Top 20 Most Important Questions for Business
Top 20 Most Important Questions for Business
Entrepreneurs cannot completely protect their business from the vicissitudes of the market. What they can do is deal with the fundamental questions that determine the fate of any business. Searching for answers to these questions is a tedious task that requires both intellectual and emotional honesty. It's good if you start thinking about them long before the money is spent, the goods are released, and the customers are lost. But the real work is not to stop answering these questions. As the business grows, new opportunities and threats arise, and yesterday's answers may not be enough. Constantly thinking about tough questions is what keeps Microsoft, Wal-Mart, Hewlett-Packard, and Google at the top. Taking into account the need for this struggle, we present the 20 most important questions that an entrepreneur must answer and continue to answer again and again in order to build a thriving business.
What is the value of your offering?
If you can't explain in simple words in three sentences why people want your product, you don't have a value proposition, and therefore you don't have a business. Dot.
Will there be a demand for your product?
The Seinfeld character was convinced that his key to wealth was to create a bra. He has not done any research to confirm that there is a demand for his product. Don't think you'll be able to create demand where there wasn't any. Don't sell another men's bra.
What sets your product apart from the competition?
Starbucks made people believe they needed a caffeinated brew for $4, and Louis Vuitton convinced them to shell out $1,500 for denim handbags. But it's not just marketing. If you want to succeed in business, you need to offer tangible value that others don't have. For example, the lowest possible prices (Wal-Mart), original design (Apple), exceptional convenience (FedEx). Find out what the advantage of your product is and hit that point.
Is your business scaling?
The difference between modest wealth and obscene wealth is scale. It's good when you spend less and less money on the production of each next product. Take software, for example. Once Microsoft has paid for the development of the code, the marginal cost of releasing each additional copy of Windows is negligible. And some models don't scale. For example, in the service sector, where the need for personnel grows along with income.
How dedicated are you personally?
You have a family and two children. Are you willing to work 100 hours a week for the next two years to get your startup off the ground? If you want to be in charge of everything, be willing to sacrifice everything—at least to begin with.
What is your strength?
Google compiles powerful search algorithms, Steinway works wonders with wood, Cisco sniffs out and buys promising new technologies. Understand what you're good at and do just that. It's an obvious remark, but a lot of ardent entrepreneurs got burned on it. There are so many opportunities in the world.
What is your weakness?
Know what you're good at and what you're doing badly. For example, Apple doesn't make cameras for the iPhone, but buys them on the side. Countless online stores order third-party websites and payment systems. Wasting resources to get mediocre results is suicide. Do what you know how to do and find reliable partners to handle everything else.
How much will your customers pay?
Why Do People Pay Twice As Much For Vanish As Generic Bleach? Determining the upper bound of the price a customer is willing to pay for an item, whether it's an iPhone or a bottle of bleach, is one of the most powerful levers for making a profit. Consultants are paid a lot of money to help determine the right price.
What power do your customers have?
What happens if you sell rubber scrapers to the only window cleaning company in the city? If the buyer asks for deep discounts, your business will come to an end. It's better to expand your customer base in advance.
What power do your suppliers have?
The fewer suppliers you have, the more power they have. Making antique watches out of knotty pine may seem like a great idea, but what if you only have one source of gnarled wood? Answer: You will have to pay. On the other hand, beware of hungry suppliers who are ready to work very cheaply – they often do not monitor quality.
How do I sell a product?
Dell Computer sells its computers directly. General Motors and Coca-Cola rely on distributors. Apparel companies like Ralph Lauren use both internal and external distribution channels. And Apple is opening branded stores. Whichever sales method you choose, make sure it aligns with your overall business strategy.
How should you promote your product?
Telling everyone about your company without going broke is not an easy task. In the mid-1990s, America Online spent so much money distributing demos of its software that it had to hide the expense on its balance sheet. Later, this accounting technique was banned, and millions of accounting profits disappeared.
What is the threat of new players entering the market?
If there is money to be made in your sector of the market, there will definitely be competition. If it's not a direct competitor (think of what Microsoft did with Netscape), then another technology could pull the rug out from under your feet (look at what digital photography did to Kodak). Long before that happens, build barriers for new entrants — apply for a patent, secure a long lease term, and build a loyal consumer base.
How will you protect your intellectual property?
A small addition to the previous point. Let's say you've invented a car that can reach speeds of up to 240 km/h on solar power alone. A few months later, five savvy competitors dismantled your model and are now bringing their own versions to market. Before showing the samples to the public, apply for a temporary patent. It will protect your idea for a year while you finalize the details.
How much start-up capital do you need?
Any early-stage investor and any small business consultant will tell you that most startups fail due to a lack of capital. While there are no hard and fast rules, "double down on your initial estimate of capital needed," says Jim Pack, head of dental software developer Curve Dental.
How will you finance your business?
You have a choice: a rich auntie, credit cards (dangerous), an angel investor, venture capital (if you have a serious business), a bank loan (good luck with your search), and the most expensive way is to issue shares. Be careful: selling shares leads to dilution of capital, loss of control, and difficulties in management. In general, improve your business if you can. And finally, don't forget to correlate the timing of the receipt of money from your assets and the timing of payment of obligations. The discrepancy can be painful.
How much money do you need to survive the first few years?
For those who overslept the previous point: keep an eye on the money. A lot of entrepreneurs boast about their financial growth forecasts, but their pockets are empty before the good times are on the horizon. (Remember the failed dot-coms?) Be patient with Aeron chairs and Macs until you get more than you spend.
What are your financial projections?
Movement is not possible if you don't have a destination. Two important milestones are: 1) operational ROI – when your business makes more money than it spends in a given period, and 2) ROI – when you finally recoup your initial investment (adjusted for inflation). Financial projections must be reasonable. If you paint an overly optimistic picture, experienced investors will run away from you. And you'll run out of money.
How to make your assistants happy?
What's American Idol without Simon Cowell? We'll find out soon, but a lot of people think the show won't be what it used to be. If you're lucky enough to find a great talent, try to keep it. Salary is just part of the equation.
What is your ultimate goal?
Do you want to dump your business to the first person you meet with money? That's what the owners of MySpace did, but not Facebook. Different goals require different strategies. Always remember what you are aiming for.
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