Ten Crucial Questions For Your Business Future
I'm a business coach. I've worked with hundreds of small, medium and very large business, and over the course of the past eleven years, I've asked my business coaching clients endless questions which have helped them achieve much greater levels of success than they would have otherwise. While the following may not be the only ten questions -- or even THE ten questions, they are ten questions that you must answer if you want your business to flourish. The right answers are critical to your company's future.
1. How many un- or underserved prospective clients are in your target market?
The number of prospective clients available to you relates to two key considerations. First -- and most obvious -- as the total core revenue possible from this client base. The other is the kind of marketing tactics that will be most cost-effective. If yours is a 'mass market,' then advertising may almost certainly be part of the your marketing mix. By contrast, if your market is very small (I once sold software to the top-50 international banks) you can contact each and every prospect by telephone and courier.
2. How large do you envision your business?
Does your vision include being a Fortune 500 company? If so, check question 1 above. On the other hand, many of my clients would be completely satisfied generating $5MM with a staff of 50; pocketing $1mm per year and selling the company for $10mm when they are ready. How you answer this question governs the kind of markets you can enter, whether you are vertical or horizontal in nature, mass market or niched, as well as the kind of management structure your organization requires.
3. What important changes are occurring (or have recently occurred) in your market and what is their impact on your business?
The answers to this question may govern changes to your product, your product mix and your marketing campaign. Big changes generally signal big opportunities; however if you aren't prepared for them, they can also signal the demise of your business. Dramatic increases in new housing created significant opportunities for a client who sold estimating software and brought a field-ready, cost-saving product to market just in time.
4. Who is your competition, what are their strengths, and why are you a better choice for your prospects?
It may shock you (on the other hand, it may not) how many CEOs cannot provide a compelling answer to this question. Recently, I was at a meeting for Microsoft Business Solutions Partners, and spoke to a number of the VARs who came to improve their marketing programs. When I asked about their competitive advantage, three separate resellers answered telling me how long they had been in business, and how well they understood their customers. Yeah? Well, so what. If you don't want to get blindsided by your competitors, you need to understand their capabilities. And if you want to outflank them in turn, you'd better have ammunition more powerful than your length of service.
5. How important is "service" to your clients, and how do you plan to deliver it?
Some markets high service, some do not. What about yours? If you are playing in a market where customers expect to get their hands held, you need to be geared up for it. A client of mine in educational ERP software implemented a big (and effective) sales push, only to have their Help Desk swamped with new customer service requests. Ultimately we fixed this with a new support policies, a knowledge base, an active user forum, plus effective staff training -- but it almost sank the company.
6. Is your business model scalable? In other words, could you grow your business by x%, without your expenses growing by the same ratio?
If not, you can never be more profitable -- in percentage terms - than you currently are. You may sell more, and earn more in absolute terms, but for each dollar you sell, you will make the same, or likely less, money. This means that an acquirer will not pay a financial premium for your business, because adding money to your business won't make it more profitable.
7. What are they 3-5 critical factors for your business' success? How would you rate your company in each factor, from 1-10, with 10 being the best?
Where do the profits in your business come from? What are the areas where you beat the pants off your competitors? Why do clients seek you out? These are the critical areas of success -- and you'd better be damned good at them. Rate yourself on each, and create an improvement program wherever you are lower than an 8. I've done this exercise with many of my clients, and it has probably created more value than any other.
8. What portion of your business operations have documented, repeatable, scalable systems? Are there systems which cover the critical success areas?
This is the solution to the problem raised in question 6. It is also your ticket to a well-earned vacation. Ask yourself, if you left for four weeks without voice mail or e-mail, would your business be better than you found it, about the same, or a smoldering ruin? You may think that not all areas of a software company lend themselves to systemization, but all the important ones do. Sales? Marketing? Product development? Customer service? Consulting? All systemizable.
9. How good are your finances?
Your financial picture and your market share, analyzed in the context of a growing or shrinking market determines the future of your company. If you've got lots of surplus cash you can whether anything. You can create completely new products if you have to. Next best thing is strong cash flow out of which you can pay for development, buy a competitor, or expand revenues with new technology. (One of my clients recently reinvigorated their business by buying a non-competitive player selling products to their legal clients.) But if your bank account is poor and your cash-flow weak, you are in a tough place -- particularly if your market is shrinking. My Grand Strategy Model would tell you to sell your company for whatever you can get, and invest the proceeds in a healthier market sector.
10. Is your market growing or shrinking and what is your current market share?
This is the other key to the Grand Strategy. If you dominate your market is there enough room to grow? And if not, who can you steal business from? If your market is expanding there may be years of growth left, but if it is stable or shrinking, the forecast may not be so good. This is where cash balances and cash flow come in. With them you can develop new products and services to expand the size of purchase transactions or increase the frequency of repurchase. If there is just no room for increase, think about how you can tweak your product to redeploy it in an adjacent market space. At a time when a client's customer's just wasn't buying their old products, (and recently, whose customer's were?) we shifted much of their resources into providing interim services, and thereby saved the company until the new products came out.
(c) Paul Lemberg. All rights reserved
About the Author: Paul Lemberg is the president of Quantum Growth Coaching, the world?s only fully systemized business coaching program guaranteed to help entrepreneurs rapidly create More Profits and More Life?. http://www.fastergrowthnow.com