The Bureau of Labor and Statistics notes that 20% of all new US businesses fail in their first 2 years. 45% of them fail within 5 years, and 65% during their first 10 years.
That means that of the 843,320 new businesses that started in 2021, about 168,664 have or will have closed their doors by the end of this year.
Scary stuff if you’re a fledgling entrepreneur.
Why Do So Many Businesses Fail?
There are a myriad of reasons a business might not last.
- It’s possible there wasn’t a market for the product, or the competition was too stiff.
- Maybe the original business plan was weak or not well-thought-out. And to add insult to injury, it’s possible the management team fell in love with their subpar plan and refused to shift gears even when the writing was on the wall.
- Not enough startup capital is another reason a company could fold early.
- Poor marketing can also do a business in. Maybe they tried a shotgun approach and/or didn’t target the right persona.
- There could also have been too much of a good thing. Maybe they appeared to hit it right and the money started rolling in, so they began expanding and spending in earnest. Then suddenly the market shifted and their capital dried up leaving them stranded.
How do you avoid these common pitfalls and increase the odds of business success?
There are ways to ensure a long and lasting future for your business. A solid diagnostic is a big one. Just as you monitor your own health by regular evaluation by a doctor or other healthcare professional, business owners should be conducting regular check-ups on the health of their teams, plans, and goals.
An excellent way to keep your finger on the pulse of your company is by conducting a regular Organizational Health Checkup.
What Is An Organizational Health Checkup?
An Organizational Health Checkup is the systematic process of gathering information about the viability of your business from the people who know it best… your internal teams and stakeholders.
By conducting a regular examination of your company, leaders can gain insights that help them to:
- Identify strengths, weaknesses, opportunities, and threats
- Create and manage KPI’s or Key Performance Indicators
- Allocate people and resources effectively
- Maintain open lines of communication with their teams
- Make adjustments to prior plans as needed
Gathering this type of information is Step 1. Operationalizing it is the critical Step 2 that many businesses that fail miss.
When your healthcare provider notices something out of whack on your test results, what do they do? Prescribe a set of instructions to set you on the path to a longer and healthier life.
The same is true for your business. And armed with the results of your Organizational Health Checkup, you can create that solid plan of action.
What Should Be Evaluated In An Organizational Health Checkup?
A good healthcare professional doesn’t only look at one area of your physiology during a diagnostic. They should be looking at every system in your body. An effective organizational assessment should do the same.
Here are 11 categories we recommend you examine that drive improved performance and can increase profitability:
- Personal – How do the individuals in your organization feel?
- Employee Alignment – Is everyone driving for results and profits?
- Personnel – How effectively do you lead people?
- Team Effectiveness – How strong are your teams?
- Leadership – How trusted and inspiring is your leadership?
- Strategy & Planning – How comprehensive and secure is your strategy?
- Customer Service – How loyal are your customers?
- Sales & Marketing – Does your pitch resonate and do your people sell?
- Operations – How effective are your operational systems?
- Culture – Is your culture all it’s cracked up to be?
- Management – Are your managers successfully leading their teams?
Measuring performance in all of these areas provides a truly holistic approach to business evaluation. From here you can springboard to deeper investigation and then create development plans to address key issues.
Don’t Forget The Follow Up
Conducting a regular Organizational Health Checkup is only one part of the diagnostic process.
If a healthcare professional identifies a problem, they don’t just prescribe meds or an exercise or diet plan and cut you loose. They want to hear back from you. Much can be learned and adjusted at the follow up visit.
The same is true for your business.
Use the results of your Organizational Health Checkup to accomplish several key goals:
- Gather updated information for a current SWOT analysis.
- Develop recommendations for changes to the organization’s culture, structure, processes, or strategies.
- Communicate the recommendations to your teams and implement them with their help.
Never ever forget the role that your team has played in helping you get to where you are today and be sure to involve them in moving your company to where you want it to go.
Every team member has a stake in seeing that your business has a healthy and profitable future.