5 Ways to Assess Your Business Health and Increase Your Profits

(Last Updated On: June 6, 2021)

All business owners must prioritize business health and profit margins while assessing the overall growth of their brand. This ensures the business remains sustainable and optimized in the long run. A wealthy business is indicative of a healthy business and a proper assessment is essential for it to move forward successfully.

Regardless of this continual assessment, some businesses earn profits and some suffer deep losses. It is necessary to address the deficiencies and the underlying loopholes which are not always visible and can affect the overall profits for a business.

5 key parameters to assess business health

1. Growth in Sales:

Business owners must constantly review and analyze the growth or decline in sales of services or products in lieu of a viable market. The sales should reflect the growth of the business. It is important to read between the lines to find any obstruction which might hinder the growth.

If your sales are constant and unaffected, it may be time to work on a few important strategies to speed things along: 

  1. Define brand strategy
  2. Analyze your business (SWOT)
  3. Analyze your competitors
  4. Identify your target audience
  5. Study market trends
  6. Prepare a marketing plan

2. Availability of Cash:

Essential to a growing and profitable business, cash availability is a prerequisite.  Check on the following to ensure cash availability:

  • Receive payments from clients on time.
  • Pay suppliers on the agreed dates and clear off any previous overdue balance.
  • Set aside specific provisions for EMI’s and manage other expenses as well with the available funds.

Additionally, a business owner needs to reduce giving credits to avoid unexpected business expenditure and maintain reserved cash.

3. Growth in Profits:

Expenses incurred in resources cost must be managed and controlled to the extent that profits are not compromised.

Working on the following factors might help increase profits:

  1. Defined brand and USP:  association with widespread brand value-adds to the extent of sales leading to profits.
  2. Review product portfolio: investments through strategic planning by which new innovations and sets of products can be introduced to help fund the right kind of projects.
  3. Relook at pricing: revise pricing structure in accordance with the change in customer attraction. Starting off at a low base price needs to be revised to a new one to adhere to market policies every fiscal year.
  4. Review promotion strategies: once the basis of establishing everything else has been accomplished, move to other areas of improving business performance through advertising and promotion by spreading out its reach to the maximum extent possible.

4. Compliance:

It is important to adhere to certain prescribed guidelines before establishing a proper business. There are various regulations, standards and legislation to comply with any business to run smoothly and effectively. Acquire basic approved licenses like shop act, NOC from gram panchayat, PAN details, rent agreement or FSSAI, GST registration, etc. All the approvals need to be verified in order to attract more customers to the reputation of a progressive and guilt-free business.

5. Asset Efficiency:

Asset efficiency is how well a company is utilizing its assets to generate revenue. It is necessary to look into factors that are detrimental to the business. For example: 

  • Good knowledge of the work to be distributed among the employees.
  • Asset distribution analysis such as removal of obsolete ones and improving productivity by proper usage of current ones. Equipment maintenance should be regular.
  • Stocking up on raw materials for crisis situations within the realm of time so that no losses are incurred.


Any business is successful only through healthy business performance and consistency. Carrying out a close analysis in deep scrutiny is vital to the factors determining a consistent flow of smooth business. Keeping these five important factors in check would help in critical times and lead to the formation of a healthy market structure and gradual flow.

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