Prevention is better than cure
Most of us recognise that preventative care is cheaper than curative care (or treatment), and more effective than palliative care (which just reduces the impact of symptoms). And not just in medicine, but in many activities. That’s why we have routine services for our cars, planned maintenance for our infrastructure and quality assurance in manufacturing.
It’s the reason why at Company Pulse we offer business health checks as the primary tool for improving the commercial and financial health of businesses. We think that if you want to help a business grow, step up to the next level, or even just survive, you need to know its strengths and weaknesses and how it can use them. One of our business health checks is the first step in understanding business potential, helping the management team think strategically about their business and actively planning its future direction.
The easy option, of course, in not to check your business health. But can you afford not to?
Back in the day, most people thought quality management systems were a nice-to-have that added costs to a business. But Armand V. Feigenbaum (in a 1956 Harvard Business Review article) showed to the contrary, that the costs of NOT taking preventative actions were almost always higher. The cost of quality failures generally far outweighed the costs of prevention. Feigenbaum’s work lead directly to the development Total Quality Management and Six Sigma. He defined four main cost areas (with typically increasing overall cost to the business):
Costs of Control
Prevention (planning, training, process control)
Appraisal (inspection, testing)
Costs of Failure
Internal failure (scrap, rework)
External failure (complaint handing, servicing, warranty, reputation)
A business health check falls under the costs of control, with elements of both prevention and appraisal. Analysis of the business environment is an essential element of strategic planning, and such elements of a business health check are pure prevention, as is the review of business capabilities. Benchmarking business performance comes under appraisal in the quality costs model and will highlight potential deficiencies and areas for improvement.
A Company Pulse business health check is an independent and objective review of your business that should lead to real performance and profitability improvements, enhancing business value and delivering a positive return on investment. And because our business health checks are low cost and fixed-price, the initial investment will probably be less than you expect and almost certainly less than the costs of not taking a precautionary check-up.
Unlike an MOT or filing your accounts, there’s no fixed schedule for checking the health of your business. Best practice is to take regular (say, biennial) health checks of your business. But if you haven’t got into that routine yet, when is a good time to take its pulse? The two main triggers are whenever you are considering major change; and when you know there is a problem, but you’re not exactly sure what it is.
The sorts of major or strategic change in your business, when a prior business health check is advisable, include:
• Entering a new market
• Launching a new product line / category
• Acquiring or merging with another business
• Raising new finance or refinancing existing debt
• A fundamental change to existing business strategy
• Implementing a turnaround
• Succession planning
• Seeking an exit (through selling your business)
If you’re about to embark on one of these potentially risky ventures, a modest investment in a business health check, which should alert you to any hidden problems and steer you towards a better outcome, is likely to be time and money well spent. After all, prevention is better than cure.