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 Adviser and/or Accountant may ask you a series of questions which acts like a health check and can grade your business in terms of its risk and pin points opportunities for value improvement.
Below is a sample of the many questions and topics that are covered:
How healthy is your business? Answer by scoring 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 weaknesses?
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 unforeseen triggering events?
If you would like to discuss further please contact our team on 08 8334 0600 or email enquiries@dalewood.com.au.
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.
Article supplied by our partners at Bstar.