Business Health Check: Step 1 Improving Net Profits

By: Carmen Gigar

As small businesses reset in the new year, it is the perfect time to make real change. Organizations assessing their net profit position regularly is critical. As part of a Business Health Check, adjusting a few key areas can make a massive difference in the profit position of any company. Working with a certified, professional ActionCOACH business coach, your business can start the year off right.

As part of a comprehensive review of your business practices, processes, and systems, an ActionCOACH can guide you through a transformation and reinvention of your business. ActionCOACHes are not consultants and wouldn’t leave you with a laundry list of ‘To Dos’ and then disappear. An ActionCOACH partners with you to make real change and get you real results.

The first step of any good health check must be securing your net profitability. The first step is to increase collection of your receivables:

Create an Accounts Receivables aging report
Know your ART Ratio; Net Annual Credit Sales ÷ ((Beginning Accounts Receivable + Ending Accounts Receivable) / 2)
Be proactive; Don’t wait until they are late
Move swiftly on past due accounts; Send reminders and notices on time
Consider offering a discount for early payments
Consider offering a payment plan; break up obligations into manageable amounts
Work with your banker to get cash management options
Make it easy for your vendors and suppliers to pay; Offer multiple ways to pay

After you have maximized the cash coming into your business, reducing cost of good sold will help improve profitability as well. Some areas to reduce COGS for your business include the following.

Consider buying in bulk
Start bargain hunting
Substitute lower cost materials if possible
Leverage suppliers
Negotiate vigorously
Reduce waste and rework
Automate whenever possible
Move manufacturing if necessary

Finally reducing direct costs will also lead to higher profitability. Here are some ways you and your coach can pursue.

Reduce labor expenses
Upgrade or retire equipment
Make materials changes in production
Scrutinize your inventory management processes
Streamline all logistics
Improve supply chain relationships

Once your organization is in a more secure net profit position you and your coach move to the next step of the business health check, business growth.

Moving towards improved profitability will give you confidence that the changes you are making will allow you transform your organization into an enterprise that works for you. Remember it’s a new year filled with new possibilities. Reach for them all.

Reason #1: Different styles and methods of business coaching don't work for everyone

It's important to be honest with yourself and conduct a realistic assessment when it comes to business coaching. Though business coaching can have many benefits, it might not work for everyone.

Every individual brings their own experiences and values to the coaching dynamic, so results will vary. Additionally, some individuals might need more than just a coach. They might also need specialised knowledge or communication strategies specific to their industry or target audience. Below are a few key factors to consider:

Reason #2: There is no clear focus or vision (talk about time dedication here too)

cIt's important to be honest with yourself and conduct a realistic assessment when it comes to business coaching. Though business coaching can have many benefits, it might not work for everyone.

Business coaching is an effective tool for developing a clearer focus and vision for growing your business. A good coach will help you to take a comprehensive look at your strengths, weaknesses, and available resources that can be used to reach those goals. They will also help you draw up action plans with step-by-step instructions to get there.

By providing honest feedback and being patient throughout the process, a business coach can make sure that you’re on the right track. This will enable you to set realistic milestones and tasks.

These tasks may need dedicated time outside of coaching sessions. For example, a coach might help a client develop a marketing strategy or implement new systems for managing employees. However, if the client does not have enough time to devote to these tasks outside of coaching sessions, progress will likely stall.

Both the coach and the client must have enough time available to reflect on past experiences, brainstorm new solutions, and test out different strategies. If either party is rushed or distracted during coaching sessions due to other commitments or obligations, they may struggle to fully engage in this process.

Effective business coaching also requires a commitment to regular meetings and ongoing communication. If either the coach or the client does not have enough time to dedicate to these meetings, progress may be slow or nonexistent.

It's important to recognise that business coaching is an ongoing process that takes time to yield results. While some clients may see improvements after just a few sessions with their coach. Others may need months or even years of consistent effort before they begin seeing real changes in their businesses.

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