Five concise questions for the entrepreneur
June 11, 2009 at 11:47 pm nbtventures 7 comments
I’ve been contemplating the questions that concisely define a business. These questions aren’t quantitative and are no substitute for a business plan, but any entrepreneur (or any executive, for that matter) should be able to answer them confidently and without equivocation:
- Who are you customers? (or, how do you know whether or not someone is your customer?)
- What products/services do you sell?
- Why does the customer buy your product/service rather than making/doing it themselves or buying it from someone else?
- How does your business generate a positive cash flow?
- How does your business generate value beyond revenue from sales?
So, gentle reader: what essential question would you add to this list?
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1.
Craig | June 12, 2009 at 1:16 am
How does the customer find (out about) you or your product/service?
2.
fearless_fool | June 12, 2009 at 6:09 am
Craig; I hadn’t considered that the way you market or promote could “concisely define a business”, but now I realize that’s a possibility. Burma Shave comes to mind…
Good call.
3.
Sonia Lyris | June 17, 2009 at 8:23 pm
Who is your team? Few of us do brilliant work solo.
4.
nbtventures | June 17, 2009 at 8:33 pm
Sonia:
Great to hear from you. I think choice of team is very (very) important, but I have a harder time believing that the team actually defines the business.
Most likely, I’ve mis-titled this thread: it should have been "five questions that define a business".
Agreed?
5.
Sonia Lyris | June 17, 2009 at 8:42 pm
There may be a difference between a start-up business, in which the team is critical, and an established business in which the processes and product are in place. Maybe.
My experience with startups is that without the right team, there simply is no business. Just try swapping out your entire team and see how it goes. For established business, that might not be as much the case, though I doubt even an established business can continue without blip if you swap out everyone. I’d be happy to find out how wrong I am when I have an established business.
6.
nbtventures | June 19, 2009 at 3:55 pm
Sonia:
I agree with you about the importance. But I want to stress the difference between a business (an organized way of making money) and a company (a collection of individuals that form a business).
I think you’re making a VERY good point about the importance of a team in making a healthy company. I’m trying to tease out the essentials attributes that define a business.
Yes?
7.
Sonia Lyris | June 20, 2009 at 1:47 am
Defining a start-up business is not the same thing as defining an on-going concern. I want to agree with you, I really do, yet while an established business may well be definable as a set of processes and resources that one (skilled) person can do (nearly) as well as another, an entreprenueral enterprise has so many ways to fail, and the actual actors have to be skilled and lucky and agile — and sometimes very foolish — to succeed. They are not interchangable in that phase the way they might be later on. (Indeed, later on, the business is often better off without them. Another subject.)
So, yes, I could be persuaded to agree with you that in an established business there is a useful distinction between the processes and resources that make money and the people who are making those things happen. For the start-up, I don’t quite buy it. For a start-up, the processes and the people are often creating each other on an on-going basis.
Since you asked for my opinion.