I meet a lot of business owners that are doing everything they can to build a big business. I also have met quite a few owners of big businesses that are struggling. What all of these business owners really want is a healthy business.
Does this sound familiar? Have you been focused on growing a big business? (whatever that means to you) Or do you aspire to grow a healthy business? And do you know the difference?
The business owners that are happiest with their businesses have healthy businesses, regardless of size. What does it mean to have a healthy business? Here are some questions to ask yourself
Big vs. Healthy
Are you getting a paycheck?
1) The owners are taking home a very nice salary. Regularly and without (too much) stress. After all, it’s your business, and you’ve taken the risk. If you’re not reaping the reward, what’s the point?
Is there something left over?
2) There’s profit left over to reinvest in the business. For growth, for new initiatives, to reward your team, to support your community or whatever else you’d like to do with your business.
Is there a cushion
3) There’s cash in the bank. Some like to call it a war chest, but I’m a pretty peaceful person so I prefer rainy day fund. The point is, there isn’t going to be a panic if there’s a sudden large expense or your biggest client has cash flow problems or disappears.
Are you diversified
4) You’re not relying on one client or industry. That’s too many eggs in one basket.
Is Uncle Sam happy?
5) There’s money set aside to pay taxes, and your quarterlies are getting paid on time.
Do you have the right team?
6) You’re able to hire the quality and quantity of people you need. Maybe not every single time (there are always the few that get away) but on a regular basis. This is an area where the investment can really pay off. A few (or ten) thousand dollars a year more for the right team member can really make a huge impact in your business and your personal workload (assuming you’re still working in your business)
And the right equipment?
7) You can afford the right equipment, and afford to maintain, replace and upgrade it as necessary. For certain types of capital equipment intensive businesses it makes sense to put money away for this regularly.
Can you get more?
8) You can borrow money easily at a reasonable rate. Sometimes those business opportunities come up that you just don’t want to pass by. Being able to borrow money when you need to, as leverage, can be key in growing your business.
Can you monitor your health?
9) You can get financial information, and answers to financial questions, and “what-ifs” easily. Frankly, you won’t have any of the other aspects of financial health if you don’t have the right systems in place and know how to use them. Having insight into your finances (past, present, and FUTURE!) is critical to making good business decisions.
Granted, this is a lot, and for newer companies this should all be something to aspire to (except number 9! You can’t get anywhere without number 9). It takes time to build up to this, but with these goals in place, your business should be humming along, generating the cash that it should be for you, so you can go enjoy your boat or beach house or travel, or whatever you love to do with those you love!