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Business Health Check – Your Strategic Snapshot For SME’s

A business health check is a chance to stand back and look at your business with fresh eyes as it looks at many different aspects of your current business performance and the factors that determine future business performance.

Why You Need A Business Health Check

As the owner of a small business and a coach to other small business owners, I know how easy it is to get caught up in the day to day issues of managing your business.

Stephen Covey the time management expert splits activities into four sections:

  • Not Urgent Not Important
  • Urgent Not Important
  • Urgent & Important
  • Not Urgent & Important

I suspect that like many managers you can get caught up in the urgent categories as you fire-fight your way through your business day.

You probably know that you shouldn’t be doing the first category – not urgent and not important. If the tasks need to be done at all, then they should be delegated or outsourced.

But do you realise that the category that can have the most impact on your performance is the fourth and last one – not urgent and important?

Think about it.

If you spend your time doing important things when they are not urgent, you don’t have to make compromises because of time pressures so the most important things get the attention they deserve.

You do them better and that leads to superior performance.

The purpose of the business health check is to help you to find these “important but not yet urgent” tasks before they become urgent and dominate your time and energy.

My Business Health Check – The Strategic Snapshot

I first developed my business health check – what I now call my Strategic Snapshot – as part of my MBA dissertation when I looked in detail at how business advisors can prevent SME clients (small and medium sized businesses)  getting into financial difficulty.

The idea is simple, prevention is much easier than cure.

Businesses can be turned around but if performance is declining sharply, then the time and money needed to put the business on the right track is often not available when the business owners and management team ask for help. This causes many businesses to fail or even become bankrupt unnecessarily.

My business health check is much more strategic than many I’ve seen which focus on tactics which the business owner/management is or isn’t doing.

I believe that if you’re going to use a business health check to look at your business health, you need to look much broader than tactical activities. Businesses get into trouble for a wide variety of reasons but often it’s a strategic problem at the route cause.

My Business Health Check Format – The Five Pathways To Profit And Loss

  1. Pathway 1 – market attractiveness – growing or declining
  2. Pathway 2 – market competitiveness – growing or declining
  3. Pathway 3 – competitive advantage – increasing or decreasing
  4. Pathway 4 – management skills, planning and control – effective or ineffective
  5. Pathway 5 – the business owner’s inner game – str0nger or weaker

The main emphasis is on the first four pathways although over time I’ve come to realise that the inner game of the business owner and his or her vision for the business, passion and commitment and the way it translates into priorities, goal-setting and time management is a vital issue.

But it’s personal and I prefer to explore these issues, with the owner’s permission verbally rather than through a business health check questionnaire.

The idea of the pathways is simple – a weak rating in one or more area either needs to be corrected there or compensated for elsewhere by a much stronger performance.

For example, if the business is trapped in a market that can only be described as unattractive and extremely competitive, then the management team must focus on its own management skills, planning and control procedures and look to develop competitive advantages. This is a similar idea to SPACE Analysis.

The Value Of A Business Health Check

The value of the business health check comes from three sources:

  1. Completing the business health check questionnaire may make you acknowledge issues and uncertainties that have been nagging away at the back of your mind and undermining your confidence without being formally recognised. You’ll know what I mean if you’ve ever felt anxious about something but not known why – you just had a bad feeling – and you’ve been frustrated because until you pinpoint the underlying issues, you can’t take actions to reduce your concerns.
  2. Your internal feedback to yourself – the health check helps you to identify what needs to be done and can give you incentive to do something. For example, if you’re always struggling to balance cash flow, then it’s logical that you should spend some time on cash flow forecasting to give you advanced warning of issues and time to do something about it.
  3. External feedback on your answers in the business health check questionnaire. My health check draws on the major strategic planning models to identify performance patterns and issues which you probably won’t see on your own.

Is A Business Health Check A Cynical Way To Sell Business Consultancy, Coaching & Advice?

My business health check is my preferred diagnostic tool when I first get involved with a business and certainly with a business of ten or more employees. It provides structure to the review process.

Unfortunately I found resistance from prospective clients and it hasn’t been the effective lead generator I expected.

I now believe that a business health check offered by a business coach or consultant is viewed suspiciously by an entrepreneur as a cynical way to sell consultancy services rather than a problem identifier.

I can understand that.

Holding your hand up and saying that X, Y and Z are problems is admitting that you do need to do something.

But whatever a free business health check says about your business problems, it doesn’t mean that you have to do something about it or that you have to buy from the business coach or consultant providing the health check.

Just as you take a medical health check and you may be advised to take more exercise, eat more fruit, lose weight, stop smoking and cut back on the booze, it doesn’t mean that you will follow the advice.

On my last health check I was told that I needed to lose about a stone in weight but I didn’t do anything about it. Now I need to lose about two stone! The basic rule seems to be that if you ignore a problem, then it tends to get worse.

I recommend that you see the business health check as an input into how you run your business. It will confirm some things that you already knew but it may tell you about other issues that you hadn’t appreciated but which are easily cured.

I’d like to know your thoughts. Do you reject offers of a business health check from a business coach or consultant because you don’t want to be “sold”?

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