Leading Companies Online Magazine Archives
Staying Fit: Making Sure Your Company is Healthy
By Ray Smilor, Beyster Institute Executive Director
The start of the New Year is always a good time to resolve to be healthier. Not just for yourself, but also for your company.
Each of us would like to be fitter, stronger and more energized. So too, should our company be fitter, stronger and more energized. So think of your company like your body, and listen to it.
We monitor the vitals of our body, and so too should we monitor the vitals of our company. We watch things like our blood pressure, pulse rate and cholesterol level to give us indications of how our body is doing. What should we watch for to get a sense of how our company is doing?
I think there are three key vitals for a company:
- Cash pressure. This may be the most critical factor to continually assess. High cash pressure means that the company is burning cash at too fast a rate. Low cash pressure means that you’re gasping for air because you can’t get enough cash to fund operations. Either way, the result can be deadly as the company either bleeds to death or dies by asphyxiation.
- Complaint rate. Complaints come in a variety of forms and are clear signals of health problems. A complaint may be a lost key client or an irate voice on the telephone. Whatever the form, a complaint is a sign that something is amiss and needs attention. Statistics seem to show that only about 1 in 10 people actually complain when they encounter a problem with a company. So if you get 3 or 4 complaints about your service or your product, multiply by 10.
- Morale level. Are people in your company happy? Or are they grumbling, calling in sick often, inattentive and frustrated? People need to feel as though they are doing meaningful work, are appreciated, and are recognized for their accomplishments. If they don’t, then the company suffers. Leaders who ignore the warning signs of a low morale level are ignorant, arrogant or indifferent.
Monitoring cash pressure, complaint rate and morale level can serve as an early warning system of health concerns in a company and thus allow entrepreneurs the opportunity to address issues before they become major problems needing radical treatment. The key is not to ignore them, and once spotted to take action to remedy the causes.
So how can you monitor these company vitals?
Have regular check-ups. Use a board of directors or board of advisors to review company operations. Having outside advice is invaluable. It’s like sharing your personal concerns with your doctor to help determine an accurate diagnosis. Directors and advisors can bring experience and wisdom to keep your company on the right health regimen.
Identify your key metrics. Each company has a few key financial or operational measurements that give clear insight into how the company is doing. Maybe it’s inventory turnover or rate of innovation or sales requirements. But whatever they may be for your company, know them and track them.
Take your medicine. If you have to make changes, even if they are difficult, make them. Medicine is not necessarily supposed to taste good; it’s supposed to make you better. So if you have to make staffing, financial or operational adjustments, make them as quickly as possible.
Companies get sick, just like people do. But they also get well if we know what’s wrong and then do something to get better.
Have a happy and healthy New Year.
©2007 The Beyster Institute and its authors and their entities. All rights reserved.
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