Good health is important. It is important to our bodies, and it is important to our business. When you care about the health of your business, you are demonstrating an interest in more than just the money that flows through it. You are showing that you fully understand the different parts of your business that contribute to its success – its good health. Just like we visit our Doctors once a year for a checkup, we take our cars to a mechanic for a tune-up, or we visit the Dentist for a cleaning, we should also conduct a checkup on our business at least once a year. Some suggest conducting a checkup twice a tear. Whichever you choose, you may be wondering – What exactly is a Business Checkup?
If you are an owner of a small to mid-size business, the odds are that your business is what is sometimes called a “Life Style” business. In other words, the business is there for an income with which you support yourself and family. The more income you have, the better your lifestyle.
According to the Exit Planning Institute (EPI), most business owners have between 80 and 90 percent of their personal wealth tied up in their businesses. Further:
- About 63% of businesses are owned by Baby Boomers, and inevitably all of them will one day leave their business.
- Of these, 83% have no plan for their future or the future of their business.
- Half of these owners will need the business to be profitable after they exit.
Personal wealth does not come from revenue alone; it comes from the value of the business. Value is linked to revenue. You have to focus on BOTH to have the financial security to maintain your lifestyle. So how do you do that? (Business value also affects business loan eligibility and amount – that’s another story.)
If you are a small or mid-size business owner, I have a question for you? What is more important to your business? Is it how many dollars in service product that it sells? Is it your Margin? Or, is it the value of your business? The answer should be yes. But which question(s) depends on what your long-term plans for your business are.
Depending on those plans each of those areas of focus have a different meaning. In some instances they should mean everything; in others, they may mean little. Regardless, all are important. How important, again, depends on your plan for the business.
We have all heard the mantra, “If your business isn’t growing it’s dying.” In today’s highly competitive business environment that is true. Business growth is much more than sales, revenue, and profit. While those are important so is the ability to sustain them. In point of fact if you can’t sustain it, then it doesn’t help your business. So while aggressive growth, and I define aggressive growth as an average of anything more than 20% a year, looks exciting and appeals to your emotions, if you cannot sustain growth then you are harming your business.
How do you sustain your business growth?
It’s an interesting question. How do you know? It was a question my youngest son would ask me following my explaining something that I hoped his toddler mind could grasp. He would nod approvingly, look at me with those big eyes and ask, “How do you know?” I never took it as a challenge; it was a request to learn more. So how did I know and more importantly, how do you know?