THE 14 STRATEGIC QUESTIONS THAT COULD DOUBLE YOUR PROFITS
Do you want to know a secret? Do you want to know the real difference between those businesses that outperform and outlast their competition, and those that simply struggle along? The difference is the questions that they ask.
To really make a difference to your current profits and future position there are a limited number of powerful questions you need to think about very carefully. These are:
- possibility questions
- focus questions
- action questions
Most SME’s do not have a clear analysis of ‘what is possible’. The absence of this means that too many businesses perform at a level that is below their true potential – without ever really knowing what they failed to achieve.
So, ask the questions “What is the optimised state for my business?” The optimised state is not the idyllic state where everything is perfect all the time (life is never like that), but rather what your business is like when everything is going as well as it possibly could.
Next ask, “How well am I doing now?” You are probably (at best) no more than 80% of your optimised state, and there is every chance that you are closer to 60% of the possible level of performance for your business. Now you can see what is possible for your business; you now need some different questions to achieve this.
The problem for most SME’s is not the lack of opportunity, but too much opportunity. Too many SME’s get caught completing activities that make money – but not as much money as possible.
To avoid this trap answer the following questions:
- What makes my business unique?
- What do my customers value most?
- What customers/markets offer me the best opportunity to make the most money with the least investment of effort?
- Which of my products/services are going to take me into the future, and which represent a sentimental attachment to the past?
- What wastes my time and resources?
- Is my business on the path to the optimised state?
When you have clear answers, you are ready to make a tough decision. You are ready to deliberately start to spend more of your money and effort on those products/ customers/ markets/ opportunities that will return the most to your business, and spend less time (and this is the hard bit) on those parts of your business that do not return as much as they should – even though they still might make money.
Now use these action questions to make it happen:
- Which products/ customers do I already have, but I need more of (expand)?
- Which products/ customers should I have less of (reduce)?
- Which products/ customers should I not have in my business any longer (eliminate)?
- Which products/ customers do I need that I do not have (introduce)?
Allocate each product/ customer you consider a score out of ten, so, for example, if you really need to introduce or expand a particular customer/ product give it a score of 10, if this is valuable but not essential give a score of 5, and if it’s not at all critical then allocate 1, and use a similar scoring criteria for ‘reducing’ and ‘eliminating’.
You can now create two lists:
- the ‘Earners’ – customers/ products that do/can make top dollar for you,
- the ‘Eaters’ – customers/ products that use up too much resources for the money produced.
Migrate your business activities so that all you do is centred on the Earners.
To achieve this ask:
- What steps do I need to follow (in outline)?
- What is the first step (specific details)?
Make sure that the first step is easy – and do it. The biggest problem in implementing change is beginning. Once you have made a start it is easier to continue.
You have just followed a ‘strategic planning’ process that is no different in concept and outcome to the process followed by the most successful businesses in the world.
Perhaps this is your first step to take your place amongst them.
Neville Lake is the author of five books including the recently published “The Strategic Planning Workbook”, and “The Customer Service Workbook” which are part of the Sunday Times series of management books. Neville has visited over 50 work best practice organisations, has consulted to over 80 businesses and has presented to over 50,000 people around the world. Visit Neville on www.lakegroup.com.au for free online videos and articles.
Peter Townsend BS, LLB, FAICD
Peter Townsend Business Lawyers
The Clarence Street Professional Group
Level 3 – 222 Clarence Street
SYDNEY NSW 2000