Business Financial Health Check: Five Vital Steps

Just as individuals prioritize an annual physical checkup for their health, businesses can also benefit from a comprehensive annual examination to ensure optimal performance and sustainability. In this article, we’ll explore five essential steps that parallel the elements of an individual’s health check, offering business owners a roadmap for maintaining the well-being of their ventures.

1. Review historical performance metrics

Similar to how a doctor reviews a patient’s medical history, business owners should delve into the prior year’s performance metrics and analyze the year-over-year trends. Consider analyzing key performance indicators (KPIs) such as revenue and cost growth (ideally broken out into individual drivers of each), multi-year profit margin trends and other industry-specific metrics to better understand your practice’s overall health. Reviewing the data for areas of both strength and fragility will help lay the foundation for a proactive approach to maintaining your corporate well-being.

2. Identify key goals and KPIs for the year ahead

Setting key goals and KPIs for the year ahead is akin to establishing personal health objectives. Define clear goals and indicators that align with your business’s overall well-being. This could include items such as (for example) targeting 4% annual revenue growth or increasing the number of new patient cases by 10% relative to last year’s total. This roadmap should ultimately serve as your corporate “health plan,”guiding your efforts and ensuring a focused approach to achieving optimal performance.

3. Identify areas of weakness

In the same way a doctor identifies and addresses areas of concern during a physical examination, businesses must pinpoint and rectify weaknesses. Conduct a comprehensive SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) to identify potential “ailments” that could be hindering your operations. By addressing weaknesses proactively, you can prevent future challenges and contribute to sustained success in your practice.

4. Model out anticipated cash flow

Similar to monitoring vital signs during a physical check, mapping out anticipated cash flow is crucial for maintaining the strength of your practice’s financial pulse. Develop accurate cash flow projections at the beginning of each year and use the results as a guide to set your year-ahead business and personal financial goals. We often use this strategy at the start of each year to help clients discover their excess cash flow capacity (i.e., how much extra cash flow they have available every year that’s not already being earmarked for other spending/savings goals).

5. Leverage cash flow to achieve future goals

Think of leveraging cash flow to achieve future goals as analogous to adopting a healthy lifestyle thathelps prevent future health issues. Just as maintaining a healthy lifestyle contributes to overall well-being, strategic cash flow planning can significantly improve your personal and practice’s long-term financial health. Using the strategy mentioned in the previous section, leveraging excess cash flow capacity is oftenone of the most beneficial actions you can take as a business owner. Whether it’s used for expediting retirement savings, paying down high-interest-rate debt or investing in new equipment for your practice, having a solid game plan for “un-earmarked” cash flow is always better than not!

In conclusion, treating your business to an annual health check is a proactive approach to encouraging sustained success. By following these five vital steps, you can help maintain the well-being of your practice and position it better for long-term growth. Similar to the way in which many individuals prioritize their health, business owners should prioritize the health of their ventures for a resilient and thriving future.


Andrew Kobylski

Andrew Kobylski

Associate Wealth Advisor

Andrew is an Associate Wealth Advisor in our Atlanta office. He works closely with Small Business Owners, Dental Professionals, and Attorneys helping to create financial plans that align with each client's values and goals. By focusing on comprehensive investment and wealth planning strategies, he puts the pieces of the financial puzzle together that allow clients to focus on what matters most to them. Andrew joined legacy firm Brightworth in 2020. Originally from the Northern Virginia area, he attended Virginia Tech and graduated Summa Cum Laude with a degree in Finance under the CFP® Certification Education Option. He obtained both his CERTIFIED FINANCIAL PLANNER™ and Certified Investment Management Analyst® certifications in 2021.


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