Five leading questions that get you thinking like an entrepreneur! The trailing questions take you deeper into the reality of owning a business. These questions ask for self-driven answers, not giving you a perceived best answer.
The Five Questions:
- Who’s the President or CEO of your organization?
- How are new customers obtained?
- How are customers onboarded into your organization?
- What systems are in place to manage people and processes?
- How are finances managed?
Who’s the President or CEO of your organization?
Leadership is key! A business can only have one leader at the top. This is not a trick question; one person must be accountable for the entire organization.
- What roles/accountabilities are in your executive organization chart?
- Who’s assigned to each role, if applicable
- Do you have a written executive summary for your business plan?
- These are a couple of written segmented pages that tell the reader everything needed about what you are doing, who is doing it, and what success looks like
- How does working "on your business" differ from "working in your business" regarding your ability to delegate all accountabilities and have the business be self-managed?
- Are your skill sets holding you hostage to your business
- "I am the only person who can do ....!"
- What's your exit plan when the time is right
- Have you defined the business's Core Values?
- You have these already; they are not "your" core values but your businesses
- Created so they are impactful and known by all employees
- They are so impactful that the business hires and fires using them
- What is the business's Vision Statement?
- This has nothing to do with your business but with the industry issues solved for your customers or community.
- What is the business's Mission Statement?
- The “what” your business is doing to make your Vision a reality.
- Your elevator pitch within one or two sentences, what does your business do
- How are you and your leadership team learning about entrepreneurship and leadership?
- Reading/listening to relevant books, attending conferences and seminars, membership in associations, hiring consultants, joining peer groups, and coaching others to name a few
- You do not lead by example; you lead by building trust in others first
- What are three to five KPIs used to monitor the business's heartbeat?
(key performance indexes)- Weekly/Monthly/Quarterly/Annual goals that are written S.M.A.R.T.
- Specific, Measurable, Attainable, Relevant and Time-bound
- How are big issues addressed and resolved?
- Do you have a defined process of issue discovery through resolution
- How often do you meet with your leadership team?
- What is your meeting cadence? (weekly, monthly, quarterly, annually)
- How far down the org-chart do meetings get held regularly
How are new customers obtained?
A business must have a marketing plan clearly stating who is being marketed to and where!
- What is your target market?
- The most impactful industry, trade, association…
- What are your specific customer demographics that define the perfect customer avatar?
- Age, gender, race, job department, title, industry, education, trade, skillsets
- Geographics can fit perfectly here too
- What are the psychographics of the perfect customer?
- What drives their decision-making process
- Intimidation, fear, no time, overwhelmed, lack of knowledge/skill …
- What differentiates your business from competitors and attracts customers?
- No more than three are needed
- Define the business's eCommerce model.
- Does your website generate leads and revenue
- Does your website have a shopping cart engine
- Do you track site activity as a KPI
- Are you marketing on TMGOG using organic or pay-per-click resources (The Mighty God of Google)
- Can you track new sales/income to sources of leads?
- Organic search, PPC, referrals, direct mail, cold calling/outbound sales, networking, tradeshows
- What is your cost-of-lead acquisition?
- Advertising dollars spent divided by the number of inbound leads
- What percentage of revenue is repeat business?
How are customers on-boarded into the organization?
Prospects are converted to customers and must be managed until all products and services are rendered.
- What CRM are you using or another process for securely managing customer data?
- Storing prospect, customer, vendor, employee, and networking contact data in a spreadsheet, on your mobile phone, or handwritten calendars is a red flag
- ACT CRM, and anyone who competes with them, is a great place to start
- HubSpot, SalesForce, and NetSuite are big dollar investments, but they can guide system configuration. Some have free versions, too
- Do you generate written proposals, orders, and invoices?
- As a sale turns into an order and then an invoice, what does that look like in your business
- How do you determine Terms of Payment when applicable?
- If you are doing business-to-business B2B, accepting purchase orders and offering payment terms can be a customer-attracting benefit and a huge liability if not managed correctly
- Do you accept cash, checks, credit cards, and purchase orders?
- Each has its own issues and benefits
- How do you track active sales, projects, and orders?
- How do you forecast future sales close dates, and run reports
- When you have many hands touching a project, how do you control quality
- When you invoice a project, how do you bill correctly for all work performed and against the scope of work you and the customer agreed to
- What order action defines when a financial transaction occurs?
- Must it be paid in full upon placement of the order
- Partial deposit with benchmark payments
- Partial deposit with the balance due Net:30 or 45 or 60
- Will you accept credit card payments on Net:30 terms...NO
- Must have a Purchase order for B2B at the time of placing the order
- All invoices due are billed upon shipment, receipt, or services rendered
What systems are in place to manage people and processes?
Hiring the right person for the right position is key, and defined processes are required.
- Have you defined the key roles and accountabilities within your company?
- This is an organization chart with accountabilities listed for each
- Have you documented all key job descriptions with the required skills and traits to ensure you select the right employees and that they understand exactly what is expected of them?
- This expands your accountabilities list with a checklist of expectations used in personnel reviews
- What triggers let you know when to hire the next employee?
- Hiring too early can be a financial burden
- Hire too late, and onboarding can be delayed as training resources are not easily available
- Do you have defined hiring, onboarding, and termination processes?
- How will you find candidates, and how will you assess them
- How are new hires onboarded so they know what their job expectations are, other human resource related directives, and understand the overall culture of the business
- Do you know laws around workers' compensation and W2 wages within your industry?
- Do your homework here; not everyone can be on a salary without understanding the perils of the unqualified
- Does your business hold quarterly reviews with each employee?
- After 90 days, most employees lose focus on their core accountabilities; how are you keeping them from and center
- What cybersecurity measures protect customers' and employees' personally identifiable information (PII) and payment information?
- Most businesses run on employee and customer data, so understand your business's cybersecurity accountabilities regarding protecting PII and PCI-compliant data from fraudsters.
How are finances managed?
Cash is king; knowing your numbers defines your kingdom!
- What accounting software are you using?
- Invest now or pay later
- Start by looking at Quickbooks and who ever competes against them
- Do you have a general bookkeeper or accountant?
- Invest in a certified public accountant (CPA) on day one, it will pay off in tax benefits and reduced headaches long term
- Is your chart of accounts set up specifically for your organization?
- Data in equals data out, so if you have only one source of income, you need one income account.
- If you earn Income from segmented product lines and services, consider breaking down your Income into sub-lines and having matching Expense lines.
- This will allow the determination of the profitability of each Income line item.
- Why did you choose your business type? (info provided is not legal advice; do your research)
- Sole Proprietorships and Partnerships—These structures have single ownership or multiple owners liable for all debts and are taxed on profits using personal tax returns. This structure provides the owners with the most personal liability exposure.
- Limited Liability Corporation—A corporation with one or more shareholders where limited liability is provided against business debt and personal assets protection. Any income or losses generated from dividends are passed on to the shareholders for tax reporting, similar to sole proprietorships and partnerships. However, other corporation tax models can also be considered. Unlike some other forms of business, there is no requirement for quarterly meetings or record keeping.
- S-Corp: A domestic corporation with one or more shareholders, but no more than 100. Limited liability is provided from business debt against personal assets of shareholders and corporate offices. All dividend-generated income or losses are passed on to the shareholders as personal income and may have better tax advantages over an LLC. To protect the corporate veil from being breached, regular meetings, annual at minimum, with corporate officers and board members are required, along with recorded minutes.
- C Corp - A separate legal entity with one or more shareholders offering significant liability protection to the shareholders and corporate offices. The corporation pays taxes on all profits. It is ideal for larger companies and when using outside investors.
- Are you preparing now for tax return submission during the first quarter of next year?
- Listen to your accountant and pay taxes due as directed
- What is the best accounting method for your company; Cash or Accrual
- Are you required to collect sales tax when applicable, and what process do you follow to comply with out-of-state sales tax collection?
- Know your county and state sales tax laws
- If selling in multiple states, learn about what denotes the sales or use tax nexus.
- Avatax is a great resource to consider
- Are you (all participating/working owners) on the payroll?
- If you are working in your business, you should be on the payroll at fare-minus wages at minimum. Again, talk to your accountant.
- Can you generate a P&L any time it is needed?
- Are you generating a positive cash flow?
- Do you understand the basics of EBITDA?
- earnings before interest, taxes, depreciation, and amortization
- Do you have the correct insurance coverage based on your exposure?
- General Liability
- Worker's Comp
- Cybersecurity
- Do you have enough cash in the bank, credit card limits, or an established line of credit (LOC) to float you through times when cash flow is not positive?
- One of the top reasons businesses fail is a lack of capital funds or knowledge of cash flow management.
- As a business grows, accounts receivables grow
- What resources do you leverage when you're owned a lot of income and have fewer funds in checking than you do in accounts payables; that are due now