Rani Gandha: Is your business as healthy as it can be? Hi, I’m Rani Gandha. I’m a partner at Turnbull Hill Lawyers, and I look after our commercial section.
Today, we’re going to talk about whether you’ve conducted a business health check. It’s the start of the year, and it’s an excellent opportunity to look at your business as a whole and decide, is it as healthy as it can be, and what can I do to improve it?
The first thing we start with is you look at your stakeholders. Typical stakeholders, your major one is going to be your clients or your customers. The second one that you’re going to look at is your employees and who helps you run and manage your business. The third one you may look at is your suppliers, depending on your industry and who you have third party contracts with. Lastly, you may also be looking at the bank. Where do you get your money from and how do you finance what you do.
What you need to be doing as part of your business health check is going through those four stakeholders. The key question will always be, am I getting the best from what I need to keep my business healthy? When it comes to your customers or your clients, the question is, what am I getting out of them? Are they the best client I can have? We all have clients and customers that we’ve had for a long time, and while loyalty is always appreciated, if you start to have clients where you’re struggling to get them to pay, they’re not respecting you or your business or your employees or you’re finding that they’re getting more out of you and you are starting to fund them, maybe it’s time to say 2020 is not the year that you continue in that relationship.
The second stakeholder that I spoke about is your employees or your team. Your team is key. They’re the team that are going to be representing you, and it’s really important to make sure, again, have I done enough for them? Are they doing enough for me? Are they the right fit, and what can we do to build so that we have a positive year together?
The third stakeholder we spoke about is suppliers. The key question here is, are you getting what you need from them? Are they delivering what they said they would deliver in a timely way and are they suiting your business? If the answer is no, you need to be looking at the contract that you have with the supplier and working out what the term is and how you can exit if it needs to be. If it turns out, yes, they are the right supplier, congratulations, and nothing else has to be done.
The last stakeholder I spoke about was the bank or finance. The key here is to look at, what is the interest rate you’re getting? Is it the time to move on? Banks rarely have any loyalty to you, so there’s no need to necessarily have loyalty to them. Again, if you are saving money, you can either pass that onto customer or you can put it in your pocket. All better options than just being in a rate or a relationship with a bank that’s not working for you.
The second part of a business health check is to look at your structure. Three main structures that a business operates under is a sole trader, a company or a trust. The question, as a business owner, you need to ask is, do I have the right structure and do I need to change my structure? If you’re a sole trader, which is how a lot of businesses start, it may be time to look at the protection and the tax efficiency that a company can offer. Again, you may have a company and you may want to look at, what is the shareholder of that company? Do I need a family trust? Do I need a discretionary trust or am I going to implement a trading trust? The key is to ask the question and then the answer will lead you to where you have to go.
It’s the start of the year, so it’s a great time to ask all of the questions I’ve spoken about. You need to be doing this at least annually, and if you don’t feel confident in doing it on your own, you may look at getting other advisors that can go through this list with you and check that you are where you need to be. It’s always easy to do something at the start of the year then towards the end when we all tend to get very busy.