Is Your Business Healthy?
Posted: Jun 10, 2016
Running a business is exciting and exhausting but sometimes you need to take a step back from the day-to-day activities of running a business and give it a business health check. If your business is not healthy then you could potentially run into problems just like with your own physical health, the health of a business is just as important.
Do you have strong foundations on which your business strategy is built to ensure the business can grow and develop in future years. Are your goals for the next year. 3 years or 5 years clearly documented do you have a sales and marketing plan or are you just lurching from one month to the next? Do all of your staff have the necessary skills to grow with the business (and do you?) – if not then you need to consider training or a professional development programme.
On the financial side do you keep accurate and up-to-date accounting records all year round or panic when year end approaches. Are you personally and the business properly protected financially and insured adequately? This will depend on the structure of the business, whether it is a limited company or a sole trader or a limited liability partnership.
As a business owner it would be nice to think that your knew what you personally were achieving or want to achieve from the business but sometimes the sheer busy'ness of running your own company means that you do not have time to step back and just think. If you can try and take time out to think about how you see your business growing. If it is currently a small business it is likely that it is very dependent on you personally but if it grows then you will have to be able to hand over responsibility to others. Do you have employees in place already who could take on increasing responsibility?
And what if the business is not doing well financially? Are there good reasons for this that can be easily resolved (economic recession ending, restructuring finance to make it less expensive, large start up costs in purchasing equipment or premises that you won't have in future years).
Do you have tax efficient strategies in place to minimise your corporation tax bills. And do you have salary structures in place to minimise you personal tax burden relating to how you withdraw money from the company?
What are your plans for the business in the future; is the intention to sell it as a going concern or pass it on to your children. If so you will need to know the current value and projected value of the business at your retirement age. If you have not selected a retirement age then plan for the statutory retirement age just as a guide for planning purposes. This is particularly important if you view the business as your pension, either as an income or as a lump sum if sold.
If your plan is to sell the business then you will need to make sure that key employees, customers and suppliers will stay with the business after you sell – any buyer will want to know that and have some sort of guarantee in place. If you need any help with advice on these issues or a full business health check then talk to an accountant for professional advice. Many fixed fee accounting services will include a business health check as part of the package.
The author has written and published articles on a wide range of topics including Small Business Advice, Tax and Accounting, Interior Design, House Renovation and Project Management.