Is your business actually healthy? The financial and operational metrics most owners ignore until it’s too late Most of us schedule an annual physical with our doctor. Our physicians run bloodwork, monitor key indicators and look for issues before they become serious problems. Similarly, we service our car before the engine fails, we maintain our homes before small repairs become major expenses and have gotten used to the maintenance culture as adults. Yet many business owners go years, sometimes decades, without ever conducting a true health check on the company they spent their lives building and unfortunately, that disconnect is more common than most people realize. A business can appear successful from the outside while quietly carrying operational weaknesses, valuation issues, customer concentration risk, or financial inefficiencies that dramatically impact long term value. In many cases, owners do not discover those vulnerabilities until they attempt to sell the business, secure financing, bring on investors, or step away from day to day operations. By then, the correction window is smaller and significantly more expensive. Strong companies are built by owners who consistently evaluate the health of the business with the same discipline used in personal health, vacation planning and auto maintenance! An annual business review has become increasingly important for privately held companies, particularly across the Main Street & Lower Middle Market where many founderled businesses operate without formal boards, outside investors, or institutional oversight. Some of the key components to review to reduce blind spots are: ■ Current business valuation ■ Cash flow health ■ Profit margins ■ Customer concentration risk ■ Owner dependency ■ Recurring revenue stability ■ Revenue growth trend ■ Leadership & management strength ■ Financial reporting accuracy ■ Business transferability Maintaining a clear understanding of the items about above will positively impact the quality of your organization. In essence, healthy businesses tend to secure better financing terms, attract stronger talent, produce better financial outcomes, weather market disruptions more effectively, and create greater optionality for ownership in the future. Most importantly, they provide owners with clarity. Clarity around risk. Clarity around value. Clarity around what has actually been built. And in today’s market, clarity is the TRUE competitive advantage. If you’d like to discuss a business checkup in greater detail, please reach out to me. ERIKA BAEZ-GRIMES is an award-winning M&A advisor and founder of Silver Tsunami Transitions, a boutique M&A advisory and business brokerage serving founders and privately held companies. She is managing partner of The BPH Group, a platform focused on business valuations, transaction strategy, and exit readiness for founder-led companies. Erika is a member of the Enterprising Women Advisory Board. Mazutam90 / Shutterstock.com 20 enterprising Women MANAGEMENT by Erika Baez-Grimes
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