Eighteen questions away from a better business

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 they ask.

For example, the last time you worried about the performance of your business you may have asked questions like, “How do I become more efficient or effective?” or “Where are there more business opportunities?” or “How can I hammer out some costs?”. These are great questions to ask — but these are not the questions.

To really make a difference to your profits and future position, you need to ask three kinds of questions:

* Possibility questions

* Focus questions

* Action questions

Possibility questions

Consider this question: “What is possible for my business?” The chances are that you do not have an immediate answer.

The absence of this answer means that too many businesses perform at a level that is below their true potential without ever really knowing what they failed to achieve.

To get the possibilities for your business clear, you need to draw a sub-optimisation graph like the one situated right.

Now you have to ask a number of questions that will lead you to the answer. Begin by asking, “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 could be like if everything is going well. It would be like having your best month over and over again.

This is a possible level of performance for your business, and — with some work — you could consistently reach this level. On the graph, the tall bar on the right represents your optimised state.

Now, ask “What would be the effect on the key measures for my business if I was able to achieve the optimised state for a year?”.

In the box next to the tall bar show the annualised effect on sales, profits, costs, and whatever other measures are critical to your business.

Next go to the short bar, and ask, “How well am I doing now?” and record your current performance on the same set of measures you used before.

You are probably (at best) no more than 80 per cent of your optimised state, and there is every chance that you are closer to 60 per cent of the possible level of performance for your business.

Now ask: “How much more money could I make if I was able to make the transition from my current to my optimised state?”

Calculate the amount by looking at the figures in the two measurement boxes, and enter the amount in the box with the dollar sign between the two bars.

The chances are that it’s a lot of money. You now need some focus questions to achieve this newfound level of performance.

Focus questions

The problem for most small/medium-sized businesses is not the lack of opportunity, but too much opportunity. A way to picture this is to think of all the opportunities available to your business as being enclosed in a circle — your circle of opportunity (see diagram, above).

However, you only have a limited amount of money available to you, and a finite number of hours to spend on your business. Picture this as a thin wedge. There is only one right place for your business within your circle, and to find this you need to ask some more questions.

Have a look at the optimised state that you have already identified, and use it as a springboard to ask the following questions.

* What makes my business unique?

* What do my customers value the 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?

* If I continue doing what I am doing now, will my business become the best that it could possibly be?

* What wastes my time and resources?

* What produces the lowest profits?

Take some time to explore these questions.

Collect the opinions of those who work for, and with you, and question some of your clients. When you have clear answers, you are ready to make a tough decision.

You are now 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.

Create two lists, and show everything that you are doing that is within your best position within your circle of opportunity, and everything that falls outside.

These lists show you how to focus effort to achieve a higher level of performance — now you have to make it happen with some action questions.

Action questions

What do you have to do to become the kind of business that you could be — and should be? Consider the information you have created so far and ask the following questions of specific customers and products:

* Which products/customers do I need that I do not have (introduce)?

* 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)?

Allocate to each product/customer you consider a score out of 10, 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 is not at all critical then allocate 1, and use a similar scoring criteria for ‘reducing’ and ‘eliminating’.

Now, put the results onto a table.

You can now circle all your high scores — this is what you need to do first to focus your business and get a step closer to your optimised state. For those items with a high score you can ask two further questions:

* What do I need to do?

* What is the first step?

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.

So, you have asked 18 powerful questions and created some insights that have led you to take action. 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 publishedThe Strategic Planning Workbook, which is part of theSunday Timesseries of management books.