Business Questions That Will Help You Evaluate It Objectively

Contents:

• Is our revenue dynamics random or controlled?
• What will we do if we don’t meet the sales plan?
• Is our revenue growth the company’s growth?
• Does our business depend on large clients?
• What will happen if the crisis ends?
• Isn’t it time for us to introduce automation, robotics, and AI?
• What percentage of ideas are ultimately worked out and implemented?
• Is the company ready for ambitious goals, or is it better to slow down and bring everything in order? Is it okay?
• Does business depend too much on specific people?
• What happens to the company if the founder is suddenly unable to manage its affairs?

Zoya Strelkova, Head of the Company Economics Department at ARB Pro, shared her views on current issues in the field of economics. Her expert opinion is essential for understanding current trends and challenges facing companies today.

At first glance, a company may appear positive: large clients, growing revenue, and a team of highly qualified specialists. However, behind this favorable façade, serious problems may lurk that could negatively impact the sustainability of the business. It is important to conduct a regular analysis of the internal structure to identify potential risks and eliminate them before they become critical. Transparency and openness in management not only help maintain a reputation but also ensure the long-term success of the company.

In this article for the Skillbox Media "Business" editorial team, I will present 10 questions that will help you identify potential problems and address them promptly. These questions will help you conduct an in-depth analysis of the current processes in your business and identify weaknesses that require attention. An effective approach to problem solving contributes to improved business performance and increased competitiveness.

Is our revenue dynamics random or controlled?

Achieving success requires effort, but sometimes we are also lucky. For example, if a competitor is experiencing problems, this can lead to a large order that we never even dreamed of. As a result, our revenue increased by 50% compared to last year. However, the question arises: can we repeat this success next year? To do this, it is important to analyze the current market situation, identify new opportunities, and strengthen customer relationships to maintain stable growth and not depend on external factors.

When should you ask this question? This is relevant when creating sales plans. When planning for the next year, it is important to rely on real data, while excluding so-called "extremes" - significant successes and failures that are unlikely to be repeated in the future. This approach will help create more accurate and realistic forecasts for the successful achievement of sales plans next year.

If you don't ask this question, you risk creating an overly optimistic plan for next year. This can lead to failure to achieve the plan, which, in turn, will demotivate the team. It is important to set realistic goals to maintain a high level of motivation and trust within the team.

What will we do if we don't achieve the sales plan?

Most companies develop a sales plan, but few define in advance the actions to be taken in case of failure. Managers often perceive the fulfillment or failure of the plan as something uncertain, relying on luck. It is important to create a clear strategy that will include alternative measures and an analysis of the reasons why the plan may not be achieved. This will not only minimize risks but also improve the team's effectiveness. Developing backup plans and regularly monitoring progress will help companies stay on track to achieve their goals.

The question of when to ask key sales questions should arise annually at a strategic sessions where the company's strategic goals are formed. This process must be continued monthly, when plans are adjusted. It is important to understand what can go wrong and what measures can be taken to increase sales, besides applying significant discounts. As in football, pre-developed and tested strategies contribute to the successful achievement of goals. Effective solutions and a creative approach can significantly improve sales results and strengthen the company's position in the market.

If you don't ask this question, there is a risk that expenses will exceed income, which can lead to losses for the company. It is important to monitor the balance between the expense plan and the sales plan to avoid financial difficulties. Effective budget management and revenue forecasting are critical to business sustainability.

Is our revenue growth the company's growth?

In 2024-2025, the main driver of revenue growth will be price increases. At first glance, the indicators look promising - revenue is indeed increasing. However, true company growth lies in increasing the number of customers and the volume of purchases per customer. Sustainable business development requires not only price increases but also active efforts to attract new customers and maintain the loyalty of existing ones.

It's important to ask this question when summing up the reporting period. It's essential to analyze revenue in detail, breaking it down into components, to identify areas of company growth and areas where stagnation is occurring. This approach will allow you to better understand financial results and develop a strategy for further development.

Failure to ask this question can miss undesirable phenomena, such as customer churn and a decrease in average order value when customers begin purchasing fewer items from your product range. As a result, you won't be able to promptly detect negative trends among customers, which will lead to ignoring emerging problems. This can lead to significant consequences that will subsequently need to be actively addressed. Regular monitoring and analysis of customer behavior helps prevent such situations and ensure stable business growth.

Is our business dependent on large clients?

If one client's share of a company's revenue exceeds 10%, this indicates the business's dependence on that client. This situation can be risky: the loss of a key client will lead to significant financial losses. However, the client, recognizing its importance, can use this knowledge to its advantage. A sustainable business should strive to diversify its customer base to minimize risks and ensure income stability.

When should you ask this question? It is relevant when analyzing the results of the period and making plans for the future. If we have managed to attract one large client, this indicates that we are capable of attracting others. It is important to discuss target clients and develop a strategy for initiating cooperation with them. This approach will not only increase the client base, but also improve the overall efficiency of the business.

Ignoring this question can lead to a situation where by the time the dependence on one client reaches a critical point, the company will not even have a strategy for attracting new large clients. This creates risks for the business and can threaten its stability in the market. Developing a clear plan to attract diverse clients and reduce dependence on one source of income becomes necessary for the successful development of the company.

What will happen if the crisis is over?

We are waiting for more stable times to come. However, the question arises: will we lose some of our sources of income during this period? How will demand for our product change if foreign companies return to the market after pausing or reducing investment in 2022? It's also worth considering how we will be affected by the mass exodus of citizens abroad instead of vacationing at Russian resorts. Are we prepared for such changes, and how can we adapt to the new conditions?

The question of strategic planning should be asked annually at a strategic session. It is recommended to develop three scenarios: optimistic, pessimistic, and most likely. This will help the team better prepare for possible changes and respond effectively to challenges. Working through various scenarios facilitates a more in-depth analysis of the situation and allows us to identify possible development paths in advance.

By failing to ask this question, the company risks stalling its development. In the absence of serious competitors, it may lose motivation to improve and update its product, which is currently successfully sold only due to the lack of alternatives. This can lead to stagnation and a decrease in consumer interest, which will ultimately negatively impact the company's position in the market.

Is it time to implement automation, robotics, and AI?

The introduction of new technologies into business processes is often associated with high costs, long implementation periods, and a lack of immediate results. This forces company leaders to carefully examine new solutions, but at the same time, they are reluctant to invest in them themselves. However, technology continues to evolve, reliable contractors appear on the market, and the cost of qualified employees increases, while their efficiency does not always improve. Therefore, it is important to find optimal ways to integrate modern technologies to improve business competitiveness and minimize implementation costs.

When should you consider investing in automation? This is important to do annually, analyzing actual revenues and expenses, and creating a budget. To decide on investments in automation, it is necessary to evaluate not only the financial feasibility but also the potential benefits for the business. These benefits include reduced staffing requirements, fewer human errors, and increased order processing speed. These aspects not only help optimize costs but also improve the overall efficiency of the company.

If you fail to consider the feasibility of automation, the company risks missing a crucial opportunity when implementing automated processes can significantly enhance its competitiveness. Continuing to work manually not only increases costs but also wastes time, which can lead to the loss of customers and a decline in market share. Automation optimizes workflows, reduces task completion time, and lowers costs, which ultimately contributes to increased profits and improved market position.

What percentage of ideas are ultimately developed and implemented?

Russian entrepreneurs are overflowing with ideas. If a manager actively participates in seminars and conferences and maintains communication with colleagues and partners, they can generate dozens of new ideas every month. These ideas are shared with the team, but what happens after that? It's important not only to generate ideas but also to effectively implement them so they benefit the company and drive business growth. Teamwork and support for employee initiatives are key factors in the successful implementation of ideas. Effective communication within the team and the implementation of innovative solutions can significantly improve a company's competitiveness in the market.

It is recommended to ask this question at least quarterly. It is important to compile a list of all ideas and assignments delegated to the team and request information from those responsible on the results achieved. The outcome should be measured not only by the successful implementation of an idea, but also by instances where an idea was developed but deemed irrelevant. This will allow for more effective project and resource management, as well as identifying areas requiring additional attention.

Failure to ask this question can have serious consequences. When employees are constantly faced with new ideas that are not monitored or clearly implemented, they begin to perceive management initiatives as unimportant and unnecessary. As a result, the chances of successful implementation of ideas are significantly reduced. An employee will only pay attention to those offers that are interesting to them and align with their personal plans. This can lead to a decrease in the overall effectiveness of the team and the loss of important opportunities for business development.

Is the company ready for ambitious goals, or is it better to slow down and get things in order?

With the cooling Russian and global economies, companies are facing difficulties in achieving business growth. Increasing the customer base by 50% or switching from equipment sales to engineering become serious challenges for all departments of the organization. Effective marketing strategies and business process optimization can help overcome these difficulties and achieve goals. It is important to adapt to market changes and use modern tools to attract new customers and increase competitiveness.

Are there issues with the accounting system that prevent you from obtaining accurate profitability data? Or perhaps your warehouse is not automated, leading to delays in sending orders to customers? Increasing volumes with inefficient infrastructure can lead to serious problems and even business collapse. It is important to optimize processes and implement modern solutions to avoid negative consequences and ensure stable growth.

The feasibility of goals should be addressed annually at a strategic session. When formulating ambitious goals, it's important to conduct an analysis of all departments' performance in advance. This includes assessing their effectiveness in achieving current tasks and identifying complaints from external clients and internal users. This approach will allow for a more precise identification of areas for improvement and the achievement of goals.

Failing to ask important questions about production capabilities can have serious consequences. At one plant, designers decided to change the shape of a shrink-wrap bottle cap and created a trial run that looked very attractive. The new design was presented to customers, and they began placing orders. However, it soon became clear that the trial run had been hand-made, and the caps were shrinking over a teapot. As a result, the necessary equipment for mass production was not available. This incident highlights the importance of conducting a preliminary analysis of production capabilities and technical equipment before implementing new designs.

Uncomfortable situations can arise in any department of a company. These moments can impact the work environment and communication within the team. It is important to be able to effectively manage such situations to minimize their negative impact on productivity and employee morale. Proper communication and openness will help overcome awkwardness and strengthen teamwork.

Is the business too dependent on specific people?

An entire plant may depend on a single technologist who is the only one who knows how to configure complex equipment. Similarly, among programmers, there may be only one specialist with knowledge of a custom information system. This "key figure" becomes a bottleneck where the process stalls and a source of risk for the entire organization. Eliminating dependence on such specialists is important for increasing efficiency and reducing potential problems. Optimizing processes and creating knowledge backups will help avoid negative consequences and make the company more resilient to change.

This question should be asked annually during a strategic session. Effective succession planning and developing a talent pool for key positions are essential for sustainable business growth. Without such a system, the company risks facing problems associated with a shortage of qualified specialists and a loss of competitive advantage. Regularly updating talent management strategies allows organizations to adapt to market changes and ensure long-term stability. Failure to address this issue will sooner or later lead to the risk of dependence on key employees, potentially paralyzing the business. The loss of a key specialist or their lack of knowledge and experience can negatively impact the company's operations. Therefore, it is important to proactively manage these risks, develop strategies to reduce dependence, and ensure the stability of business processes. A company's sustainability depends on being prepared for such challenges and having contingency plans. What happens to the company if the founder is suddenly unable to manage its affairs? Modern Russian business is just over 30 years old, and many companies remain under the control of their founders. However, no one can guarantee that they will be able to effectively manage a business for the long term. It is important not only to wish health for yourself and your team, but also to develop a strategy for the transfer of authority—both temporary and permanent. Having such a plan promotes business stability and sustainability, avoiding potential risks and ensuring a smooth management transition.

This question should be asked annually during a strategy session, when the team has a frank dialogue about the company's future.

If the question of the company's future without the founder is not addressed, as the leader ages, the team may begin to quietly speculate about possible scenarios associated with their absence. A lack of open discussion of this topic can lead employees to form their own assumptions, which can negatively impact their motivation and attitude toward work. This can lead to uncertainty and anxiety among team members, which ultimately impacts productivity and the company's atmosphere. Open dialogues about the future and succession plans will help reduce stress and build trust within the team.

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