10 Questions Small Businesses Need to Answer
As a consultant, I have walked into many small companies on that first day and wondered what the next few weeks would be like. Every company is different and just about every job has had a different set of requirements and objectives. But, when I push aside the differences, I see some common threads. When it comes to small businesses, especially the 25 people or less kind, I have found that we have to sometimes get back to basics in order to move forward.
So, I thought I would share the top 10 things that I would ask any small business to think about and answer.
1. What do you make/do? OK, no snickering out there – this is serious stuff. It is often very hard for small companies to specifically define and clearly state what they do/sell. You should be able to clearly define your products and/or services in a couple of sentences.
2. Who are your competitors? This is not just a list of all the companies who sell the same thing(s) you sell. It is a list of the companies who sell their similar product to the people that you think would buy your product. There is a difference and it’s important to understand it. For instance, if you sell handmade soaps, your competitors are not Proctor and Gamble, Dove, Irish Spring, etc. Your competitors are more likely to be other handmade soaps, boutique soaps, specialty companies selling organic soaps and so on. Figure out who exactly is selling in your target market – which leads me to #3…
3. Who is your customer? Who are you trying to sell to? Who wants or needs your product? Where are they and what are they like? There are not too many small businesses out there who target an entire population – so figure this out. Once you do, it makes it a lot easier to find potential customers – at least you know what they might look like!
4. Why should anyone buy from you? What is your value proposition? You cannot convince someone to buy from you if you cannot define what value you can provide. What is better about you than the other guy? What needs do your customers have that will be addressed with your product? Are you faster, cheaper, nicer, bigger??? OK – these are a whole bunch of questions – but I’m counting them as one!
5. Do you have the right people working for you? Small businesses can’t afford to have a bunch of ‘C’ players. You need to have the right people, because when there are just a few of you doing everything, you need to trust that things are being done right. Don’t tolerate incompetence – you can’t afford it.
6. Have you communicated with your employees? I always thought that big companies would be bad at the whole communication thing and that small companies would be great at it. Well, based on my experience, small companies do a terrible job at communicating to employees. I’m not sure why, and I’m sure it is not always the case, but it is common. The lack of more formal systems being in place for employee training, not having big department meetings and the fact that communications are generally informal, are all contributing factors. So, make an extra effort to talk to your staff. People need information in order to connect and they need to understand what is happening with the business.
7. How are you funding your growth? Do you know where your next round is going to come from? Can you/should you borrow? Cash is king and you need to know where the money is and what your cash flow looks like. (yes, for some businesses, this should be question #1)
8. How will you market/sell your products? What is your marketing strategy? Besides your web site, what are you doing to sell? Where are you selling? So many options here – you need a plan. Once you have a plan, you need to measure results and adjust as required. Don’t get stagnant here – it’s vital to re-visit your plan and try new things. Stick to the core message and branding though, otherwise you keep starting over instead of enhancing.
9. What price can you/should you charge for your product? Product Management 101 – the art of pricing. Pricing, for many businesses, is not an exact science. No one wants to leave money on the table, yet if we come out too high, business can be lost quickly. Do your homework on this one. Search competitive products, talk to people in the business, look at your costs and put a stake in the ground. Then, listen to your customers and sales people. Adjust accordingly, but don’t always jump when someone says they need a better price. We all say that. Know your market and your value.
10. How can I be better? This is the question that needs to be asked regularly. Never sit back and think everything is great. Things can always be improved and the market will change over time. Never be satisfied with the status quo. Never.
What would you add to this list?