Periodic Business Checkup

Every year thousands of new businesses are started. Yet within five years, about 80 percent of them fail. Whether you have been in business for a few years or for many years, a regular business checkup might help you remain among the successful few. Below are a few of the broad range of questions that every businessperson should be asking themselves at least annually:

Does your business have a plan?

Successful businesses recognize the importance of a written business plan. The process of writing a plan can help you identify potential problems as well as opportunities. A written plan also forces you to think about where you have been and where you are going. See also Plan to succeed, and you probably will.

Is your form of doing business still appropriate for you?

The tax and nontax consequences can be significant. The basic forms of business include sole proprietorship, partnership, corporation (both "C" and "S"), and limited liability company. For this and related items of possible review see Setup new corporations.

Does your company hire and retain good workers?

High employee turnover often results in high customer turnover. Money alone does not make happy employees. Find out what's important to your employees. Flexible hours, casual dress, or benefits can be as important to employees as salary. See also Reducing Employee Turnover.

How is your cash flow?

A company can have a healthy profit picture and at the same time have a critical cash flow problem. Look for ways to speed collections, such as sending invoices when merchandise is shipped, giving early payment discounts, and imposing finance charges for late payment. Don't pay bills earlier than necessary, but pay early enough to take advantage of cash discounts offered by your suppliers. Consider establishing lines of credit before you need them. See also Cash Flow versus Profits.

Is your inventory excessive?

Identify suppliers that can ship quickly to reduce the amount of inventory that you carry. If you have inventory that hasn't moved in a while, you may want to give it to a charitable organization and get a tax deduction for your donation. See also Pay attention to inventory

Who will your next customer be, and what must you do to win or keep that customer? 

Never assume that growth is automatic or that it will last forever. The success of most businesses can be attributed to repeat customers. Conduct customer surveys. Train employees to listen to customer feedback, both good and bad. Offer customer discounts or privileges to preferred customers. See also Give your business a service check-up.

Take the time to identify areas in which your business can improve. We have helped many businesses improve their profits and growth prospects by providing an experienced, fresh outside viewpoint. Every business needs a thorough periodic review to succeed in this difficult, rapidly changing environment.

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© Copyright 2001 Raymond S. Kulzick. All rights reserved. 010318.