Seven Signs of a Healthy Business

Seven Signs of a Healthy Business

Entrepreneurs want their companies to grow and make a profit, but there are some things you should keep an eye on which don’t show up in the accounts

The numbers look healthy, your clients seem happy and the business appears to be growing well. But does this mean a company is set for success in the long-term?

Entrepreneurs are often focused on the bottom line, and although this is of crucial importance, there are other issues you need to consider. It needn’t be difficult, however, as there are simple tests you can apply to your business to make sure it’s strong and prepared for the future.

So if you want your enterprise to be bulletproof and on the right track for success, then discover the seven signs of a healthy business.

1. A varied client list

Everyone likes to win the business of a big and well-known company. Being able to mention that a major brand is a client can often impress and is good for the sales story. But although having a client with a lot of spending power can be lucrative, it’s wise to ensure you could still be successful if you were to lose that customer tomorrow.

Entrepreneurs should take a look at their accounts and work out how much their biggest client is worth in percentage terms. If one client is the majority of your trade, then you should work hard to expand your list. However, if you feel you could comfortably withstand the loss of any of your main clients, then you're well placed for the future.

The same holds true for the sectors, and even countries, in which you and your clients work. Spend some time proactively looking to spread your risk by diversifying. If all your clients are in the further education sector, and budgets are slashed, you risk exposure. Similarly, if your client base is predominantly in one place – the Eurozone, say, or China – you may be hostage to currency fluctuations, or changes in law, economics or government policy.

2. Company values

Businesses need to adapt their offerings over time and be flexible in their dealings when necessary. However, at their core they also require values, which remain the same over time.

A study by the Harvard Business Review found that many of the world's most successful businesses had one thing in common: they all possessed core values which remained the same over time. Business owners need to know who they are as much as where they are going, the survey’s authors found.

So spend some time with your managers, or other key personnel, and ask them how they define the business. Then work together to create values and beliefs that will unite the business and help keep it headed in the right direction in the long-term.

3. Motivated and engaged staff

A well-motivated team is crucial to the success of any business and retaining top performers is also mission critical. The best way for a business to retain its best staff is to ensure they have goals and ambitions to strive for. Really good employees want to reach the top and it’s up to business owners to provide them with a route to get there, which will also benefit the company.

Healthy businesses conduct regular appraisals and discuss performance with their staff in a way that helps both the employee and the company. Investors in People [LINK https://www.investorsinpeople.com] (IIP) works with many of the UK’s most successful businesses to help them boost their staff effectiveness, and can offer advice and support to help your company.

4. A strong reputation

The sales may be booming but entrepreneurs still need to know why customers are buying from them. If people only come to a business because it’s cheaper than the rest, then it is at risk of being undercut by a competitor – ultimately leading to a price war and reduced profits. However, if customers like the service, trust a company and believe it cares about them then these are all excellent indicators. If they’re prepared to recommend you to their friends and family, that’s another positive sign. A company’s reputation is crucial and you should guard it well.

5. Up-to-date technology and techniques

Groundbreaking technologies and innovations are released every day and new possibilities are being unlocked as a result. Business owners need to keep their ear to the ground for new tech that could be useful to their companies and make sure they keep up.

Entrepreneurs should also regularly review their IT systems and other key equipment in their companies to make sure they are performing well. They should also explore their leasing and asset finance arrangements to make sure these provide them with enough flexibility to ensure the business can upgrade in good time to take advantage of the best new equipment when it comes to market.

6. Healthy debate

Having thorough and open discussions with employees, partners, suppliers and customers helps keep a business alert to new opportunities and potential threats on the horizon. Owner-managers may prefer it when everyone agrees, but businesses should be wary of falling into the habit of ‘group think’.

Company managers should encourage debate and be prepared to have their ideas scrutinised. Creating a formal process for discussion is a sensible idea. However, once a decision has been made, the management must agree to take a plan forward and present a united front to the rest of the company.

7. A caring work environment

Great employees want to work hard and achieve fantastic results. But sometimes the best staff can try too hard for too long and are at risk of burnout. Working long hours doesn’t always mean working well, so don’t be overly demanding of your employees and refrain from cutting into their downtime unless it’s absolutely necessary. Ensuring you have fair and transparent HR policies to deal effectively with staff holidays, illness and compassionate leave is a must for all good companies.

Finally, entrepreneurs and business owners should make sure that they take a break from work every now and then. Recharging the batteries with a holiday will help a company leader to perform at their best and keep perspective on what’s important.

 

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Wednesday, 14 November 2018
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