Would your business still thrive, or would it suffer a catastrophic failure if you suddenly stepped away? It’s tough to remove yourself from the day-to-day operations when you’re passionate and busy. However sudden accidents, illnesses, or family emergencies can – and will – happen and you need to be able to step back knowing your systems are robust enough to cope. Build in resilience For your business to work for you, you need to make yourself replaceable. Large corporations have plans in place to mitigate what’s known as 'Key Person Risk'. But when you run a small entrepreneurial venture, who is the backup? The more you can train and empower your team to perform the business’s essential daily functions without micromanagement, the closer you'll be able to enjoy a lifestyle business. Establish repeatable and scalable support infrastructure to run the daily operations and create a great team that you can lean on. Your staff need a common purpose, knowing why what they’re doing matters, as well as clear expectations around their roles.  By creating a suitable work environment, where employees both individually and as a team are more efficient and likely to enjoy what they do, you’ll breathe easier knowing they have your back (and your business) in an emergency. Finally, it’s important to know what the business looks like without you. An exit strategy is often thought of as the way to end a business – which it can be – but in best practice, it’s a plan that moves a business toward long-term goals and allows a smooth transition to a new phase. That may involve re-imagining business direction or leadership, keeping financially sustainable, or pivoting for challenges. A fully formed exit strategy takes all business stakeholders, finances and operations into account and details all actions necessary to sell or close. Strong plans recognise the true value of a business and provide a foundation for future goals and new directions. Top Tips No one is irreplaceable – Challenge yourself to step away for a week. Which systems fall over? Which procedures get left hanging? Which duties get ignored? Go cold turkey as a test case for the time you may have to leave your business in the hands of others. Embrace innovation – Get systems that are simple, streamlined, effective and can be used by multiple key team members. Make sure anyone can log in and see exactly what’s needed for what reason at any time. Recognise the value you’re creating – A business that doesn’t rely on its owner is worth a lot more when the time comes to sell or pass the reins to someone else. Over the years, we’ve grown into one of the leading accountants in York, expanding our range of accounting services whilst staying true to our core values. If you would like to talk to our team about structuring your business to make it more reliable, then book a discovery call with Donald Inglis .

When you’re running a business, it’s easy to get caught up in the day-to-day activity and lose sight of the big picture. Taking stock of the health of your business is important. Knowing where you are allows for more effective planning, early warning about any issues, and the chance to better chart a course for success. There are some quick ratios that will help you to gauge the health of your business. We can help you to assess your business health and show you how to calculate these vital checks. Liquidity ratios Liquidity ratios are about how quickly you can turn your business assets into cash - which helps you assess whether you’ll be able to pay the bills if cashflow gets tight. High ratios are better, as this means you’ve got more assets than liabilities. Current ratio Current ratio = Total current assets / Total current liabilities As a general guideline, 2:1 is a good current ratio, but this does depend on the kind of industry you’re in, and the nature of the assets and liabilities. Quick ratio Quick ratio = (Current assets – stock on hand) / Current liabilities This measure excludes your existing stock, which you may not be able to quickly turn into cash, and is seen as a more realistic quick snapshot of your position. Solvency ratios Solvency ratios look at sources other than cash flow to see whether your business will be able to settle debts. Leverage ratio Leverage ratio = Total liabilities / Equity This is a measure of whether your business is reliant on debt financing or equity to fund your assets. A higher ratio can make it harder to borrow money. Debt to assets Debt to assets = Total liabilities / Total assets This tells you what percentage of assets is being financed by liabilities. Profitability ratios Profitability ratios will let you know how efficient your business operations are. Where possible, it’s good to measure your business against others in your industry. Gross margin ratio Gross margin ratio = Gross profit / Total sales This ratio tells you whether you can cover the necessary business overheads from your sales. Net margin ratio Net margin ratio = Net profit / Total sales This measure tells you the percentage of sales dollars left after you’ve settled your expenses, except for your income taxes. Checking your business health is a great habit to get into Using these ratios helps you to understand your current business health and allows you to plan. Talk to us about how to calculate the factors in these ratios in order to keep your business on the right track.