If you’re going to make a commitment to starting a business, then make sure that you are able to answer the five questions that I will be presenting to you. These questions are essential because if you’re able to answer them, then it means that you are running a successful business. If you’re not able to answer them yet, don’t worry. That is what growth is all about.
# 1 – What’s the ultimate end goal for your business?
If you are the owner/founder of your business, then only you can answer this question. People have many different reasons and motivations to start a business. Although, the businesses that have long term success have usually set the following objectives.
- Bringing innovation to the market
- Bringing value to customers
- Pricing accordingly to the value of your product vs the consumer demand
What is the ultimate goal? To hopefully change the world for the better. Be weary, if money is your ultimate end goal, then you will not be seeing much success in your time in business. Your product or service is your most important factor that will help you accomplish all of your objectives.
#2 – Are you making a profit?
Do you actually know your essential numbers in and out? A common factor that is regularly overlooked by first time entrepreneurs, is evaluating how much revenue and net profit you need to stay afloat. How much of your product or service do you have to sell to stay in the positives and be successful?
If you are opening a physical store, how much can you rely on foot traffic in the area? Of all the people that are walking by your store, how many of them do you need to come in and what is the target minimal purchase? Is your store located in an area that is easy to discover or do you need to invest in some publicity to get people to even know your store exists.
A big enemy would be over confidence in the idea that 75% of the people passing by your storefront will walk in and make a purchase. Also, don’t make the mistake of underestimating how much you need on a daily, weekly and monthly basis in order to stay profitable. Don’t rely on the idea that you will definitely make up the revenue lost this month in the month to come.
I highly recommend having a daily, weekly and monthly plan of what your revenue needs to be. Break it down as much as you can so you can be as detailed as you can as well. Give yourself realistic estimates of how many people you can expect to see to come in your store and commit to a purchase. Do some reports at the end of your day, week and month. Numbers don’t lie. Evaluating these numbers will help you improve your strategies including how to price your items.
A similar concept would apply to an online business. Instead of foot traffic, you have website visitors. The only difference is, you’re not on a physical street that people would normally walk by. You have to figure out what kind of strategy and budget you need to get in front of people’s eyes.
#3 – Do you have an exit strategy?
Your exit strategy plays an important role in your overall business strategy. It is commonly overlooked because it is not in the here and now of your business. Think about it, if you don’t know how you want to exit, then how will you determine the strategic direction of your company. Your business is not something that you can be spontaneous with if you plan on it being a success.
Your exit strategy has to be in line with your personal and business goals. Put it this way, when you start your business, you should already be thinking of your exit strategy. Thinking of your exit strategy from the beginning of your business will grant you the flexibility to execute specific strategies at specific times.
If you want to avoid going down a path other than what you planned for, then I would recommend integrating your exit strategy into your business plan. Just because your exit strategy is defined early, doesn’t mean that it has to be executed any time soon or that it won’t change or evolve. Every entrepreneur use their exit strategies in different years of their business. You, as the owner, should be able to determine the expected outcome and results before you put this strategy into motion.
#4 – What value are you bringing to the market and your customers?
If the answer is obvious to you, it can still mean that it flew right over the head of someone else. How can you communicate to people of what value your product or service brings them? How can you make them understand?
Describe your product or service
Part of this is easy, just literally explain what it is. Once you’re done the obvious explanation of the product then start to describe with the intention of showing the benefit it has for your client or customer.
The target customer
Make sure you’re talking to someone or a group of people that show interest in your product or service. I had a meeting with a client one day that was telling me that her online business was severely lacking in sales and that she wanted to start using email marketing to increase sales. Long story short, I was asked if we can just buy an email list from somewhere instead of taking the time to build one from scratch.
My response was simply, sure, you can go ahead and buy an email list but how do you know that the people on that list, are interested in your product?
Needless to say, that idea was dumped very quickly. What I am trying to tell you is, make sure you do some research to find out who your ideal customer or client persona is, figure out where they are, then tell them about your product or service.
Go even deeper and visualize them standing in front of you, what do they look like, what are their mannerisms, what do they like doing on their free time, every little detail will help your marketing efforts in grabbing your ideal client’s attention.
The value you provide to them
Value, the magic word that somehow not all entrepreneurs can answer. You have to explain to someone why they should give you their money. Will they have a return on their money? Or will they have an experience that is worth the price?
What great benefit will your product or service have to your target customers. Keep in mind they don’t care about YOUR benefit of selling your product/service. Keep yourself, your intentions and your goals out of this conversation. Focus on your target customer, evaluate their problem and sell your solution.
#5 – What are the next 3 steps of your business?
Always stay 3 steps ahead of your business. If you’re just starting off or a couple of years matured, you always want to know what your next steps are ahead of time. Why? For proper planning and direction and execution. You can’t lead yourself blindly, this is not the time to be spontaneous. You want to be in control every step of the way, and three steps ahead as well.
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There you have it! Five simple questions that any business owner, of any type of business, should be able to answer. If you can’t, as I said, don’t worry about it. Don’t think of yourself as a failure, you just need to take a step back and reevaluate your business plan and your business intentions. If you need some help, that is what my business consultation is for. I’m here for you to help you and your business reach your full potential.