The key to operating a successful business and making money in an economic downturn or recession is to know where your business performs well and where it can improve.
The ‘signs’ of a healthy business are sustainable profits and strong trading cash flows. Whereas, the ‘symptoms’ of a business under performing and at risk of being ‘infected’ by a recession or downturn, include declining sales and high fixed costs.
People who care about their health visit an expert – their Doctor.
Business owners who care about their business should similarly visit an expert – their Accountant and/or Business Adviser to complete a business health check.
Prevention is better than cure!
To ensure your business remains healthy and continues to prosper in these uncertain times, you should undertake a business health check. A visit to your key professional adviser can protect your business from the full effects of a recession and better prepare you for recovery. Your Accountant or Business Adviser can access online valuation technology that includes a Risk and Value Driver Assessment Questionnaire.
The Questionnaire acts like a health check and grades your business in terms of its risk and pin points opportunities for value improvement; the cure below is a sample of the many topics covered in the Questionnaire:
How healthy is your business? Test yourself!
Your Score: 1 Poor – 5 Good
1. Have you segmented your customers sales to identify profitable products/service lines and customer risks?
2. Do you use benchmarking to identify your business’ strengths and weaknessess?
3. Does your debtor’s policy include discounts for early payment and personal guarantees for large customers accounts?
4. Does your approach to managing staff include capping salary increases and pay incentives for above budget performances?
5. Do you have systems and procedures in place to reduce the business’ reliance on you?
6. Do your business protection strategies include adequate risk insurance in case of an unforeseen triggering events?
Ask your Accountant or Financial Adviser to provide you with a copy of the ‘Risk and Value Driver Assessment’ Questionnaire so your business thrives, not just survives, into the future.
Disclaimer: this information is of a general nature and should not be viewed as representing financial advice. Users of this information are encouraged to seek further advice if they are unclear as to the meaning of anything contained in this article. Bstar accepts no responsibility for any loss suffered as a result of any party using or relying on this article. © Bstar Pty Ltd