Management Tips

Is Your Business “Healthy”? Three Tests

Some aspects of health are obvious and can be easily observed. But the most important indicators of health are not visible without investigation.

Much like problems with blood pressure or cholesterol, you won’t know there is a problem unless you have the right instruments to check it out. And if these go unchecked, they can be fatal.

I discuss this topic in more detail in my book and in prior blogs (see links below). Here I would like to highlight three big health-factors that can make or break a business (including non-profit organizations).

  1. Trend lines not in conflict. There are many trend combinations that can be in conflict but often go unnoticed. Included in these combinations are growing revenue and shrinking gross margin, growing debt and declining assets, growing profits and declining equity. More of these are presented in the book. Any one of these can cripple or shut a business down.
  2. Top management is clear on top priorities. There are always more issues to address than available time. If top management doesn’t set the priorities, everyone on the team will set their own versions of their top priorities. Alignment only happens when goals and priorities are clearly defined and communicated.
  3. A routine process exists for monitoring and adjusting directions and priorities. Without progress reviews, there can be no accountability. Without accountability, things drift. When a company drifts, it is impossible for it to get traction in any specific direction.

Unhealthy companies stay flat and are unable to move forward. Unhealthy companies may survive but they are just one speed bump away from going out of business.