When you’re caught up in the day-to-day of running a business, it’s easy to judge how things are going by what’s right in front of you. 

Sales are coming in. The team is busy. There’s money in the bank. Things must be going pretty well, right? 

Maybe. 

A healthy business is about more than revenue or how busy everyone is. It’s about profitability, cash flow, efficiency, having the right structure in place and knowing where the business is actually heading. 

Sometimes you need to look up from the day-to-day and take a proper look at how the business is really performing. 

Here are a few areas worth checking. 

 

start with the numbers, but look beyond the top line 

 

Revenue is an easy number to get excited about. If it’s growing, happy days, right? 

Maybe. 

As I’ve said before, sales are for show, but profit is for dough. 

A business can grow its revenue significantly and still end up working harder for less. So, look beyond the top line. 

How is your profit tracking? What’s happening to your margins? Are expenses growing faster than revenue? Are some parts of the business performing better than others? 

The important thing is to understand why your numbers look the way they do. 

Your numbers should tell you a story. If you don’t know what that story is, it’s worth digging a little deeper. 

If profitability isn’t where you want it to be, I’ve recently unpacked five areas where your business could be quietly losing money and what to look for. 

 

how healthy is your cash position? 

 

Profit is important, but profit and cash are two very different things. 

You can have a profitable business and still find yourself wondering where all the cash has gone. Why? Because businesses spend cash, not profit. That’s a point I’ve been banging on about for years.  

So, where is your cash? 

Is too much tied up in debtors or stock? Are customers taking longer to pay? Has debt increased? Are tax liabilities creeping up? Do you know what your cash position is likely to look like three, six or twelve months from now? 

A cash flow forecast can help you see where the tight spots might be before they become a problem. 

Knowing your cash flow is knowing your business. 

 

is the business getting easier or harder to run? 

 

Being busy isn’t necessarily a sign of a healthy business. 

Think about how the business actually operates. 

Has growth made things better, or has it just made everyone busier? Are your systems and processes keeping up? Are there bottlenecks that continually cause headaches? Is too much still dependent on you or a handful of key people? 

I’ve written before about the “boring bits” of business – the systems, processes and back-office stuff that rarely gets much attention when everything is busy. But boring or not, they can have a big impact on how efficiently and profitably your business runs. 

If something is taking too long, costing too much or frustrating your team or customers, there’s probably an opportunity to do it better. 

I covered this in more detail recently with practical tips to improve productivity and business performance without simply asking everyone to work harder. 

 

does your structure still fit the business? 

 

Businesses change. 

You bring in new people. Revenue grows. Assets accumulate. Owners come and go. Your plans for the future evolve. 

But sometimes the structure behind it stays exactly the same. 

The structure that made sense when you started out may not necessarily be the right structure for the business you have today – or the one you’re trying to build. 

If the business has changed significantly, it may be worth reviewing your structure with your accountant and legal adviser, particularly from an asset protection, tax, ownership and succession perspective. 

The question is simple: if you were setting the business up today, would you still structure it the same way? 

 

where is the business actually heading? 

 

This is probably the most important part of the health check. 

It’s one thing to know how the business is performing today. It’s another to know where you want it to be in 12 months. 

What’s working really well? 

What isn’t? 

What needs to change? 

And what does a successful next 12 months actually look like for you? 

I’m a big believer in having a roadmap for the business rather than simply seeing where the year takes you. Goals are much easier to achieve when there’s a plan behind them and a way to measure whether you’re actually getting there.  

Set some clear goals. Build a budget. Work out the handful of numbers that will tell you whether you’re on track. Then actually use them. 

Because a budget or business plan sitting untouched in a folder isn’t going to change anything. 

 

now, do something with it 

 

A health check is only useful if you act on what you find. 

Maybe your margins need attention. Maybe cash is tighter than it should be. Maybe a process needs fixing, your structure needs another look, or the business has simply lost sight of where it’s heading. 

Great. Now decide what you’re going to do about it. 

You don’t need to fix everything tomorrow. Pick the areas that will have the biggest impact, decide on the actions required and make someone accountable for getting them done. 

Know your numbers. Ask the hard questions. Then do something with the answers. 

 

we’re here to help   

If you have any questions or need a hand working out where your business could be performing better, you can contact me or give the team a buzz on 1300 BDEPOT. 

 

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