Owners are often so busy working in their business that they rarely take a step back and get a full perspective on how things are going and what areas could be improved. This big-picture purview is critical to the ongoing success of any company.
Think of it like an annual physical – it’s often tempting to cancel or skip the doctor visit if everything seems OK or if you are too busy, but these check-ups are key to identifying underlying health issues and devising a plan to address them before they grow into a full-fledged medical condition. To continue with the medical metaphor, patients never walk into an exam room and hear the doctor immediately exclaim, “You look great to me!” Instead, physicians need to ask probing questions and check vital statistics before making an assessment.
Owners or executives wanting to get a better handle on the overall health of their companies can take a page from this approach – whether it is for the purposes of an annual report, a meeting with your bank or a new customer/supplier relationship, walking through the below questions with your business advisor can reveal the financial and operational underpinnings of your company’s recent performance.
- What is the quality of my company’s earnings?
- Which business relationships are most important to us and how do we protect them?
- What is our customer concentration?
- What is our gross margin by product line and service offering?
- Which customer relationships are most profitable?
- Are we generating adequate cash flow from normal operations?
- Are we generating the right types of management information (financial and operational)?
- Are the management reports being distributed timely and are they being utilized to make decisions?
- Do we have efficient asset management and turnover (accounts receivable and inventory)?
- What are our greatest vulnerabilities and how do we mitigate them?
Business owners who consider questions like these on a periodic basis are better positioned to respond and adapt to emerging challenges or seize new opportunities for growth. The most effective business check-up program is one that is especially designed for your organization’s specific circumstances. RKL’s team of advisors have decades of experience helping business owners assess and optimize financial and operational performance. Contact us today to develop and implement a customized check-up for your organization.