Business Health Check

General Business Efficiency
There are a number of general areas that are indicators of the level of business efficiency. For example:
- Do we always deliver on time?
- Is our quality up to standard?
- Are our marketing & advertising campaigns focused and well directed?
- Are our gross profit margins protected against inflation?
- Are our terms and conditions of doing business complete and unambiguous?
- Are our levels of wastage and scrap low?
- Does our plant and equipment operate relatively free of breakdowns?
- Is our plant layout and production flow efficient?
- Are our stock levels efficient (neither too high nor too low)?
- Is our stock obsolescence minimal?
- Can we find things (goods, raw materials documents etc) instantaneously?
- Are we adequately and properly insured?
- Do we use / do not use outside consultants effectively?
- Do we analyse our returns and complaints by quantity, reason and value?
- How many customers are we upsetting?
  What is this costing us in forgone profits?
  If material how do we remove the cause?
- The physical appearance of the shop floor and offices will tell much about the standards elsewhere.
Ageing
Ageing is an efficiency indicator that should be applied to all areas of the business. For example:
- The average management age - no new blood/ solid experience.
- An ageing and less efficient plant facility.
- Old and dilapidated premises.
- Product profile - no new products for years.
- An outdated attitude to employees.
- Obsolete office equipment and systems.
- Over-used advertising or marketing procedures.
Risk status
Scan every business activity from a risk point of view. For example:
- Is the business subject to any special kinds of risks (eg fire)?
  Has avoiding action been taken (eg insurance, water sprinklers)?
  Have alternative arrangements been made (eg supply strategic customers) in the event of a disaster?
- What would happen to the business if we lost our top three customers?
- Where would we stand if the landlord did not renew the lease?
  Increased the rent?
  Changed the trading terms to our disadvantage?
- What if a strategic supplier went out of business?
  Blackmailed us on price?
- What if our computers went on the blink?
- What if a key staff member was no longer available through death, illness or resignation?
Competitiveness
The main criteria by which competitiveness may be judged are:
- Quality
- Price
- Delivery
- Innovation and new products
Market Intelligence
It is essential to know what is going on elsewhere in the market place.
- What new developments to products and services are afoot?
- Who is building up manufacturing capacities?
- Who is making special price bargains?
- Who is approaching our customer’s etc?
Start by trying to ascertain the size of the market in which we operate and our market share.
Then we would like to know the size of the other main players that affect us.
Next will come a review of our product strengths and weaknesses in contrast to our competitors.
What do we have that others do not?
Keep our eyes open and ears to the ground.
Talk to suppliers, customers, sales representatives and service personnel.
Put two and two together and we will be surprised how often five will come up.
Corporate Image
The aim of a corporate image is to attain customer recognition of the company, with the purpose of developing product loyalty and company goodwill. The elements used to build a corporate image are:
- The business name.
- The logo.
- The adopted colours.
- Slogans used repetitively.
- Advertising style.
- Uniformity of product appearance or wrapping.
- External sporting, cultural and charitable activities with which it is associated.
- The standard of its office shops.
- The dress code of its staff.
80/20 Rule
We can often hit 80 per cent of the problem with 20 percent effort if it is properly directed. For example 80 percent of our orders and profits come from 20 percent of our customers and products. This warrants close attention to recognising priorities and maximising returns.

Sound products or profit centres are often sacrificed, because we spend undue time with single problem children. We should look at our business with fresh eyes to ascertain where we have been drawn into this common malaise.
Available Finance
A healthy business should be able to raise the required finance when required, within self-imposed and external constraints regarding gearing. Lack of finance should never put the brakes on prospects of sound growth.
Management Information and Business Controls
Some form of quantitative business control information is necessary to measure the results of our endeavours. They are also invaluable in the day -to -day running of the operation.

Where things can go wrong in the short term (Eg product quality, wastage levels) information may be required daily. Other control information may be received on a weekly basis. This may include the best selling products and stock re-order reports. A financial overview is normally done on a monthly basis.

Information on profitability must be available as soon as possible after the period analysed and at sufficiently regular intervals. It should be prepared to show results by areas of responsibility (branches, departments etc).

Due to the volume of figures, information should be highlighted and summarised by exception. They should reflect the divergences from a plan or predetermined standard (budget) so that immediate action can be taken to address problems. This form of reporting also highlights opportunities that may be further exploited.