There are a lot of indicators that could show whether or not our business is growing healthy. Based on experience, I simply define a healthy business venture as when the capital I invest shows positive financial growth and has operational reserve funds for unexpected situations.
These are five signs that our business is growing healthily:
- Steady increase in income. It doesn’t have to be a spike in profits.
- Spending can be kept flat despite an increase in income. In other words, the spending percentage does not exceed the increase in the income percentage.
- Have cash balances kept in the bank, so that if something urgent happens we don’t have to increase debt to meet these unexpected expenses.
- Increase in new customers and old customers.
- Maintaining a low debt ratio. Ideally the debt to asset ratio is maintained at 2:1 or lower.
Many factors influence whether or not a business is healthy. One of them is the way we manage the business we dream of with low cost, less risk, less stress, and remain enthusiastic in facing various challenges. For me, owning and managing a business is my passion even though starting with high cost, high risk, plus worry and high stress. It is true that determination and courage alone are not enough to guarantee a healthy business growth. Hopefully this article helps you avoid experiencing the same thing as me.
In the course of managing a business venture, whether it’s a new business such as a start-up or an old business that we want to expand, we prepare ourselves to think about and deal with four situations:
- The situation before the business venture operated
- At the beginning or when starting a business venture
- When the business venture is operating routinely
- The future
Each of these four situations has an equally important and related value, which proceeds continuously as a series of events without interruption. The difference lies only in the priority of activities and available resources. By itself it is important for us to get used to considering the interrelationships of the four situations in the process of thinking and making decisions about an idea, activity or business target.
The ability to manage priorities in the four situations above will facilitate the realization of the business we dream of. Below are priority areas of activity in the four situations we need to pay attention to.
1. Before the business venture operates
This situation is the phase when we have an idea or plan to build a business venture. It could also be a situation with an existing business and we wish to expand it, and/or develop a new business.
In this situation, the main priority is to provide time to write a detailed and sharp business plan, including calculations of the amount of financing, financial benefits, and a timeline of activities and achievements. One of the benefits of having a business plan is that it sharpens the direction of our business goals and minimizes risk.
Before making a complex business plan document, we should first create a business concept. The business venture concept focuses on a basic framework, which helps us think systematically in developing the dream business plan. We can do it ourselves by using the Canva business model.
The business concept is then developed into a sharp and measurable business plan document by including financial calculations such as:
- The amount of operational funding requirements.
- Time estimates and revenue targets.
- When is the Break Event Point (BEP) reached. BEP is a situation when operational costs and business income reach zero, meaning no profit and no loss.
- The size of the planned profit and when it materializes.
- When will Return on Investment (ROI) occur. ROI is the company’s ability to generate profits that will be used to cover the investment made.
Matter of fact, we can try to start drafting our own business plan, but to finalize it, it’s best to ask for help from experts or organizations that are competent and knowledgeable about our business.
Find the right people to discuss our idea or business plan with. They will help broaden our limited perspective. They are people we can trust, have knowledge and experience, and are competent in their fields. Even better if that person has experience with the business we are planning.
2. Starting (Start-Up)
This is a situation when our business venture is ready to carry out the business plan that we made with the available funds for a certain period of time.
For some people starting a business is not easy. It definitely needs determination and courage as I wrote in the previous article. I founded (PT) Angsamerah when I was 43 years old, and it took me another three years to be determined and dare to spend capital to open an Angsamerah Clinic business.
The top priorities in this situation are:
- Set a mindset that focuses on starting from what we can and/or utilizing something that already exists/has been successful, so that we can do it quickly and effectively.
- Find the right core team that will execute the operations of the business venture.
- Prepare management systems such as standard procedures, managing procedures of the services/products offered, marketing, finance, staffing, and other related regulations.
- Arrange promotion and marketing strategy; from planning, calculating the comparison between the number of benefits and expenses from promotional and marketing activities, implementation timeline, duration, and finally who does it—ourselves, other people, or marketing agencies.
3. The business situation is already operating routinely
The important goal in this situation is to keep customers coming back and to increase new customers. This can be implemented if the products and services we offer satisfy customers, in terms of quality, affordable prices, and responsive and friendly service. In addition to the products and services we offer, customer satisfaction is influenced by the team’s ability to serve, support systems that enable productive teamwork to produce maximum results with minimal errors.
The four priority elements in this situation are:
- Keep a productive teamwork.
- Improve efficient and effective management system.
- Build and maintain healthy communication between the team and the outside community– both customers and partners.
- Build and maintain good network relations.
4. The future
We need to provide some time to think about the future by reflecting on the efforts that have been carried out so far, and taking the essence of learning as the basis for our steps to grow.
The benefits of thinking about the future are anticipating and minimizing risks, and providing hope that creates new motivation that drives business growth and enriches our mindset and skills.
Simple things that are essential but we often forget about the future are:
- Practice to think about the consequences of every decision taken.
- Keep trying to visualize our future dreams specifically.
This is all for now. Hopefully this short article is useful and encourages you in facing the challenges of the independent investment world. Let’s work smart and have fun! See you later!