Time for your business health check?

Future planning is key for any business. However busy you get day to day, working to meet short-term deadlines, it’s important to set aside time to think about what position you want your business to be in, in say one, five, or even ten years’ time.

If you’re planning to retire, or simply sell up to pursue other avenues, you want to ensure you leave your business in the best shape possible – a profitable, well-run outfit that offers an attractive ongoing concern to potential buyers/investors.

There is a proven approach to help reach that goal – create a process.

You can ‘future proof’ by improving your business processes. This will not only help realise a greater return when you choose to exit and sell, it will improve revenue on an ongoing basis up until that point. So, where do you start?

Business Health Check

A Business Health Check is a method of assessing the current health of your business and what may need to be done to get it on a sound footing. This is th efirst step of future proofing – a bit like taking your car for its WoF.

While it’s possible for you to complete your own Business Health Check, it’s also helpful to establish a Business Advisory Panel to provide an independent assessment.

Business Advisory Panel

In large company structures, the CEO, senior management team, board of directors and possibly shareholders will work together to assess the state of the business and plan for the future.

However, most building companies in New Zealand are small to medium-size enterprises (SMEs). Often, one or a small number of people can be the shareholders, directors and part of the management team. This sometimes makes it harder to step back and look at your business objectively from various viewpoints.

That’s where a Business Advisory Panel can come in handy. This comprises a set of independent, professional service providers, who can help you take stock of your business’ health by providing an unbiased perspective, as well as providing access to independent skills in areas such as governance, strategy and best practice.

Panel power

These professional service providers could form your Business Advisory Panel:

• Your accountant can advise on the value of your business.
• Your lawyer can ensure that you have the right contracts signed up and that your business meets current compliance requirements.
• Your banker can help you protect your assets and fund further growth.
• Your business coach can help balance your priorities and clarify your goals.

Business Enhancement Plan

Once the health of your business has been assessed and areas for improvement have been identified, the next step is to set up a Business Enhancement Plan. This represents all aspects of a business in the form of a chart. The chart indicates potential focus areas for such a plan.

In essence, this is about fine-tuning your business practices – not necessarily a major overhaul. Usually this is a combination of improving revenue, reducing costs, increasing productivity and improving quality.

You’ll be surprised how even the smallest of improvements to your bottom line can improve the value of your business over time.

This plan is also about ‘de-risking’ your business, by having sound business practices in place.

Once the plan is in place, ensure your whole team knows what needs to be done and who is going to do it. This is very much a team effort, so you need to communicate your plan and get buy-in from everyone in the business for it to succeed.

Improvements can be measured, so you will know if you are on the right track. Effective follow-through is a critical factor in the success of such endeavours. Again, your Business Guidance Panel can greatly enhance your effectiveness in implementing, tracking and managing the Business Enhancement Plan and preparing for succession and exit.

About the Venn Group

The Venn Group provides the opportunity for you and your business to benefit from the insights of a team of independent specialists in enhancing the effectiveness and efficiency of small and medium enterprises. If you have any questions about the above issues, or would like to discuss this article in further detail, please contact Tony Hocking via tony@venngroup.co.nz, Tim Wilde via tim@venngroup.co.nz or Peter de Valda via peter@venngroup.co.nz.