Business health check: There’s no time like the present


This blog post was originally published on April 17, 2020. It was updated on May 26, 2023.

Look at four vital signs to gauge how your company is faring

I didn’t go to medical school, but I often feel like a primary care physician. I check your company’s blood pressure by reviewing your financial statements. I look at vital signs like sales growth and liquidity. I recommend vitamins and exercise, like accelerating collections. I spot complex tax problems and refer to specialists. And like many primary care docs, I’d like my patients to get more regular check-ups.

There’s no time like the present for a business checkup. Economic uncertainty, from interest rate changes to a looming recession, presents challenges for organizations across all industries. So whether you’re a manufacturer trying to manage the increased cost of raw materials or a tech startup seeking new investors, checking the vital signs below remains an important part of your business’ health.

1. How’s your cash flow?

A clear understanding of your business’ cash position and the drivers of liquidity are always important. Doing so allows you to stay ahead of cash shortfalls, and can also help improve your competitive advantage and position yourself for growth even in volatile times. Consider tracking your current and future cash position on a weekly, monthly and quarterly basis. Establish cash reserves if possible and consider alternate means of funding before you need them.

2. Is your revenue stream steady?

I’m sure you had a revenue forecast for this year, but you may not be hitting your targets. Now is the time to run diagnostics with your team. What’s still working? What is selling… and what isn’t? Are you missing any opportunities to maximize profitability or bring new value to your customers? If you’re struggling to make sales, consider whether preferred customer discounts or limited-time pricing strategies might help. Leverage your network and community connections to consider beneficial joint ventures.

3. Have you looked at costs?

Don’t ignore the problem or hope it will be better tomorrow. Being proactive gives you opportunities to prioritize, defer or even renegotiate payments. The two biggest expenses are often rent and labor. If rising rent is a challenge, consider speaking with your landlord. You may be able to defer rent payments or renegotiate better terms. If you’re struggling with labor costs, consider supplementing your team via outsourcing or the use of contractors.

4. Is your supply chain reliable?

The global supply chain has seen its share of challenges over the past three years. While the outlook has improved since the early days of the COVID-19 pandemic, some industries are still feeling the effects. Avoid surprises by checking on your sources and diversifying where needed. If any of your producers are struggling to meet your needs, you may want to consider alternate supply chain partners before the need becomes critical. If you belong to a trade association, consider talking to others in your industry who may be willing to share resources or partner for better deals.

Don’t stop with the checkup.

Your company’s checkup is only the first step. In times of economic uncertainty, many businesses look to cut costs and expenses. However, those strategies may not be enough. If you want your organization to be resilient and sustainable in the long-term, monitoring key performance indicators (KPIs) can be critical. Look at your entire business cycle, from grabbing a prospect’s attention to delivering your product or service and beyond. Tracking and regularly reviewing key metrics with your trusted advisors will help you plan for future growth and be ready to seize whatever business opportunities may come your way, including mergers, acquisitions, investments and more.

Contact me or another member of Kaufman Rossin’s Entrepreneurial Services team for help with assessing your business health and positioning your company to reach your financial goals.

Meredith Tucker, CPA, is a Entrepreneurial Services Principal at Kaufman Rossin, one of the Top 100 CPA and advisory firms in the U.S.

  1. Gregg L. Friedman MD says:

    Interesting story on financial planning. Thank you for posting it. 5 Stars. By Gregg L. Friedman MD

  2. david bergstein says:

    Excellent article and I agree with all that you said. Now is the time to step up with all your clients and do a health check.

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