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5 Questions Business Owners Should Be Asking, Expanded
Running a growing business is a challenge because there’s a very delicate balance between taking care of everything that needs to happen today while preparing for what needs to happen tomorrow. Even more overwhelming is the fact that so much of what needs attention is not today’s or tomorrow’s issues, but yesterday’s.
In the midst of the busyness of business, though, we fail to ask important questions about the future success of our business. The answers to these questions are the ones that prevent the overwhelm and crunch in the future, but, if left unattended, they’re the ones that create the fires to be fought tomorrow.
My article on Inc., "The 5 Questions Business Owners Should Be Asking", presents the following questions in a slideshow format. However, slideshows have to be slimmed down considerably, for every frame can only have 100 words. I’d like to extend the discussion here with some of the original ideas that didn’t make the cut. Every quote except for the last comes from the slideshow on Inc.com.
The following are five of the most important questions that businesses aren’t asking.
1. What disruptive forces threaten our business?
Every business faces external forces that are disruptive or threatening to success or, even, viability. These could be changes in consumer preferences, supply of new employees, or distribution channels.
For instance, the rise in online commerce gave way to more economical modes of marketing to and interacting with consumers. Businesses that stand between buyers and sellers can now find themselves edged out by those that engage customers directly.
The music labels often focused on the piracy that Napster and file sharing fostered, but overlooked the way those offerings altered music listening. Apple, meanwhile, exploited the opportunity with the iPod and iTunes Store. We can find more examples of disruption at play. Amazon.com, for instance, didn't start by changing the product customers bought - it changed how consumers bought and received the product. It also took a look at the price game that box book stores play with books and decided to use the discounting methods available and pass more of them on to its buyers. It managed to compete on price in a way that didn't bottom-line its viability.
In a similar vein, investment companies that understood the shift from brokers as buyers to brokers as advisors prospered, and others were left with brokers calling on prospects who no longer understood why they needed to pay a broker to buy stocks when they could just as easily.
Newer entrepreneurial businesses are usually a major disruptive force that established businesses have to be on the lookout for. Most established businesses worry that young businesses will be able to compete under the current rules of the game, and they're missing the point - innovative new businesses change the game completely. Innovation is, at its core, disruptive.
2. Are we building tomorrow's business or maintaining yesterday's?
The work to keep a business running is enough to keep you busy. But being busy and building a business for tomorrow aren’t necessarily the same thing. The hard part is making sure today’s activities are building tomorrow’s opportunities.
Take customer service as an example. Many consider customer service merely as a cost to be managed rather than a chance to strengthen a brand and loyalty. If you’ve got the attention of a customer, use it wisely. An ethos that engages and supports customers rather than minimizes interactions with them has a tendency to bode well for the future. Many businesses spend a great deal of their resources managing yesterday's business. This is only natural, as the work to keep a business well-running and well-maintained is enough to keep most businesses busy. But being busy and building tomorrow’s business aren’t necessarily the same thing.
The businesses that are focused on building tomorrow's business are better positioned to capture the opportunities that tomorrow brings. While they're looking forward and catching the new opportunities, others are looking backwards and working yesterday's problems and challenges.
If you don't build the business of tomorrow, you're going to be stuck in the business of yesterday. The hard part is making sure today's activities are building tomorrow's opportunities at the same time that you're executing well on the opportunity set currently available to you.
3. Are we attracting the best workforce and working hard enough to retain them?
One of the largest costs of any business today is the recruitment, training and integration of talented employees. Long gone are the days when an employee starts a career at the same company he or she retires at.
Good managers are hard to come by, as are experts that catalyze innovation and development. Star employees can be cherry-picked by competitors or start their own ventures.
But across the board, the businesses that perform the best also hire and retain the best. Quality people build quality businesses. Make sure your day-to-day decisions reflect this. One of the largest costs of any business is the recruitment, training, and integration of people. The costs are counter-intuitively higher in small businesses, as they tend to be strapped on operating capital and understaffed in the first place. Bigger businesses can withstand the loss of $250,000 a lot easier than a small business can withstand the loss of $25,000.
Small businesses also generally can't compete with bigger businesses with the salaries they can offer their workforce, but where they can really outshine the corps is in the family and small feel that their business offers. Many people would take a pay cut to work in a small team whose work they believe in and where they feel appreciated than being stuck in a cubicle and be tracked by their employee number.
The challenge in small business, though, is that there's very little upward mobility and growth opportunity. If someone wants to be a manager, executive, or major decision-maker, the small business setting may not provide the opportunities they need. Losing your star salesperson or team leader when you only have 15 people is a serious setback, and, like Big Businesses, small businesses stand to lose their best and brightest if they're not proactive.
Looking down the horizon, what are you setting up now to keep your strongest team players?
4. Why aren't prospects buying from us?
Many businesses get feedback from current customers or prospects that are already deep in the sales cycle. You should also have the backbone and creativity to inquire with those who are not buying. Why? This data will help you identify the true impediments to growing your business. Rather than competitors, you might find that ineffective marketing, unremarkable products and offers, or too many options are the culprits of customer inaction.
Many businesses assume that they're losing customers and clients to other businesses. This assumption is flawed, as what's probably happening is that prospects aren't buying from anybody. It's surprisingly hard to be better than nothing.
A common pattern that I've seen in my clients is that they're concerned that people aren't hiring them or buying their products, and, further into the discovery process, we find that they're not even effectively displaying their offers. How's a prospect supposed to work with your or buy from you if they don't even know you have anything for sale? As a general rule, the harder they have to work to buy from you, the more they won't - so make it easier for them.
5. What's the lead weight we need to drop?
Every business has something that drains resources without delivering value back. This is lead weight the business is fighting against to stay afloat.
Dead weight could be the rock star sales rep of three years ago that now spends more time on Farmville than rainmaking. It could be a product that never launched but is held onto for sentimental value. It could be an expensive vendor that no one takes the time to replace.
The lead weight that’s the hardest to recognize and drop, though, is a philosophy that no longer matches the reality of the business or its customers. The more lead weight a business carries, the harder it has to work to maintain its current state, and, even more important, the harder it has to work to build tomorrow's business. Managing current complexity is hard enough, and each new project only makes the business more complex. One of the easiest ways to tame complexity is to drop the lead weight.
That seems rather abstract in theory, but take stock of all the half-done projects and half-seized opportunities in your business. Imagine dropping them and focusing on the current and future opportunities that actually matter? If you noticed yourself feeling lighter, then you know exactly what I'm talking about. (Gracefully let the lead weight go.)
Work on One Question at a Time
“Analysis of the entire business and its basic economics always shows it to be in worse disrepair than anyone expected … But precisely because there are so many different areas of importance, the day-by-day method of management is inadequate even in the smallest and simplest business.” – Peter Drucker
What generally keeps people from asking these questions once they know they need to be asked is that they try to work on them all at once. It then becomes yet another Thing to do, and the world of small business is already strapped and busy enough. To make room for this type of work, it's believed, requires even more planning, resources, and time that people don't have enough of already.
Rather than go that route, focus on one question at a time. Take the one which seems the most pressing to your business. Many people already have a gut feel for what’s happening in their business but haven't made the space and commitment to make a constructive and positive change.
Furthermore, there’s no need to schedule a week to work on them. What can you do in 30 minutes to answer these questions? The reality is that you have to fix the plane while flying it, so it’s best to start small in one area, but start sooner rather than later.
Ailing businesses don’t ask questions and struggle; average businesses ask easy questions and do something with some of the information they get. Great businesses ask the hard questions, make hard choices, and are continually improving their businesses. Which do you want to be?