What you are about to read is for anyone trying to make money, create a job or get a better one.
If you’re losing sleep over your livelihood, here’s some comforting news: As much and as fast as the world changes, the fundamental reasons for success and failure endure. To reckon with them, you have to ask the right questions.
I know, you’ve heard that line before and almost smacked the condescending jerk who said it. The truth is, though, “asking the right questions” is muchmore difficult, constructive and wallet-nourishing than it sounds.
Below is a modest stab at assembling the most important questions in business. After 14 years at Forbes studying companies young and old, with various business models and in a host of industries, I can safely say that, if you dig deep enough, nearly every strategy, tactic and in-the-trenches decision stems from the answers to these questions. Each case study has its nuances—business is ultimately about people, and no two are alike, let alone entire management teams, client lists and corporate cultures. Yet it turns out, as in fiction, that there are only so many plot lines to go around.
In an age when vast fortunes are amassed in a heartbeat (see Instagram,an 18-month-old photo-sharing service, bought in April by Facebook for $1 billion), it’s easy to forget that prospering over the long haul demands relentless focus on the fundamentals. This list is your reminder, your companion and your conscience.
The questions are grouped into three sections: “Under The Hood” deals with seminal issues like strategy, competitive advantage and financing; “Eyes On The Road” focuses on operations, management and personnel; and “New Gear” gets into growth, and what it takes to maintain it.
The logic here: Addressing the fundamental questions often involves wrestling with many aspects of business at the same time, so to group them by functional discipline (such as marketing, finance or HR) somewhat misses the point. (Note: I did not address obstacles like intractable corruption, violent currency swings and excessive government regulation—plagues essentially beyond anyone’s control, other than deciding where to do business, playing the futures market and hiring a lobbyist. Likewise, and with all due respect to Malcolm Gladwell, I’ve also ignored the-being-at-the-right-place-at-the-right-time effect which, while real enough, isn’t much of a strategy.)
Many of these questions should be familiar, but don’t get complacent: If the answers come too easy, you probably haven’t thought about them hard enough lately. Keep pushing and I promise that you will be a greater asset to the company you work for, the company you hope to start, or the company you already run.
Have great questions to add? Please comment on this post.With any luck we’ll assemble the definitive road map, grow out of our gaping fiscal hole and sleep better at night. After all, business is hard enough—even when you know the right questions to ask.
Here are 23:
Under The Hood
1. How committed am I?
This one trumps all the rest, and getting to a meaningful answer involves some serious self-honesty.
Commitment comes from motivation—the fuel you need to get really good at something. One of my mentors liked to say that working journalists had to publish 100,000 words (that’s roughly 140 one-page stories in Forbes) before they got the hang of their craft. Analysts at investment banks suffer two years of 80-hour weeks learning to build financial models; neurosurgeons slog through 12 years of training; Yo Yo Ma has practiced cello for something like 50,000 hours thus far (nearly 14 years worth of 10-hour days). Michael Jordan is so competitive that, during his Hall Of Fame induction speech in 2009, he chided his coach for playing teammate Leroy Smith ahead of him on the varsity squad—and invited Smith to the speech for good measure.
What motivates you? Funding your kids’ education? A second home near salt water? The need to make a difference? Sheer pride? There are no feel-good answers, only authentic ones.
2. What’s my value proposition?
This article began by identifying its audience and what they stood to gain from reading it. That’s what business-school types call a “value proposition”—fancy wording for “why the hell you should spend money and time on my product or service.” Every company, project and employee should have a value prop—preferably a clear and measurable one—though plenty are wanting. Chew on yours a bit. In question No. 5 I’ll show you why the answer may not be what you think it is.
3. Am I clearly communicating my value proposition?
You should be able to explain—in three sentences your senile grandmother could understand—why customers need what you’re selling. If you can’t, you’re in big trouble: The reality is (and don’t take it personally) no one really cares about what you do. You have to make them care. This is as important as offering something worth caring about, which is why it’s not folded into the previous question.
PowerPoint presentations are nice (actually, most aren’t), but you should know your value prop so cold, and be able to deliver it so compellingly, that you can grab someone’s attention in the amount of time it takes to ride an elevator with them. Whatever you do, don’t freight your elevator pitch with meaningless jargon like “robust solution,” “leveraging best practices,” and other gobbledygook found here: The Most Annoying, Pretentious And Useless Business Jargon.
Matt Hunckler knows the power of a good, quick pitch. Three years ago he founded Verge to connect tech startups in Indianopolis with software developers and investors. Every month Hunckler organizes a 200-person gathering, sponsored by tech companies and venture capital firms, where entrepreneurs make their case. (Attendance fee: $10). Presenters get all of five minutes to cover their value prop, the size of their potential market, any unique technology they’ve developed, and the quality of their management team. Says Huckler: “If the presenter is still talking at the 5-minute mark, all 200 people start a slow clap” to move them off the stage.
4. Is my product/service a real business?
What’s better: one hundredth of 1% of a $100 billion market, or 25% of a $40 million market? Of course they’re the same in dollar terms, but for whatever reasons capturing that thin slice of a massive pie might be much harder and less profitable than owning a fatter slice of a small one. As John De Puy, CEO of Oaktree Ventures, a San Diego-based venture capital firm, put it: “Define and dominate—that’s the secret sauce.”
The not-so-secret sauce is “scale.” Scalable businesses produce the next widget at minimal additional expense. Think software: Once Microsoft developed the code for its Windows operating system, the incremental cost of distributing each additional copy was miniscule. Service businesses, on the other hand, aren’t as scalable because the need for people generally increases with each additional client.
The lust for scale led to the tech wreck of 2000, but hope and hype are alive and kicking. The latest headline stealer: Pinterest, a social media site that lets visitors collect and share images on virtual pinboards. In nine months the site has attracted 18 million unique visitors per month; such scale is truly remarkable considering that new users have to bother requesting an invite to start pinning. While Pinterest has yet to demonstrate a viable business model (the site is free), that didn’t stop it from luring $27 million in venture capital last October.
5. What differentiates my product from the competition?
This one and the three that follow—all having to do with understanding and maintaining competitive advantage—come from the playbook of Michael Porter, professor at Harvard Business School and famed corporate strategist.
Having an advantage means delivering more value than your competitors do, in the form of lower prices (Wal-Mart), better design (Apple), instant gratification (Google), or some other tangible benefit. If someone tells you his company has no competition, that person is 1) naïve, 2) stupid, or 3) insane.(That’s why, as part of last year’s search for “America’s Most Promising Companies,” Forbes asked contenders to provide descriptions of up to three major competitors; companies that didn’t answer were discounted or discarded. For the full methodology behind the selection process, click here.)
Back to the warning in question No. 2: While your product may sell, what youthink makes it special may have little to do with what customers actuallycrave. Misdiagnosing that mismatch can lead to all sorts of bad strategic decisions. Clayton Christensen, another Harvard guy, demonstrates this point beautifully. In this video clip below, Christensen explains how he helped a fast-food chain sell more milkshakes by figuring out why people were buying them in the first place. It turned out that the answer had nothing to do with how thick and delicious the shakes were; it had to do with the “job” the shakes were being “hired” for.
6. How much power do my customers have?
Customers are good; crutches are not.
Delphi Automotive, the giant auto parts supplier, went bankrupt in 2005 despite generating $26 billion in annual revenue. A big reason: It served a few large customers who held so much sway that they could demand price cuts each passing year. (Delphi has since reorganized and went public last November.)
Movie theaters have enjoyed more pricing power. As Business Insider pointed out last August, ticket prices have outpaced inflation by more than half since 1999. (Manhattan moviegoers will pay $17 to see the new 3-D version ofTitanic.) One reason for the surge: Large, disaggregated audiences can’t easily organize and object en masse (the same reason shareholders in public companies have trouble quashing rich executive-pay packages). Now, thanks to video-on-demand and other services, the party may be slowing down: Annual box office receipts, not adjusted for inflation, fell the last two years, according to Box Office Mojo. That hasn’t happened in 20 years.
7. How much power do my suppliers have?
As with buyers, the more you rely on any one vendor, the tougher the terms he’ll eventually extract. That’s why America’s widening trade deficit with China is a big concern. China “supplies” the U.S. with capital so that Americans can keep buying its exports. If that trade gap grows large enough, the cost of renting that capital will spike, crimping America’s ability to pay for other stuff like education, infrastructure and scientific research. (This is worth losing sleep over.)
8. Does my business have a moat around it?
When investors use this expression, they want a sense of how easy it might before new competitors (as opposed to existing rivals) to steal your customers. Their concern cuts to capitalism’s core: If you’re smart enough to spy a profitable business opportunity, rest assured competition isn’t far behind. Or, instead of a direct competitor, maybe a substitute technology will come along (think what digital film did to Kodak). Some moats—patented technology, a storied brand—are more difficult to cross than others, but someone will always find a way to do the job faster, cheaper and better.
9. What’s my appetite for risk?
There are all kinds of commercial enterprises, from modest lifestyle businesses to publicly traded behemoths. The larger they are, the greater the risk—in dollars, time, reputation and ego. Be honest about how much you think you can stomach without making emotionally charged decisions or developing an ulcer.
A nasty recession didn’t stop the founders of EMM Group from building a luxury nightlife empire in New York City. In 2006 Eugene Remm and Mark Birnbaum opened Tenjune, a swanky nightclub in Manhattan’s Meatpacking District. The next year, as the economy started to unravel, Tenjune pulled in $12 million in revenue. But rather than take their money and run, the pair doubled down. On Sept. 15, 2008—the day Lehman Brothers filed for bankruptcy—they put down $2 million (their entire savings) for a three-floor restaurant-and-club space a block from Tenjune; with renovations and permits, the tab would climb to $7 million (they raised the other $5 million from Tenjune regulars). By April 2010 EMM Group was pulling in $30 million in revenue—including restaurants, lounges and a luxury concierge service—and hasn’t looked back. (For more, see “The New Kings Of New York Nightlife.”)
Not a swashbuckler? That doesn’t mean you can’t build a sizable business. Just ask Maryjo Cohen, chief executive of National Presto Industries, eclectic manufacturer of kitchen appliances, bullets and diapers. For years Cohen hoarded cash and government bonds—in 1999, as oceans of cheap money sloshed about, National Presto’s cash and securities accounted for 80% of its assets. When stock analysts pressured Cohen to hit quarterly earnings targets, she told them to get lost. “For all her wealth, Cohen lives with her mom in the three-bedroom, poured-concrete house in Eau Clair [Wisconsin] where she grew up,” reported Forbes in October 2009. “She flies coach, stays at Holiday Inns…and has yet to upgrade from dial-up service for her home computer.” Cohen got the last laugh: When the market turned, National Presto’s pristine balance sheet allowed it to make timely acquisitions and add equipment (see “National Presto (Finally) Opens Its Wallet”). In the last 12 months the company netted $48 million on $431 million in sales; since 1999 its stock price has doubled, to $72 a share, while the S&P 500 advanced just 4%.
Whatever your appetite for risk, there will be setbacks. Expect them, adjust and move on. As the saying goes: “If your uniform isn’t dirty, you didn’t play.”
10. What’s the smartest way to fund my operation?
Not all investment capital is created equal. Generally, using your own is expensive but clean; using someone else’s is cheaper but messier. (President Obama aims to make the second way easier by passing the new Jumpstart Our Business Startups Act, which eases financial disclosure rules for small companies looking to sell shares to the public—we’ll see how that pans out.)
Getting the most out of limited capital takes brains, imagination and chutzpah. Brad Harlow, chief executive of Physiosonics, maker of blood-flow monitors in Bellevue, Wa., nearly folded up shop twice a few years ago. To keep his startup afloat, Harlow pitted his investors—including two giant medical-device rivals, Johnson & Johnson and Medtronic—against each other in the capital pecking order and gave neither first rights to buy him out. Now that’s brash. (Read the full story here: “Awkward Bedfellows”.)
Then there’s Alan Martin, fresh-faced founder of CampusBookRentals.com (a member of Forbes’America’s Most Promising Companies list). In the teeth of the 2008 financial crisis, Martin quit his job and loaded up six credit cards—simultaneously, so the card companies wouldn’t balk—to raise $250,000 to launch an online textbook-rental company. (Oh, and his wife was 4-months pregnant at the time.) Last year CampusBookRentals was on pace to do $29 million in annual revenue. Here’s a video of Martin taking a lesson on growth strategy from pet-food titan Clay Mathile, who sold Iams Co. to Proctor & Gamble for $2.3 billion in 1999.)
Gavin McClurg liked captaining sailboats but didn’t want the hassle of selling weekly charters; he also didn’t have the money to buy a vessel. So a few years ago he created a floating time-share resort aboard a $1.2 million, 57-foot catamaran. Investors in Offshore Odysseys put up $20,000 to $30,000 per share, plus annual fees; McClurg took a cut of the fees and kept a slice of equity in the cat, named Discovery. Good work if you can get it, and he did. (For a complete breakdown of McClurg’s business model, check out Offshore Odysseys Is No Typical Timeshare Operator.”)
There are textbooks galore on the merits of debt, equity and everything in between. The point of these examples and countless others: Where there’s a will, there’s a financial way.
11. Am I outsourcing the right tasks?
Charles Wheelan , public policy professor at University of Chicago, elegantly captured the concept of comparative advantage. In his excellent Naked Economics: Undressing the Dismal Science, Wheelan wrote:
“Many engineers live in Seattle. These men and women have doctorates in mechanical engineering and probably know more about manufacturing shoes and shirts than nearly anyone in Bangladesh. So why would we buy imported shirts and shoes made by poorly educated workers in Bangladesh? Because our Seattle engineers also know how to design and manufacture commercial airplanes. Indeed, that is what they do best, meaning that making jets creates the most value for their time. Importing shirts from Bangladesh frees them up to do this, and the world is better for it.”
But sometimes “what you do best” isn’t the only criteria for choosing which tasks to keep in-house. Consider Crestron Electronics, maker of automation devices (light, sound and temperature controls) for homes, offices and yachts. Four decades after opening above a delicatessen in Rocklegh, NJ, founder George Feldstein’s company pulls in $500 million in revenue. Soldering components onto circuit boards isn’t terribly difficult, yet Crestron still manufactures 80% of its 1,500 products in the U.S. Why not save a few bucks and send much of that work overseas? “When the economy went south we brought everything in-house and paid more for it, rather than lay people off,” Feldstein told Forbes last November. “People don’t realize the importance of continuity of labor.”At Crestron, experienced assembly-line workers earn $17 an hour, more than double the state’s $7.25 minimum wage and better than the $14.90 State of New Jersey average for electronic-equipment assembly jobs. Translation: Building in-house was about strategy, not labor rates. (For more, see “Crestron Electronics: A Made-In-America Success Story.”)
On the flipside, you might think peddling new technology requires a gifted in-house sales staff. Robert Pera, founder of Ubiquiti Networks, maker of wireless-networking gear, takes a far more stripped-down approach. WhenForbes checked in with Ubiquiti in January, the company boasted 26% net margins, the highest of any publicly traded computer hardware firm; Apple, Pera’s former employer, came in second at 24%. How to get fat margins in a commodity-like manufacturing business? Outsource the sales function.“In Pera’s view, star salespeople have their own interests at heart, not their employer’s,” wrote Forbes Senior Editor Kerry Dolan. “Ubiquiti instead leans on some 50 distributors and hundreds of smaller re-sellers around the world. That’s right: Pera carries no direct sales force and he operates globally.” He’s made a mint, too: Ubiquiti’s share price has doubled since the company’s IPO last October, making Pera’s 64% stake worth a recent $1.9 billion on paper.(For more, check out “Silicon Valley’s Newest Billionaire: Wireless Wonder Robert Pera”.)
12. Who is my role model?
Somewhere, someone is “doing it right” in your industry. Investors (and employers) want to know you’ve thought hard about whothose companies are and why specifically they are setting the standard you aim to beat.
Eyes On The Road
13. Am I measuring the right things?
Sales growth, gross margins, inventory turns and cash flow capture the status of an enterprise. But to understand how to improve a business you have to look beneath the financials—and no one cheat sheet of metrics works for all industries.
In late 2009, Lumber Liquidators, vendor of hardwood flooring for homes, was weathering the housing crisis in surprisingly fine shape. One reason: It kept a close eye on customers who requested product samples—they proved 30% more likely to buy flooring within the following month. This metric was so crucial that store managers received annual bonuses based in part on how many samples they distributed. (For more,see “Hardwood Hero.”)
Marc Lore, co-founder of Quidsi, the company behind online retail sites Diapers.com (baby gear), BeautyBar.com (cosmetics) and Wag.com (pet care), mines scads of data. To improve customer service at Diapers.com, Lore tracked hourly call and e-mail volume against the time it took his service reps to respond (see “Diapers.com Rocks Online Retailing”). He found that too few reps were on-hand during off-hours—basically, he was giving money away. It’s those kinds of discoveries that eventually enticed Amazon.com to buy Quidsi for $545 million in 2010.
Sometimes it’s not easy to know which metrics you should be measuring—or how to make use of them. Publishers can attest to that. As the supply of content has exploded online, the price even well established brands can charge to corral an audience has plummeted. (That’s the problem with infinite inventory—price eventually goes to zero.) Worse, advertisers now can finally see what they’re getting—or not getting—for their ad budgets. While the ostensible audience for their ads might be large, the percentage of readers who click on them is still paltry. Hence the publishing industry’s current scramble to come up with a compelling metric that captures readers’ “engagement” on their sites—an amalgam of benchmarks including the number of pages visited, time spent on the site, etc. The more engaged readers are, the more likely they’ll absorb an ad’s message, and the more money advertisers might pay to run it—or so publishers hope.
Say you want to learn more about what your customers like or don’t. Online surveys are cheap, but gathering meaningful data is tricky. The difference between good data and bad is in how you ask the questions, says Kern Lewis, owner of GrowthFocus, a small-business marketing consultancy in Castro Valley, Calif. For example, if you ask people if they prefer great quality at a low price, of course they’ll say “Yes”; in reality, though, they may be willing to accept lower quality at a price that still keeps your business in the black. (Crafting surveys is a discipline all its own: For a clear case study in building one that yields actionable data, check out Lewis’ column“Mastering The Art Of The Online Survey.”)
14. Do I have the right people?
If the questions had to be ranked, this one would make the top three.
Bruce Poon Tip built a $160-million (sales) adventure-travel company by learning how to give up control and let his lieutenants lead. That meant looking beyond his network of pals for help and recruiting people who knew how to mind the metrics—“people I hate,” he quipped. The search was painful, the tweaking constant (see “Cracking The Founder’s Dilemma”), but there’s no substitute for having the right people.
And the right mix. Tom Ryan and Dave Prokupek, founders of fast-growing patty chain Smashburger, are a rather complementary pair. Ryan is the product guy, with a masters degree in lipid toxicology and fragrance chemistry. “There’s so much technology behind ketchup and mayonnaise…I was always fascinated by that,” he told Forbes last November. Propupek looks after the business side: He susses out new locations, deals with the back-office and tracks customer feedback. The result: “Meet America’s Most Promising Company: Smashburger.”
Sometimes you have to ax a smart employee who constantly complains about how management is messing up, notes Ben Horowitz, co-founder of venture capital firm Andreessen Horowitz. “Often it’s very difficult to turn these kinds of cases around,” he wrote (see“Time To Fire The Talent?”). “Once an employee takes a public stance, the social pressure for him to be consistent is enormous.”
Having the right people also includes cultivating outside advisors whose opinions you respect and who aren’t afraid to share them—assuming you’ll listen. “Entrepreneurs by nature are anti-authoritarian juvenile delinquents,” points out Steven Berglas, psychologist and executive coach for 30 years. “Taking advice isn’t their thing.” The selectively deaf might want to read “Learning The Art Of Listening.”
15. Are incentives aligned with business goals?
For good or ill, you inevitably get what you incentivize. If you want repeat revenue, tie bonus pay to customer-satisfaction forms. If you want to crank up mortgage-processing fees, don’t ask borrowers for proof of income.
Good pay for good work is still a good formula. In the mid-1960s, Nucor Corp., then a struggling manufacturer of nuclear instruments (it twice went bankrupt), decided to make steel using smaller, electric-powered mills fed by scrap metal. Central to its strategy under new chief F. Kenneth Iverson: a bonus system based on weekly production—up to 60% of employees’ base pay. That was quite a change from Nucor’s established, union-heavy competitors. A half-century later, Nucor is one of the largest steelmakers in the U.S., with $20 billion in annual revenue, thanks in no small part to its compensation strategy.
Joe DePaolo built Signature Bank, in New York City, to $12 billion in assets in 13 years by poaching talented bankers with fat client lists (and by refusing to carry too many dicey mortgage-backed securities on its balance sheet). Their comp, too, is based on productivity measures, such as profitability of accounts and customer retention. In 2010 DePaolo told Forbes there are years when his best lieutenants take home more than he does (see “What It Takes To Run A Sound Commerical Bank”).
Recognition doesn’t always have to come from the top. Google employs a “Peer Bonus” system. Five times a quarter, Google staffers can award one of their colleagues a $175 bump for a job well done. That’ll build a bond or two.
Of course, plenty of companies can’t afford to shower their people in cash. That’s why, in 2010, Zao Yang walked away from an eight-figure restricted stock package at Zynga (the social gaming outfit) to launch BetterWorks. The company develops employee-perk programs that combine the buying power of Groupon, the recommendation engine of Amazon.com, and the communal nature of Facebook. With a few clicks, small companies can put money into an employee’s account to be spent on everything from sushi to dry cleaning—stuff that employees actually want. “Pay only goes so far,” John Foster, a senior VP at Hulu and BetterWorks’ first client, told Forbes last August (see “Perked Up”). “Perks and benefits are a great way to scale value.”
A closing dose of Duh!: If you want to get the best out of people (employees and colleagues) tell them “Thank you.” Maybe even ask how they’re doing and actually listen to the answer. It doesn’t cost a penny and yet it lifts spirits and builds trust.
16. Do I have the right customers?
The best clients aren’t only the paying kind. Like employees and vendors, some are better fits than others. Trying to make a few troublesome customers happy at the expense of many is a sure way to bleed cash.
Every company should have its own criteria for what makes a good customer. Jason Elkins, owner of Transparent Social Media, an online-marketing firm in Nashville, Tenn., started out (as most entrepreneurs do) working “with anyone with an idea and a budget. ”A few years in, though, Elkins now looks for clients bearing four specific traits:
–They are “entrepreneurially minded” (because social media marketing is relatively new, and customers have to be comfortable trying new ideas).
–They have a “serious commitment to customer service” (because social media, at bottom, is about building relationships).
–They have to value the notion of “giving back” (if not by funding a non-profit, then to some community cause or church).
–They have to be the “best in their field, region or industry” (no matter what industry they’re in).
Demanding as that sounds, P.E.S.T. Inc., a pest control company in Springfield, Tenn., fit the mold. Not that Elkins aims to dominate the pest-control niche: “We could leverage the success with P.E.S.T.,” he says. “but other pest-control companies aren’t P.E.S.T.”
Paying customers make life easier, of course. If you need help collecting from deadbeats, check out “Make Them Pay” from Robert Bovarnick, of Bovarnick& Associates, legal counsel to small and midsize businesses for nearly 30 years. One hardball trick, he offers: “Taking a security interest (in a business or personal property) may not get you paid today, but it may give you enough leverage to extract payment in the future. Example: Say a customer is six months behind. In exchange for not suing him today, you might agree to take a junior mortgage on his house.”
17. Are my assumptions still reasonable?
When an equity analyst, money manager or chief exec says something like “Sales at ABC Widgets will grow 20% over the next three years, ”they don’treally know if customers will keep lining up. It’s a guess—one based on a battery of assumptions about ABC, its competitors and the overall economy. If ABC’s new widget takes off, sales could soar; if interest rates rise (leaving less cash to reinvest in equipment or people), growth could sputter. Buying stocks, hiring employees, taking out a mortgage: All those financial decisions are based on assumptions about how the world will look in the future.
The best planners constantly reassess their assumptions—especially in tech-startup land, where every week is an eternity. At Y Combinator, vaunted startup incubator founded by venture capitalist Paul Graham, the development formula is fast and furious: Get your software up and running (bugs and all), gather feedback, adjust and grow. Graham’s mantra: “Put it out there and let users decide,” he told Forbes in a cover story in 2010 (see “The Disrupter In The Valley”). Y Combinator expects its budding entrepreneurs to have a working product, customers and revenue within three months.
Not all industries are as fast-paced and volatileas technology, but the lesson is that you don’t win by carving assumptions in concrete.
18. Do I have a good lawyer?
19. Am I truly harnessing technology?
Building a clean, intuitive Web site or mobile app is relatively easy; getting people to do what you want when they get there is still really tough. (Drunk gnats have longer attention spans than most people have online.)
With roughly 650 million sites vying for eyeballs now, rookie design mistakes like cluttered layouts, impenetrable blocks of text, befuddling navigation and buried phone numbers persist. (Evernote, maker of popular note-taking software for laptops and tablets, doesn’t bother to list its contact number anywhere on its site.) Haven’t rolled out a mobile friendly version of your site? Read this: “The Number Of Mobile Devices Will Exceed World’s Population By 2012 (& Other Shocking Figures).”
To get the most out of technology, you have to run tests. Bridgette Sexton, Google’s effervescent Global Entrepreneurship Manager, put it like this: “Divorce your Website, have multiple wives for awhile, and choose the best one later.”
Sexton recently walked through the wonders of Google Website Optimizer at an all-day seminar in Nashville, Tenn. (FLO Thinkery, a tech consultancy, organized the event, which attracted entrepreneurs from all over the state and beyond.) The Optimizer can test an audience’s response to just about anything—text, colors, location of images, calls to action (Buy Now! versus Learn More!)—and all for free. During the highlight of her presentation, Sexton asked the crowd to choose which design of Barack Obama’s website was more effective in getting people to contribute to his campaign in 2008. Most of us picked the worst-performing layout. Bottom line: Data rules.
Then there’s the social Web.Online marketing guru Neal Rodriguez acknowledges that so-called experts (like him) are only beginning to understand how to tap social networking’s true potential for business. “What none of us can afford is to stand by and watch it all unfold,” he says. “There’s money to be made, after all!” Rodriguez’s “Ten Myths About Social Networking For Business” and “The Definitive Guide To Selling More Of Anything Online” lay out tangible tactics any company can take right now—and you don’t need to be an “expert” to understand them.
20. Am I thinking big enough?
Here’s a trait so many business leaders I’ve met have in common: They set awesome goals. Not awesome as in, “We just took an awesome trip to Hawaii,” or “That sushi last night was awesome.” Awesome as in large, daunting, obscene.
Michael Bronfein has one. He wants to streamline the way medication gets to nursing homes, a $14 billion business that’s getting bigger: By 2025 seniors will account for 20% of the U.S. population, up from 14% today. Bronfein’s company, Remedi Senior Care makes money buying pills from drug companies, marking them up and shipping them to nursing homes. For 30 years this involved lots of people packing pills into batches of “bingo cards,” each containing one month’s worth of medication. Dispensing all those pills is extremely tedious: Some seniors take up to 12 different kinds a day, many of which look the same. Bronfein spent 15 years and $30 million to engineer a 50-foot-long, 20-foot-wide, dizzyingly complex conveyor-style robot that serves up plastic pouches containing pills individually wrapped and labeled for each nursing home resident. That saves nurses hours a day handing out medication and reduces the chance of dispensing the wrong pills.
Bronfein has made admirable strides (see “Drug Lord”, from May 2011), but those robots are expensive. So is convincing an entire industry to change the way it does business, especially given the potential liability issues. (There are 17,000 nursing homes in the U.S.; Remedi is in less than 2% of them.) Bronfein got some help last August when Centerbridge Partners, an investment firm in New York City, kicked in $300 million in fresh growth capital to fortify his robot army. Now that’s awesome.
21. Can the business function day-to-day without me?
If you want to run a growing company, or a division within one, the answer should be “Yes.” It means you have dependable people and processes in place. Billionaire Clay Mathile spent $130 million to create the Aileron Institute, in Dayton, Ohio, to teach entrepreneurs this very lesson. I spoke with Clay at length last year about what it takes to keep a small business growing. In short: Systems win, heroes don’t. (For more, see “The Billionaire Business Owner’s Playbook.”)
You’ll also need a strong bench. Andrew Sasson, who last November sold his Light Group nightlife empire to Morgans Hotel Group for $47 million, believes training starts at the lowest level—with the bussing staff. To have the honor of setting tables, dumping garbage and lighting cigars until 4 am, candidates must survive a grueling eight-day boot camp, including role-playing, sales seminars and written tests. All club managers must bus, among other tasks, before assuming their roles; the best bussers can climb into the management ranks. (Last fall Sasson let Forbes go undercover in busboy training at The Bank nightclub in Las Vegas’ Bellagio resort. Read Steven Bertoni’s breathless account here: “Inside The Vegas Party Machine.”)
Finding the time and money to train is getting harder as companies look to wring productivity from their operations. Invest now to avoid pain later.
22. Am I avoiding the tough decisions?
In the first season of Mad Men, Bert Cooper, eccentric head of fictional ad firm Sterling Cooper, lauds his star Don Draper for being, like Coop himself, “unsentimental about all the people who depend on our hard work.” It’s ahard line to hear, let alone swallow, and it’s a reminder of the granite resolve it takes to build growing enterprises.
Even the greatest leaders suffer from indecision. Executive coach Steven Berglas calls it “executive yips,” akin to the nerve-rattling doubt golfers get when standing over a short putt. “In most cases, folks who struggle with indecision have it bad,” says Berglas. In“Seven Ways To Conquer Indecision,” he offers some calming perspective and tangible advice, including:
“Plenty of talented people, even those who have made a killing, go to exhaustive lengths not to appear dumb. (For proof, read Paul Allen’s recent autobiography: The man has billions but still craves respect.) Actually, the smarter you are, the more likely your indecision is born of this anxiety. A kid building a startup can be wrong, fail and feel no shame: ‘I’m a kid…what do you expect?’ Not so for someone with an established reputation to protect. This fear of shame is pernicious, mainly because it’s useless. Let it go.”
23.Am I burned out?
Last year I asked five members of Forbes’ list of America’s Most Promising Companies the same question I’ve put to hundreds of business owners: “What keeps you guys going? ”Before I got the words out, Steve Spoonamore, founder and CEO of ABSMaterials, started laughing.
“It’s just balls-out fun,” he blurted. “Every time I get the pleasure of a nice exit, I sit around and after about three months I start bouncing around. There are people who love to sail the ocean or climb mountains, and more power to them—but it’s nowhere near as interesting as taking a technology nobody has heard of, finding a market for it and launching it to your customers. That’ssatisfying.”
That kind of wide-grin enthusiasm gets harder to keep as companies and careers grow. For many, burnout sets in. You can ward it off (see “How To Prevent Burnout?”), or you can go back to question No. 1 and reassess your commitment.
In fact, go back as often as you can. That’s what these questions are for.