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How to Tell if Your Business is Healthy...or
Floundering
When
someone asks: How's business? Do you
really know
what to say?
If you're like many business owners,
you may roll along with the dim feeling that your
business is holding its own. But in the back of your mind is the nagging
feeling that honestly, you don't know for sure if you're falling behind the
competition or pulling ahead.
Know how you can tell if your
business is really thriving? Benchmark.
Compare your business to other businesses
in your industry. As a recent article from small-business research firm
Sageworks notes, you can get
a better assessment of your company's health by comparing key metrics, including
gross revenue, net profits, profit margins, revenue growth, liquidity and turnover
ratios.
For instance, if your profit margins
are 5 percent but the industry norm is 8 percent, that's a big red flag.
Profits will be lower -- slowly starving your business of cash while
competitors will be growing and outshining you. On the other hand, if you
collect accounts receivable faster than the norm, you'll have better cash flow
than similar businesses.
Many business owners don't benchmark
because they think they can't get their hands on the data they'd need to
compare business metrics. But there are quite a few ways to get some
intelligence on your industry -- and some of them don't even cost much. Any
benchmarking data you can scare up are better than none, as they at least give
you a starting point to compare your performance.
Here are four ways you can find data
for benchmarking your business:
Click HERE for entire article
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