To lead your company to high profitability – and to stay there – due diligence is needed in critical values.
Here’s a checklist:
1. Financial statements
Continuously monitor and evaluate your financial statements to understand the earning power of your company. Keep an eye on your cash flow and return on investments.
Know your cost of goods sold (COGS). That means keeping your sales margins high by keeping your COGS down.
Zero in on your sales and operating ratios. To get a good snapshot, use best practices in preparing financial statements.
2. Accounts receivable
Analyze your receivables in increments of 30, 60, 90 days and more.
The longer your receivables are outstanding, the less value of these accounts.
Look at your top accounts and evaluate their creditworthiness.
If necessary, develop the right strategies. Then do the same for your other accounts.
3. Debts and liabilities
Look at your loans, notes and other debts. Consider how you can reduce your debt-collection headaches.
4. Industry and market trends
Evaluate your industry and your market segments that you target. This is to help analyze your profit potential.
Are industry sales increasing, decreasing or remaining flat. Compare them with your industry’s ratios, which you can find in reports produced by Dun & Bradstreet and The Risk Management Association.
5. Disruption potential
Identify opportunities for disruption in your niche by asking three questions:
- How can your assets be used differently to fill needs?
- What companies in your supply chain aren’t meeting needs?
- Concurrently, what can you do to better serve the market?
There are five recommended strategies to use if you need to rebrand your business.
6. Your business reputation
Research how your customers, suppliers and other stakeholders perceive your company – either as an asset or a liability.
Best practices are needed to manage your global brand and Web reputation.
7. Business location and market area
Evaluate your business location, the demographics of your locale, the area’s economic situation, and your competition.
This includes analyzing whether you have unnecessary challenges in receiving or delivering products.
If you anticipate growing, here are tips to pick the best business location.
8. Customer patterns
Track your customers. Determine whether they’re repeat, loyal customers as well as your retention rate.
Evaluate your peak seasons, months, weeks, days, and hours. Determine which products are popular and the preferred price points.
From this information, develop and implement multi-dimensional strategies to maximize your sales.
You should be looking at your pattern of sales. Track your sales records by product, and whether customers buy them with cash or credit.
If your sales are down, here are sales management tips.
Evaluate your price points for profitability. Draw industry comparisons. Forecast when you believe you’ll be able to increase prices.
To manage the sweet spot between price-optimization and costs, avoid 11 typical pricing mistakes.
11. Marketing strategies
Evaluate how you target customers – from public relations to advertising. Don’t forget the effectiveness of your sales literature.
Analyze your costs and the sales results. If your foot traffic is up but sales are flat determine why.
Understand and use the critical essentials to develop the best marketing formula.
Determine the condition of your inventory. Is it moving quickly enough? What are your inventory costs?
For the best cash flow, manage your inventory costs.
Review your management practices and policies. Determine how you can improve.
Communication skills are critical for managers. Typically, they have 10 management attributes for effective communication.
14. Human resources
Evaluate your staff. Consider their communication skills with customers and how they relate to each other. Determine what HR training is needed.
Evaluate your personnel policies, employee benefit plans, profit sharing, health and life insurance, and vacation policies.
Consider your salary structure and how it compares industry-wide.
To improve your business performance, implement 15 HR strategies.
15. Equipment and technology
Obviously, the welfare of your company depends on having an up-to-date information technology (IT) system. IT now impacts every facet of your business.
Evaluate your equipment and technology to see if it needs modifications to propel your growth and enhance your financial system with internal controls of IT and financial systems.
To stay competitive in this difficult marketplace, it’s vital to be proactive on your taxes with 11 payroll and tax tips.
17. Occupational Safety and Health Administration (OSHA) requirements
Check whether you’ll successfully pass OSHA inspections. Correct any shortcomings by minimizing liability and managing an OSHA inspection.
Review your insurance coverage to see if you’re adequately protected against all liabilities and if you’re paying fair premiums.
To keep your money from walking away, here are business insurance tips.
19. Planning for disasters
Make sure you plan for the unthinkable – protect your core assets from a disaster.
From the Coach’s Corner, here are related tips:
10 Strategies for Internal Controls of IT and Financial Systems — Obviously, the welfare of your company depends on having an up-to-date information technology (IT) system. IT now impacts every facet of your business. So it follows that you should invest in IT controls to protect and enhance your financial system.
8 Strategies to Enhance Your Customer Service Image — Poor customer service is a salient reason why consumers aren’t loyal to businesses. True, today’s consumers are very demanding. It’s worth noting they’re demanding because they constantly encounter poor customer service.
Your Best Source for Business Advice: Your Customers — The new economy – with a highly competitive marketplace – is making it becoming harder and harder to for businesses to sustain growth. So customer engagement and word-of-mouth advertising have taken on an increasing importance.
Clues You Need a Vision Plan for Growth – How to Write It — If you don’t have a written vision for fast growth, the reality is that you’re losing out on potential business. A written business plan is best. But if you don’t have the time and resources to write it, go to plan B – a vision plan.
Embezzlement: Guidelines to Uncover and Prevent it — Embezzlement is a widespread nightmare. Here are proven strategies to discover embezzlement, and to prevent from occurring.
“Care and diligence bring luck.”
Author Terry Corbell has written innumerable online business-enhancement articles, and is a business-performance consultant and profit professional. Click here to see his management services. For a complimentary chat about your business situation or to schedule him as a speaker, consultant or author, please contact Terry.