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Business Development

Health

The overall health of your business is more than just your bank account balance. While it's easy to check your bank balance, making sure you have a healthy business takes a bit more effort. Here are some things to think about that go beyond your balance.

Cash is king in business and maintaining positive cash flow is one way to make sure your business is healthy and growing. This is where checking your balance sheets and income statements comes in handy. As an owner, knowing how to read your numbers will help you spot cash flow problems long before they become apparent in your bank balance.

A little thing called solvency: Try this little exercise. Start with your bank balance, divide it by your monthly expenses. The result is the number of months it would take to go bankrupt if your cashflow stopped right now. Odds are,that won't happen, but it could - and the knowledge of your solvency number could make a difference in how you handle cash flow changes down the road.

Going beyond the financials: While it's easy to boil things down to just the numbers, your business is probably driven by people. You have customers, they're people. You have employees, they're people too. You might be able to bring down your overhead by sourcing parts from a cheaper supplier, but your customers may spot the difference and stop buying your product. You might be able to save by cutting employee wages or benefits, but the decrease in morale and motivation may cost you in the long run. Part of running a healthy business is making sure that you have a quality product that provides value produced by a team of employees who cares about what they do because they know their efforts are valued and rewarded.



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