The Business health check - benefits and myths

According to Antonie van der Hoek, Managing Partner of the Cape Town office of audit, advisory and tax firm, BDO South Africa, the majority of businesses experience several issues which prevent them from doing better. "A business health check, which involves a comprehensive assessment of all the areas of a business, can help to identify issues within the organisation that may hinder its long term success, and what can be done to prevent or solve these issues."

However, there are several myths around health checks, which often preclude business owners from using these very valuable tools.

They are:

Myth 1: They are only for businesses already in trouble

"This is incorrect," says Van Der Hoek. "A business health check can be of great benefit to struggling businesses as well as those that are doing well. All businesses have strengths and weaknesses and the aim of the business health check is to find and address the weaknesses so that they pose minimal risk to the business's long-term survival."

Myth 2: Only large businesses need a business health check

"A business health check can be performed on almost any size business," advises Van der Hoek. "Start-ups, small, and medium sized businesses are more exposed to failure risk and with the help of a regular business health check these business can significantly reduce this risk."

Myth 3: A business health check need only be done once

According to van der Hoek a business health check should be conducted on a regular basis. "The initial business health check will show where your business is with regards to its performance but once corrective measures have been put into motion a later business health check should be performed to ascertain if the desired results have been achieved."

Myth 4: Business Health checks are expensive

"The question to ask is how expensive would it be if your business fails - especially if it could have been saved with a business health check?" asks Van der Hoek.

Myth 5: The weak areas identified in the business health check could become public knowledge

Business health checks performed by a professional are confidential. Van der Hoek says that all information, results and recommendations are for the client's information only.

Myth 6: All business health checks are the same

"There are many different types of business health checks, ranging from the general health check to one that focuses on just a specific aspect of a business," explains Van der Hoek. "A general health check should identify which area of the business needs attention and the specific health check should be able to determine what the problems in specific areas are.
Business is all about risk and return. If you can reduce the risk - then you optimise the return. A business health check does exactly that - it shows the business owner how to structure their business in order to optimise it and to ensure ongoing profitability is maintained.

"An incredibly important point is that businesses need to be structured correctly and owners must understand ALL the aspects of their business," says Van der Hoek. "Small businesses usually have huge entrepreneurship elements but very little structure and so developing an appropriate structure for small and medium businesses to enable sustainability to occur, whilst maintaining the entrepreneurial values, is essential for the long-term health of a business."

"Structure creates a solid foundation and platform for client retention, as well as happier and better performing staff. It also enables controlled growth, appropriate financial planning and reduces risk."

Benefits of a business health check

Van der Hoek goes on to say that there are many benefits of a regular business health check.

These are: