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10 Crucial Business Questions To Ask Yourself
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One of the coolest new features on the iPhone 4S is Siri, Apple’s new personal assistant. It lets you use your voice to send messages, dial calls, schedule meetings and set reminders. Apple stresses that “Siri understands what you say, knows what you mean, and even talks back.” It can answer questions like, what is the traffic in Chicago?; can you text my friend that I will be 30 minutes late?; is it going to be chilly in San Francisco this weekend?; and how many cups are there in 12 ounces?

These are all good questions, but what would really be helpful is if Siri could answer the questions that are essential to running a successful business.  Here are the top 10 most critical questions that all small business owners should be able to answer.

1. What problem does your business solve?

Why you need to know: If you don’t know the answer to this question, how do you know if your product or service is working? It is one of the most basic questions that every business owner should ask himself, even before he launches his business.

Where to find this information: Ask your customers why they choose to buy from you (it will also help improve your customer relations).

2. How does your business generate income?

Why you need to know: What parts of your business are the biggest revenue drivers? If you want to cut back on costs and boost revenue, this will help you understand where you should be focusing your resources—and where you should potentially cut back.

Where to find this information: Monthly profit and loss statement under revenue.

3. Which parts of your business are not profitable? 

Why you need to know: Resources are limited. Your business should only support the sales of things that actually make money.

Where to find this information: Monthly profit and loss statement under revenue, cost of goods sold and net profit by item.

4. Is your cash flow positive each month?

Why you need to know: Again, your resources are limited. So if there’s an area of your business that is generating a negative cash flow, you may need to reevaluate your business plan.

Where to find this information: Monthly profit and loss statement under revenue, cost of goods sold and net profit by item.

5. What is your pricing strategy and why?

Why you need to know: Customers pay for value. It is difficult to make a large gross profit on a commodity.

Where to find this information: Split test new, higher prices with customers.

6. How much time do you and your management team spend on generating revenue?

Why you need to know: If you are not generating revenue because all of your money is spent on payroll, then your overhead is too high—and a high overhead sinks companies in the long run.

Where to find this information: Review your payroll and categorize each employee as income-generating or overhead. Be honest.

7. What is your client retention rate?

Why you need to know: If your business lets old customers leave as you bring in new ones, then you are not building a stable company. Your goal should be to increase both new and repeat customers.

Where to find this information: Track individual customer revenue year to year, and monitor how it changes.

8. Will your customers refer other people they know to your company?

Why you need to know: Marketing is expensive, and getting referrals from existing customers is a cheap alternative.

Where to find this information: Ask your customers. If you get a new customer from an existing one, keep track of it so that you can give those recurring customers special offers—and an incentive to refer more customers.

9. Who are your most valuable customers (and which are the most costly)?

Why you need to know: Those revenue-generating customers may be monopolizing your resources and preventing you from being able to service others and increase profitability.

Where to find this information: Review your gross profit by customer, and ask your employees which customers are the biggest abusers of company resources.

10. What is your social media strategy?

Why you need to know: The World Wide Web can be a worldwide waste of time. Social media must be part of your marketing strategy, but it also can be a huge time suck.

Where to find this information: Set Google Alerts or DEX Reputation Management to sample social media mentions and determine which critical success factor your social media strategy supports.

This post first appeared on the American Express OPEN Forum.

Barry MoltzSpeaker, Consultant & Author
With decades of entrepreneurial experience in his own business ventures, Barry has discovered the formula to get stuck business owners out of their funk and marching forward. He has founded and run small businesses with a great deal of success and failure for more than 15 years. He is the author of three small business books. www.barrymoltz.com | Facebook | @BarryMoltz | More from Barry

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