How do you know if a business is doing well? This company in which you have invested time, energy… and money.
You have concerns about the sustainability of your business ? It may be the stress that makes you see the worst. But how can you be sure that all is well?
I am campaigning for a serene entrepreneurship, freed from anxiety. But not irresponsible. Your business is like your child. All parents in the world are worried, even for no reason. What are they doing to reassure themselves? Simple gestures. Place a hand on their baby's forehead, for example, to check their temperature.
The same goes for your business. There are indicators of good health of a company. Watch them. Take the temperature of your business. And put your stress in the closet to make room for action!
Monitor the company's financial ratios
How do you know if a business is performing well? By checking its financial development, of course. And this at two levels:
- by monitoring theevolution of financial ratios ;
- making a financial health analysis of the company at each year-end.
I don't advise you to keep your eyes on the indicators 24 hours a day and follow the slightest flicker of the numbers. Looking at the details too much, you end up not having the whole picture. In addition, it can turn into an obsession and become very anxiety-provoking. The entrepreneur stress is not a good guide to judge the well-being of a business.
However, it is essential that you always know roughly where you stand.
I have already told you about performance indicators in an article on activity management tools. Those are :
- the turnover ;
- the profits ;
- the Gross margin (or commercial margin) and thegross operating surplus (EBE);
- the break even ;
- the need in funds (BFR);
- the self-financing capacity (CAF).
How do you know if a business is doing well? Analysis of working capital, solvency overall and in the short term, the debt repayment capacity are indicators that can reveal a company in difficulty. Or, on the contrary, show that it is doing better than ever!
Do this comprehensive financial analysis during your day-to-day accounting operations.
Do a detailed financial analysis every year
At the end of the year, it is essential to carry out a financial analysis of the company. This time, you will go into detail to check each point one by one.
- Summary of all income and all expenses.
- Fine evolution of turnover and profits.
- Precise condition of equity, fixed assets, of the'indebtedness, etc.
This detailed table shows you what is the financial solidity of your company.
On this occasion, you must ask yourself certain questions:
- all your fresh are they justified?
- do you invest enough (training, material, etc.)?
- what about fiscal advantages ?
Faced with the scale of this operation, do not panic! You have an accountant: he will do this job very well. It is his job to interpret the indicators of financial analysis. Simply, discuss it with him in depth. Thus, you will have all the cards in hand to make any decisions.
Analyze activity indicators
A financial analysis can reveal a struggling business. But it's not always the case.
Some children are sometimes in pain even though they have no temperature. The problems can lodge in any part of the body. You have to observe a person's behavior and overall condition to realize this.
Financial indicators are crucial, it's true. The problem is, they are indicative of well-established issues that have already taken their toll on your finances. It's still better to spot these problems before you get there, isn't it? And, in this case, other indicators are essential.
These indicators are the ones you set yourself as part of your commercial strategy.
It can be:
- indicators of customer satisfaction ;
- indicators of goal tracking ;
- indicators marketing ;
Pay particular attention to your Marketing strategy and on its results. Are you devoting enough attention and resources to it?
Nothing more essential than a good roadmap to know where we are ... and where we are going!
How to know if a company is doing well in human terms: observing the well-being in the company
We talk too often about numbers ... and not enough about the human element. Every now and then take a break and lean over your teams. How are your employees doing?
They are essential cogs in your business. A financially successful business can be in jeopardy if its employees run out of steam.
A internal diagnosis of the company at social level is therefore very useful. Ask yourself these questions (and ask your collaborators):
- do they feel good about the company? Tired, stressed out, overloaded working?
- do they feel involved in current activity and projects?
- are there any disagreements ? If so, do they generate frustration or theemulation ?
- do you have a lot of turnover ?
- do you have trouble recruit ?
The employee satisfaction indicators are as important as those of customers. 😉
The financial ratios, the monitoring indicators, thebusiness management analysis give valuable clues about the health of your business. As with human beings, you must:
- Firstly, stay tuned of its structure, by remaining vigilant in the face of revealing signals;
- on the other hand, from time to time make a thorough check-up.
In the latter case, it is often very useful to call in a professional. To someone who has the expertise in management and D'business organization. And, above all, the objectivity that you lack for analyze the strengths and weaknesses of your business.
As business coach of entrepreneurs, I bring you this neutral and professional look. I help you establish indicators to check the economic health of your business. I also offer you my experience in human resources management and entrepreneurial strategy construction.
Discover my coaching offer for business leaders !