Small Business Advice
Time to get an annual checkup - for your business
Why your business needs 'outside eyes' to do an independent evaluation every year
"Most people I ask little from. I try to give them much, and expect nothing in return and I do very well in the bargain."
~ Francois FeNelon
Most people know and agree that annual medical examinations are vital. They make it possible to identify all kinds of problems – the serious and the not-so-serious – before they become critical issues. In my case, I believe an annual evaluation saved my life.
I was having an annual checkup for an enlarged prostate. In this procedure, called a cystoscopy, the doctor uses a TV camera to go through the prostate into the bladder. It is not painful even without any pain medication.
I was on the table watching the TV, and as the doctor went past the prostate and into the bladder, he noticed a brown spot on my bladder, which is normally white. The doctor said, “We need to remove that,” and within a week, I was having non-invasive surgery to remove the spot (I am sure “spot” is not the medical parlance for this).
When the doctor came to my room after the surgery, he said it was cancer but that they had caught it so early that I would need no further treatment besides my annual “TV shows.” Had this not been discovered during a routine annual checkup, my story might have been very different.
The reasons annual medical evaluations are so important for individuals are the same reasons annual evaluations are critical for small businesses. They allow entrepreneurs to identify areas with potential to be significant problems so they can address them early.
Although many entrepreneurs think it is adequate just to look at their income statements, having high profits one year is not a good barometer of future performance. It is vital you have “outside eyes” come in and do an independent evaluation every year.
This evaluation should cover your financials, as well as insurance, legal, marketing and your business culture. The evaluator should investigate trends in both income statements and balance sheets, as well as how successful the firm was in achieving their strategic plan. If the firm missed a goal, they should determine why and what can be done to improve future results.
The evaluator should also talk with staff and assess the health of the company’s culture. Other critical tasks are evaluating any legal issues and assessing their financial impact, as well as looking at insurance coverages.
When hiring someone to do this work, you should think of it as an investment in the long-term vitality of your business rather than an expense. You should be able to find someone to spend a day or two going over your business as part of this vital process.
Now go out and set up a process by which evaluations are performed annually. This is so important.
You can do this!
Dr. Osteryoung has directly has assisted over 3,000 firms. He is the Jim Moran Professor of Entrepreneurship (Emeritus) and Professor of Finance (Emeritus) at Florida State University. He was the founding Executive Director of The Jim Moran Institute and served in that position from 1995 through 2008. His newest book co-authored with Tim O'Brien, "If You Have Employees, You Really Need This Book," is a bestseller on Amazon.com. He can be reached by e-mail at firstname.lastname@example.org.