7 Questions Every Business Owner Should Answer

How would you describe where you are with your business is right now?

Are you: Struggling? Frustrated? Progressing? Successful?

Of all the 5.4 million businesses in the UK right now, 80% of them are struggling or getting by and barely keeping their heads above water.

20% of all businesses are really struggling!

Living hand to mouth, with all the stress that goes with it – and not really sure how to change it.  They are caught in a spiral of doom and some don’t even know it!   They have no plans or clearly articulated goals and they don’t know their key business numbers.  They are more likely to have a nasty surprise at the end of each financial year. 

Their business struggles with consistency.  To customer, staff and suppliers there is often a sense or appearance of chaos and disorganisation.   The business has difficulty in attracting and retaining the right people, with the skills and attitudes needed to really make a change, for real success.  

The business owner experiences high levels of stress and uncertainty because of a lack of cash – and they lose sleep over how they are going to get though the next day, week or month.  In many cases they dread going into “work” but know that everything will fall to pieces if they aren’t there.  They only see their family when they are distracted, worried and unhappy.

60% of business owners are frustrated!

They might have some plans or goals, but more than likely not written down or shared with anyone who could help them.  

They need to understand basic business finance but don’t have the time to learn about it.  

They have inadequate management information and don’t do anything to make sure they have what they need to enable better decision making, often because they don’t really know where to start or how to get help.

The business owner is the main (if not only) decision maker, creating a bottle neck in many of the informal processes that the business has There’s a rudimentary understanding of “how we do things around here”.  They know they need a bigger, more skilled, team but recruiting takes up so much more time and energy than they have to spare.

Managing cash is a month by month challenge.  The business owner KNOWS the business could be so much more successful but they don’t know how to get it on the right track – there always seems so much to do that gets in the way of improving things.

These 80% of businesses are barely getting by.  That’s a lot of businesses!  And a lot of unhappy business owners. 

Do you recognise your business here?

By contrast, 15% of businesses are “doing OK” bridging the gap between surviving and getting into real success territory.  The business owner knows that action is required and that they need help.

4% – that’s a very low number! – Are getting on track and achieving.

They have plans, goals and some way of measuring their progress.  They know and understand the value of their business numbers and the drivers.  They use management information to make decisions and keep track of their achievements.  

There is a team of key people in the organisation which the business owners relies on and now the worry is related to retention and succession as the business grows.  

Success has bought surplus cash allowing growth to be funded and contingencies covered if a disaster hits.  Management accounts and cashflow forecasts are essential business planning tools.  Everyone knows what they need to do and what they are responsible for.  

The business is on the way up but there is work to do and the business owner is an essential part of the day to day operations.

Only 1% of businesses are truly successful.

They have clearly communicated plans and goals.  There are monthly management reports shared with everyone who needs to see them and the entire team is working in collaboration towards the collective vision of “what success looks like”.  

Customer, suppliers and employees all experience the same levels of support and service based on excellent systems which are continuously improving.  There is clear accountability, responsibility and authority throughout the organisation.  

There’s a great team in place constantly developing skills and finding ways to enhance the business.  If the business owner took 6 months off, the business would still thrive.

Successful companies are not just the big ones – some of those are really chaotic! – because success is not about size.

Where are you? Where is your business? Do you even know?

Starting a business is hard work – keeping it going is just as hard, if not harder.  Yet every day thousands of people go out “on their own” and start a new business, often without realising what they are about to embark on.  

Blissful ignorance and some luck can carry you so far before the stark reality of getting a business off the ground starts to hit hard.  Sounds harsh but there isn’t an entrepreneur alive (or dead for that matter) who achieved success without great timing, hard work and the right team on their side.

And it doesn’t matter what size your business is – whether you are a sole trader or building something that you hope will change the world.  Running a business is pretty much the same for everyone.  The only difference is the scale.  

“The price of anything is the amount of LIFE you exchange for it”

Henry David Thoreau

Before you get started in a new business, or continue with your existing business some of the questions you should probably ask are:

• Is it a viable business?

• Do you want it enough?  

• What is it going to cost you in non-financial terms?  

• Is it a price are you willing to pay?

Once you are on the journey, it can be easy to forget the early passion and feelings of being invincible when the challenges of running a business wear you down every day, relentlessly, persistently.

Over the last 25 or more years I have been working with businesses and their owners, just like you, to start, grow, sometimes rescue and often change ownership.  

Whether you are working in your business(es) or are a shareholder and have passed the day to day running onto a management team, most companies have similar problems and the solutions are often remarkably simple yet can be equally challenging to implement.

How you approach these challenges will dictate where your business ends up, or even if it will survive at all.

“No one talks about entrepreneurship as survival but that’s exactly what it is”

Anita Roddick

The 7 Questions in “Your Profit Score”?

With over ¼ of a century of running and building businesses, I have asked the same 7 questions of pretty much every business owner I’ve been involved with:

Each of these questions, when fully thought about, gives insight into where the business is now and where the owner / founder wants it to be – and WHY!   

This has all come together to make “Your Profit Score” – the easy and quick diagnostic tool for your business and by extension, your life.

Find the score card at my dedicated site: yourprofitscore.com and, if you haven’t already taken the assessment, please do it now.  It takes less than 6 minutes and all it need is for you to be completely honest with yourself!

Each of the questions will show you, on a scale of 1 – 12, where you feel you are with your business and where you want to be.  Are you struggling, frustrated, achieving or successful in each area?

And it doesn’t matter what industry you are in, how big your business is, how old your business is (or you are for that matter), or even how many people you employ.  

It relates to YOUR measures of success, not anyone else’s.

The whole diagnosis of your business can be shown in a few easy steps – answer the 7 questions and get a copy of Your Profit Score.

Why these 7 questions?

Each question highlights an area of your business that, if not working optimally, will have a negative effect on the business performance, the future growth and your own mindset and emotional energy.  The answer to the questions quickly and effectively diagnoses where the strengths and weaknesses in your business lay –where help and intervention to be quickly focused on and where the biggest impact can happen, not only to your business but to your life.

Why are these areas important?

Big things happen when you get the little things right.  You just need to know what the little things are first.  

That’s the real value in using Your Profit Score.

Planning

A business without goals or targets will rarely achieve anywhere near the success that one with a clear action plan will.  If they are in writing, then the chances of success significantly increase.  It sounds complicated but as you will see in the Planning chapter of this book, it can be made simpler and much quicker than you might have imagined.  Simplicity is the key to getting started.

Knowing Your Numbers

Without insight and information on how the business is performing, the effectiveness of decision-making is diminished.  A business may fail or fly based on the adequacy of the decisions made by the senior management team (even if that team is one person – you, the business owner!) Having some basic management accounts and key performance indicators on a regular and consistent basis will help you fly your business in the right direction rather than as if you were blind.  You might already have the information but it’s not regularly produced.  

You may need to build some reports from scratch – but it does not have to be complicated.  Keeping it simple is the only way you can keep on top of it.  Many accountants produce sheets of numbers that make no sense to the leadership team in a business, which makes the whole activity an expensive waste of time.  

The chapter on Knowing Your Numbers shows you how to ask the right questions and get the right reports from your finance professional.  It also shows you how to get good financial support if you need it.

Systems

As you start to grow and bring in new team members, having systems creates consistency which avoids compromising your standards of service delivery.  Everyone knowing their role in the organisation is one of the most commonly missed parts of the system.  And systems don’t mean technology – apps and software are simply the tools of a system.

It’s processes and procedures that are critical to a scalable business.  Simplicity is key (you might see a common thread in the book is the call for simplicity!)

People

Having the right skills and attitudes to allow expansion of the business and liberate YOU from working in the business to working ON it is a critical factor for scaling-up.  Many business owners do not see the value of bringing people into their organisations with the skills and attitudes that allow them to be released from some tasks to achieve more – and generally that translates into earning more.  

Seeing people only as a cost is a sure-fire way of keeping your business smaller than it needs to be.  Building a team is not easy and looking after staff, if you don’t get the right ones on board, can be debilitating and demotivating.  Some of the essentials of getting the right people are laid out in the People chapter.

Cash

Having a pathological attitude towards cash management and monitoring allows the life blood of the business to flow.  Without a flow of cash, the business will quickly seize up.  

Running out of cash is one of the most common problems in business failure.

Understanding the difference between cash and profit is essential to every business owner.  Getting this wrong will kill your business.

Your Relationship with Your Business

Your business is not a job, though it can often feel like the worst job in the world!  The most successful business owners are driven by a bigger purpose than having an income that covers their survival needs.  

They have a passion and drive that exceeds the average employee.  They are willing to take risks to achieve a bigger life and may seem to be driven by wealth.  

More commonly it’s not wholly about money at all – it’s about the things that financial freedom can buy.  If you don’t have the energy and conviction for your business how can you inspire others to feel that way too?  

This is a key indicator that you should think about getting your business ready for your exit – either by selling or by building a management team to get you out of the day-to-day activity.

Impact the business has on Your Family

Divorce rates amongst entrepreneurs is high!  A sad statistic is that only 30% of business owners are happily married or in a successful long-term relationship – and some high profile entrepreneurs testify to having the right partners, for example:

• Bill and Melinda Gates (married over 25 years), 
• Richard Branson (married to 2nd wife for nearly 30 years), and 
• Steve Jobs (married 20 years till his death in 2011).  

I have come across business owners who love their businesses and struggle to maintain a positive relationship with their family / spouse / partner.  Sometimes it’s a lack of understanding by family and friends as to why the business takes up so much time and energy.  Sometimes it’s because they just don’t want to understand.  

Entrepreneurs are abnormal people and it can be a challenge to make others understand why you put yourself through some of the challenges.  

Changing the business from a negative impact on the family into something more positive can have a transformational effect of the business, on you as the owner and your loved ones.

So What’s Your Profit Score?

Let’s dive into the diagnosis of your business.  If you haven’t already taken Your Profit Score assessment, then go to YourProfitScore.com and do it now, it will put the rest of the book into context.

Are you stuck in the day-to-day of your business with no time to plan for the future? A Professional Business Mentor is just the leverage you need to get out of the rut and flying. Discover how you can make your business worth more AND avoid leaving money on the table when you finally leave your business. Click here to contact Christine by email alternatively you can book a call with the Business Mentor of the Year 2020, author and speaker. Who helps business founders get their businesses exit ready so they can enjoy a happier, richer future.  She saves them THOUSANDS and increases the value of their businesses by MILLIONS.