What Makes a Business Healthy

When we look at a small business, we can usually tell pretty quickly whether or not a business is healthy.  We can tell if the business is mature and strong, right?  The parking lot is always full, they always have what we need, and the staff make you feel welcome and leave a desire to return.  On the other hand, we can also tell if the business is weak and dying.  We have all seen it.  

I remember going into a local hardware store for the first time after moving to a new town.  Within moments of being in the store, I was asking myself how they survive with a big box just down the street.  The signs that the business wasn’t healthy were all there.  

First, it was a Saturday morning and the parking lot (and store) was empty, so I knew they weren’t making many sales.  Secondly, they didn’t have what I needed, which should have been a standard for a hardware store.  This meant that I had to go to the big box store any way.  Finally, the staff were grouchy and didn’t seem like they wanted to be there.  It always seemed like I was inconveniencing them when I would ask them where a product was located and their hours were ridiculous - they weren’t open past five and had very limited weekend hours.

As you can imagine, this business was very unhealthy and actually closed its doors for the final time about six months after I first visited the store.  The sad thing was that this business had been around for decades and had once been a healthy staple of the local community.  

If the business had been healthy, the owners would have had a clear exit strategy: they could have sold the business and walked away with the fruits of their labor.  But these owners didn’t have a healthy business and didn’t have an option to sell it.  It was better for them to liquidate their business assets than to sell their unhealthy business.  So, that is exactly what they did; they closed their doors and auctioned everything off.

What Defines Business Health

While we often have a sixth sense as to the health of a business, we can’t always put our finger on what makes a business healthy.  So, let’s consider what makes a person healthy, so that we can determine what would make a business healthy.  We know that to be healthy, a person must have proper nutrition, physical strength, and mental health.

That’s it.  Nutrition, strength, and mental health.

But how does that apply to a business?

First, let’s consider nutrition.  Nutrition is sales.  It is what feeds a business.  The more you feed it the bigger it grows.  The better you feed it, the healthier it becomes.  Sales is the fuel that runs the ship and keeps things going.  Without sales, you don’t have a business.

Next, let’s consider strength.  Strength is the systems of your business. Your systems help you scale up and down.  They help you offer a consistent product.  They ensure continuity regardless of who is running the business or doing a specific job.  Systems provide strength, endurance and flexibility. 

Finally, the mental health of a business is its service.  Service is how a customer is treated.  It is what makes a customer want to return to a business and to tell their friends about a business.  Service is what makes the process smooth.  It creates loyal customers who return. 

The 3 S’s of Business

Sales.  Systems.  Service.  Those are the three S’s of business.  All are important in their own way and they really are interdependent on each other.  Without one, the others fail:

  • Sales w/o systems = overload
  • Sales w/o service = no retention
  • Systems w/o sales = expensive hobby
  • Systems w/o service = bi-polar disorder
  • Service w/o sales = a “nice” guy with nothing to offer
  • Service w/o systems = you are apologizing all of the time

The three S’s of business work interdependently of each other.  While each is a separate function, they cannot thrive without the others.

Why Your Business Needs to be Healthy

So, based on this, how healthy is your business?  Are you lacking one of the essential elements or do you have a healthy balance?  The good news is that restoring health to a business is simple formula = Sales. Systems. Service.

When you think about the day that you will be ready to step away from your business, do you want to be able to sell a healthy business that will pay you for your years of labor and live well beyond you?  Or will you settle for closing your doors and liquidating your assets?