Every year, you likely visit your doctor to check on your physical health. As an entrepreneur, you also should be scheduling an annual check-up of your business health. In both cases, periodic health monitoring enables you to identify potential risks and issues in their earliest stages, giving you ample time to respond and make adjustments before they become problematic or even catastrophic.
The fact that your business is growing and showing a significant profit is no reason for you to forego a detailed assessment. By ignoring a close examination of your company, you are probably leaving money on the table, spending more than is necessary, and not capitalizing on profit opportunities.
Not only will a business check-up help to optimize your company’s profitability, but it will also lead to a higher overall valuation. Here are just a few of the ways your company will benefit from a detailed evaluation.
In a recent article we published, we asked business owners: “Do You Know Your Numbers?” We provided a list of key metrics that every entrepreneur should know to understand how profitable their companies are. And while knowing your numbers is an important first step in boosting your profitability, you must follow through to interpret the numbers and then make necessary adjustments in your business.
A financial review of your business will help you understand:
- Which products or services are most profitable for your company, and which ones should be retired.
- How much you should be spending on marketing and acquiring new customers.
- Trends and patterns in your revenue, expenses, margins, and overall profitability.
- Opportunities to reduce costs through assessments of existing contracts and vendor relationships.
- Creative solutions that address challenges that impact cash flow.
Is your company operating as efficiently as it can be? Are your internal operating policies and procedures clear, comprehensive, and documented? Would a new owner and new employees be able to hit the ground running by following your documented procedures? An evaluation of your key practices and procedures will reveal if there are opportunities for improvement.
Your assessment will uncover information that could lead to increased efficiency and effectiveness in key areas. Benefits may include:
- Improving the timeliness, consistency, and transparency of your company’s accounting and financial systems, including month-end processes and financial reporting model.
- Reducing risk and regulatory scrutiny by strengthening your compliance foundation.
- Eliminating or replacing antiquated practices and redundant procedures.
- Improving workflows and coordination among your internal departments.
- Identifying time-consuming activities that could be replaced by automation.
For many business owners, a comprehensive financial and operational assessment is an eye-opening experience, which leads to a deeper understanding of a company’s strengths, weaknesses, opportunities, and threats. It gives the information entrepreneurs need to make adjustments to keep their business engines’ humming. In addition to generating to greater profits, an assessment also strengthens a company’s foundation, which leads to increased operational efficiency, better service levels, higher employee productivity, and an improved customer experience.
Are you ready to take your business to the next level? At Peek Advisory Group, our consultants are experts in building, evaluating, and improving your financial, accounting, and operational processes and systems. Learn more about our team here.