NINE WAYS TO CHECK IF YOU HAVE A HEALTHY SMALL BUSINESS

With interest rates rising and the cost of living spiralling out of control. here are nine simple ways to see if your small business is healthy .... or not.

1. Your business is making a profit. You should be able to see a consistent revenue stream and a steady profit every month, even if it is only small. This is a sign your business has a strong financial future.

2. You have a comprehensive business plan. Your plan should outline your goals and future projects for not only this financial year but the next, taking in predictions of the economic climate, cost of staff and any projected increase in product and possible new competition.

3. Expenses. Are Not Increasing. To keep your profit increasing you must make sure your expenses stay flat, and do not grow faster than your revenue. Expenses naturally increase when your business has a growth spurt, but they should stay in line with the revenue boost.

4. Your Website Is Performing Well. Check Google Analytics to see if your number of customers and views is increasing. You should be across key SEO words which will attract new customers.

5. Your Industry Is Healthy. Check what is happening with similar businesses. Is the Industry stable? Is your business up to date with new and competing industry trends?

6. Your Cash Balance is Increasing. You need a healthy amount of cash in the bank to cover any urgent expenses. You should not use all your profits to cover your costs or invest back into your business. Cash is king!

7. You Have New Clients and Repeat Customers. Do you have a steady stream of new clients, and are retaining existing customers? If so, your business has many options to generate revenue.

8. Debt Ratios Are Low. There are two debt ratios to examine: a business’ debt-to-asset ratio and its debt-to-equity ratio. Solvency formulas specifically measure how much your business owes compared with how much your business is worth. A lower number is ideal.

9. New projects are on the horizon. Even if your business is doing well now there needs to be strong signs of growth. You need to have solid projects in the pipeline to make sure your business does not become stagnant. This is especially important as many hospitality and retail businesses need to adapt to the disruptions caused by the pandemic.

• Source: SM Solvency Accountants.