it takes a ton of time. This is something you’re better off outsourcing to a company that specializes in SEO. Regular audits can also ensure you avoid the search volatility so inherent in today’s shifting online rankings.
It’s impossible for the CEO or business owner to have an objective vantage point. If you really want to know how your business is doing under the hood, talk to the people who know.
When gathering feedback, you want both internal feedback (employees and staff), as well as external feedback (customers, investors, and outside stakeholders). Avoid getting too caught up on the extreme feedback (good or bad). Instead, be on the lookout for the common threads.
Keep Your Business Healthy, Wealthy, and Thriving
In order to encourage continued growth and profitability, you should stop and perform the occasional health check. Use this article as a starting point for analyzing your business and wrapping your mind around different integral elements of success. Feel free to add and subtract as you see fit. In the end, any probing you do will yield beneficial results.