Everyone in business is either providing a service or a product to a customer. For most business owners the early days are so busy trying to raise money, acquire customers, hire staff, deal with vendors, etc. that there’s very little time to reflect on the business itself. But this is a critical step to make sure you’re not spinning your wheels expending a lot of energy but not actually making progress.
How much do you really know about your product/service from a business rather than an operational perspective? Here are 5 questions you need to know the answers to:
- How many products/services do you sell per month?– Have you put a system in place to track this? If you have physical products do you consistently do a stock count, or do you just keep replenishing stock/inventory when you find you’ve run out? If you’re a service provider, do you track your service offerings? For instance, if as a photographer I have a bouquet of services covering weddings, studio shots, parties, etc. I should be tracking how much of each I sell per month.
- What is your best-selling product/product range?– If you do (1) above then it’ll be fairly easy to answer this question. Why you need to know this is because you have limited resources and so this information helps you channel your resources in the direction that will give you the best results. In our photographer example, tracking this may make it clear that parties may take up the most of your time, but studio shots make you more money. This helps you be more effective in balancing your time and resources. For instance, you could focus on the studio shots for a period and delegate the party shots to someone you trust and share revenues, or the other way round. Bottom line is you have clarity on where to focus your energies.
- Who are your regular suppliers/service providers? – Your suppliers/service providers can make or break your business. Imagine having a huge clientele but issues with your suppliers are causing you to miss deadlines? How well do you manage your suppliers, do you pay upfront/on time or are you always late with their payments? What arrangements can you come to in getting them to supply on credit so you’re not under cash pressure?
- How long does it take to turn your product/service to cash? – You’ve gone through the process and created a product/service offering, started your business and got people to buy your product/service. Then people start asking you for credit… and before you know it, you’ve sold in theory, but it’s not reflecting in your bank account. You need to take time to analyze how long it actually takes to turn your products to cash – should you start demanding advance payments (either in full/part), if you do give credit should you start putting mechanisms in place for collections? How easy have you made it for your customers to pay you remotely? Businesses don’t go bust because they’re not making huge profits, they go bust because of lack of liquidity.
- How does your product get into your customer’s hands? – How easy is it for your customers to access your product/service? Do you make them jump through hoops or is it simple? If you offer physical products do you have delivery options or must the customer always come to you? Can they order online? Remember there are many things competing for your customer’s attention and funds so you must consciously make this as easy as possible.
Take some time to think through these questions at least once a month so you can continuously fine-tune your processes and make yourself invaluable to your customers.