Turns out I’m OK, but that doesn’t end the concern.

I naturally thought about how my personal health affects the health of my business. Then, about business health in general. How do you measure and improve it?

Attributes of a Healthy Business

What is it about a business that marks it as healthy? What characteristics make it ready for the long haul? What are the indicators to watch for to remain healthy?

1. Profits – At the end of any given day, a business has to be making a profit, or it won’t survive. Look at GM and Chrysler, lately. They have sustained massive losses over the years. They can’t make it up in volume. They finally had to bow to the truth and file Chapter 11 Bankruptcy. I don’t foresee those losses ever being earned back, let alone being paid back to the out-of-luck lenders.

Make sure you have a suitable bookkeeping system in place, and stay up-to-date on the entries. Be sure to pull an Income Statement every month, or every quarter at the latest. This statement allows you to look back on how your operations fared in the marketplace.

Profits? Good news. Are they enough? That’s the next indicator.

2. Plan – Do you have a Business Plan, and are you keeping up with it? Do you regularly review the Plan’s action steps? Do you update the Plan with new information? Are you keeping pace with the projections? If not, why not?

Do you have a Weekly and Daily Plan to work from? Do you know what you are going to be doing, today, to improve your business?

3. People – Are your employees helping your business, or are they hindering it? Do you have a hiring plan in place, or do you hire randomly? Do you have a defined and routine employee evaluation process? When you find an employee who is below par, do you coach them to improvement? Do you replace them if it doesn’t work out? Or do you collect dead wood – holding on to dud employees for a later fire sale when you go out of business?

4. Customers – Is your customer base growing? Are you serving more and more customers with better and better service? Do you have a Referral program or Loyalty program in place? Does your sales process capture customer information so you can follow up with them with later contacts?

What Else Measures Health?

This basic list of attributes will help you start measuring your business health. There are many more you can use depending on your business.

What are some of the ways YOU measure business health?

JohnL

Bookkeeping Keeps Track

With your plan in place, you have to know your progress so you can compare to plan. This measure should be strongly weighted in the direction of finances. Without a strong financial control, your business can go down the proverbial tubes.

The surest way to get into financial trouble is to not keep track of all the financial dealings. This is keeping books. How will you know where you are if you don’t keep books? All the goals and plans are for nothing if you don’t have a bookkeeping process firmly in place.

It’s easy to let this part of business get away from you. The last thing you need is to find yourself trying to catch up after weeks of inattention.

I have one client who keeps track in his head. He hasn’t done any real analysis for 5 years. Is it any wonder he finds himself behind the 8-ball?

Get a Good Start

To start with, bookkeeping or accounting is mysterious and arcane, not to mention generally boring. Way back in my college days, I took the required accounting courses in my business studies. I got A’s. I hated it. I still don’t relish the mundane and routine pounding in of the numbers, but I’ve learned the importance, and I’ve developed the discipline. It begins with getting started.

One of the easiest ways to get started is to head off to the Big Box store nearby and get a copy of QuickBooks. But, spending a bunch of money on a program isn’t necessarily the right way to go about it. You need to understand your accounting needs before you undertake the purchase of systems. Computer programs don’t solve problems. They can make things worse if you don’t have the right ones.

Here is where your Accountant or CPA is of greatest importance. Let them interview you and your business and determine your needs. Let them develop your needed Chart of Accounts. Let them recommend the right way to get started for you. Don’t try to do this analysis and development on your own. Unless you are skilled in the ways of accounting, you’ll just get bogged down and side-tracked from your prime directive – do business.

Keep Up the Momentum

Once you get a set of books established, now, make processing the required entries a routine. Get into the habit of making your entries every day.

You’ll have various sales records to process. Keep track of each sale, each customer, each method of payment. Classify your sales by department or family of transactions. Record the details for later evaluation.

Make the entries in the appropriate journals and programs.

Keep track of every Expense. Keep the Receipts, and make the entries.

Keep your banking records up-to-date. Use your Check Register to record checks and deposits. Record them as you make them.

Make it a habit to keep your entries current. Every day, if necessary, set aside a few minutes to gather all your details into your bookkeeping system. Dong this every day eliminates the mad rush at the end of every month/quarter/year.

Make a Strong Finish

Each month, make the appropriate entries and total them all up. Run your reports to illuminate your Sales, Expenses, Profits, and Net Worth. Compare your progress to your Plan. Make adjustments in business practice.

Reconcile to the Bank Statement each month.

Make your Payroll Tax deposits on time.

Pay your Bills on time.

Each quarter, make reports and compare to plan.

Each year, prepare your tax returns.

Prepare a budget.

Books Are Your Friend

Instead of ignoring or dreading your books, think of them as your trusted ally and friend. They will keep you from trouble if you let them.

Don’t let your business get away from you. Keep your Books in order.

1. Find a Market
2. Find a Product or Service
3. Sell Lots
4. Control Expenses

Market

This is a pool of potential customers. You know who they are, and you know what they want or need. You can serve a large market, or a niche market. But, you can’t sell to “everyone”.

It helps to have a Market with fewer rather than more competitors.

Product or Service

Your Product or Service needs to be something your Market wants or needs, and something that is different from all the others, You don’t want to be waving the “Me Too” banner too wildly.

Sell a Lot of It

Now, we’re getting somewhere! Selling is where it’s at… Sell a Ton of them and all will be well.

Maybe. Many a going concern collapsed by only focusing on sales.

Control Expenses

This is where Business Success is made or not. Profit is the end goal of any business venture. Without Expense Control, there are not likely to be any Profits. Certainly not as much as could be.

Think of this. Profit equals Sales minus Expenses. A Sale brings related Expenses. Only a portion of a Sales dollar makes it to the Profit bucket. However, Saving a Dollar, or NOT spending one, drops it right to the Bottom Line.

The Bottom Line

The Bottom Line is that the more that you sell AND save, the bigger the Bottom Line.

Watch Your Pennies and the Dollars will take care of themselves.

PR: wait… I: wait… L: wait… LD: wait… I: wait… wait… C: wait… SD: wait…

This Blog is a startup, of sorts, for a new phase of my life. I’ve retired from active work. I have no job. It’s wonderful!

It’s time to step out of the offices and the storefronts and stretch my legs as a writer of business wisdom. Not that I have any particular store of it. But what little I have gets to go on display and will attract its share of raspberries and huzzahs. And I’ll get to do my share of new research to stay ahead of everyone else.

So, what Action for me? I’d say concrete Goals and Plans.

Some would say this should have Mission, or Purpose at the head. But this is a small endeavor, for now, and such higher ideals will only get in the way, one more time, of what really needs to be — Action.

So, an Initial Action is to write this post. My Initial Action Goal is to write another dozen. A secondary Goal is to compile a list of 100 potential topics to write about. My Action Plan is to write posts, research blog enhancements, activate various affiliate programs, and participate in selected promotion activities to increase readership.

Simple. Direct. Effective.

What Goals, Plans or Actions would you recommend?