As businesses downsize and others close their doors in today’s uncertain economy, it takes a creative entrepreneur to find ways to succeed. How do you give your business a competitive advantage in today’s economy? Start with a sound business plan. First, ask (and honestly answer!) these ten tough questions. Your answers will be the key to defining a successful business plan.
- Why are you in business?
Are you in business because you have a great business idea or because you think you can make a lot of money quickly? Most business owners get so wrapped up in the excitement of incorporating, they avoid the difficult question of why they are really in business.
- How do you define a successful entrepreneur?
If your business plan considers the personalities of the owner(s), you have a much greater chance of business success. This is more important if the business has more than one owner. For example, owners that are not risk-takers should not start a high-risk business. If they do, their business planning and operating decisions will be based on fear, not business growth.
- What is the difference between a CEO and an entrepreneur?
CEOs are typically hired into an existing business and entrepreneurs usually focus on start-ups. They both can succeed. However, an entrepreneur has a greater chance of success if they have prior business experience. To succeed you must evaluate your skills and identify those needed to successfully manage your business and define how these missing skills will be handled in your business operations.
- Passion vs. business skill: Which do you need?
At times passion can overcome the lack of skill. Many of these passionate entrepreneurs know their weaknesses and surround themselves with people who could advise them. Consider using an advisory board to fill these skill gaps.
- What is your risk tolerance?
Successful entrepreneurs have drive, are willing to take risks, and demonstrate great initiative to own their own business. What is your level of risk tolerance? You will have a greater chance of success if your business plan and operations are designed and in alignment with this risk level.
- Money vs. value: Which is more important?
Your customers may base their purchasing decisions on factors other than prices. These may include: safety, pride in ownership, ease of purchase, quality, and many more. Knowing how they measure value will help you effectively manage your marketing operations.
- Do you really know how your customers view your business?
Every successful business owner understands why they have repeat business. Their customers return for one of three strategic attributes: best product or service, best customer service, or best price. Every successful business is great at one of these attributes and good at a second. But don’t follow all three. Do you know why your customer returns?
- What is your value chain?
Every successful business relies on outside vendors. Do you know the strategic attributes, listed in the prior question, for each of your vendors? Do these attributes align with your business operations? They must be in alignment with the strategic attributes of your business for you to succeed.
- When do you say “no” to a customer sale?
Can you as a business owner say no to a customer? During times of recession, many businesses chase any customer that offers to buy. However, at what price? If you continue to change your strategic direction you may be doomed for failure. It’s best to find out what your customers are buying and redesign your business plan to proceed for success.
- Does your business plan look like a road mao or a train wreck?
Many businesses fail due to poor planning. It is important for every business owner to understand the entire depth, flexibility, strength and weakness of their business plan. Your plan must be considered and in alignment with your entire company operation. Cash-rich companies that are not aware of what conditions may cause their business to fail may be making money by accident. Have a solid plan that is also flexible–then be aware of your financial condition every day so you will be prepared to make changes before it becomes too late.