The first thing we need to understand is that the
right answer can come only if we ask the right questions.
This isn’t as simple as it sounds. There are some fundamental
questions that are vital to the survival of any business; seven
of these questions are presented below (not in any particular order).
1. Cash Is King – How Long Can It Last?
If starting tomorrow, my revenues from existing
customers drop to zero, how long will I last at the current burn
rate? Surprisingly enough, many business owners I have worked
with do not have a clear picture of this – indicating they are
flying blind to an extent. Poor cash flow planning is one
reason business owners run to their financers / loan officers
at the last moment. That is precisely the wrong time to
be seeking additional funds!
2. How Long Does It Take For New Customers
To Come On Board?
One of the hardest things (especially) for small
business owners to do is get customers. This because they
always tend to operate with lean advertising budgets, and tend
to have fewer resources for sales efforts. As such, more reliance
is placed upon word of mouth, and referrals. Both are excellent
techniques, but take time. Not having a good sense of the
gestation period for generating business from new customers results
in over dependence on few customers, which can be extremely risky.
3. If I Am Incapacitated Tomorrow, How Will
The Business Continue?
The thought of being incapacitated is repugnant
to say the least. However, the possibility always exists
– therefore demands preparation. Many owners do not have
contingency plans in place to address this serious issue, should
it occur. They either don’t know what plans to put in place,
or are just too busy managing the operation.
4. What Makes Customers Come To Us (or Turn
Away From Us)?
Despite the well known fact – no customers =
no sales; few businesses really have a good understanding of why
customers come to them, or otherwise. Many of
the business owners I speak with say “If they customer did not
complain, it means we must be doing things right, and they will
be back!” While this paradigm can provide self-accolades,
it lays down the seeds for a lot of trouble down the road.
If you don’t believe what I am saying, just ask yourself – What
has already happened when the customer complains? They experienced
some level of dissatisfaction. This is usually due to the
product / service failing to perform as the customer wanted.
By default then, waiting until the customer complains is too late
in the game – they are already on their way out. You as
the business owner better discover “Satisfiers” and Dis-Satisfiers”
before your customers do.
5. Where Do Our Customers See Us vs. Our Competition?
This critical knowledge can mean the difference
between a business that makes it, and one that doesn’t.
Often it is thought that if there is no one else in the game,
the customer has no choice but to come to us. Wrong!!
I recently needed to purchase a car, and went to a nearby dealership.
It was the “only” dealer selling Toyotas in town (My previous
experience with this dealership had been just so, so). After
roaming the lot, I went into their office, and started looking
at the models on display there. One of their sales managers
was kind enough to come speak with me, and I identified the model
I wanted to test drive. He asked me to wait a few minutes
while he went looking for the right sales agent. Even after
15 minutes of waiting there no one showed up; meanwhile I saw
several agents sitting around cracking jokes and smoking away.
My buying experience was going down hill fast at this point.
After waiting another 5 minutes, I walked out of the showroom.
This was enough for me to file a complaint with Toyota, however
on their website there was no means to do that. Though I
don’t have any gripes against the brand, I ended up getting a
different (but equally reliable) car.
Fact is, vast majority of the customers (often 9 out of 10), when
dissatisfied, will not mention anything. At the first opportunity,
they will seek an alternative and exit.
6. What Are The Key Constraints Present In
My Business?
Why such a question? Think about it – business
is subject to many forces, therefore full of changes. We
may experience
Expansion,
Contraction,
Obsolescence
just to name a few eventualities that can occur.
The pace at which change can take place now a days is very fast.
Thus business conditions can go through a 20 to 30% change in
operating parameters in very short time (1 quarter). Lack
of adaptability can kill businesses in a hurry – so it behooves
us to be aware of the constraints that exist in the business.
One example of such constraint is the fixed payment obligation
that may be tied to a certain loan.
Awareness of constraints also makes it easy to
have contingency plans for different scenarios. One may
wonder how frequently should one look at such plans? Depending
on the industry one is in, weekly to once a quarter may suffice.
The constraints should be clearly identified - such as “Employees”,
“Technical Skills”, “Throughput Capacity”, etc.
7. How Strong Is My Skill Set / Competence
Inventory?
Like it or not, the information age has been
changing the paradigm of how businesses work. The level
and types of skills needed to do business in today’s world is
quite different from that just a few decades ago. Then there is
the trend to hire contractors and sub-contractors to get many
things done. A lack of understanding about the important
skill sets needed for the future is a sure way to lose out.
For example – business owners who do not care to upgrade their
skills in the use of databases, or spreadsheets may lag behind
the competition in keeping up with their customers. A simple
database tracking the history of purchases made by clients can
be of tremendous value in identifying elite customers. Once
this is done, you can take simple but very effective steps in
retaining such customers, and growing business with them.
This surely sets you apart from the competition, and very likely
the customer will not want to switch. Yet I see scores of
businesses have no clue about how important which customer is
to their business!
Reprint of this article does not constitute an
endorsement by the National Business Association; the article is
for informational purposes for our members and viewers of our Web
site.
