5 Management Questions Business Leaders Need to Nail Every Day
Entrepreneurs and corporate leaders have a overwhelming amount of data to consider every day. Focusing on the wrong data or insignificant issues can hinder their performance as the strategic caretaker.
The constant swirl of daily challenges and 'fires' can easily distract managers from the fundamental imperatives. Owners and business leaders need to be on top of these issues not only for themselves, but for the benefit of board-of-directors, investors, and employees.
Here are 5 things to ensure you monitor constantly...no matter the effort.
1. What are the gross profit margins on your products and services?
Leaders need to know not only the monetary amounts but also the gross profit margin that each produce.
How does this compare to plan?
How does this compare to other product lines?
How does this compare to industry standards?
Is this supporting the overall strategy?
If you answer to a board-of-directors or executive committee, plan on answering these questions often. Keep the answers in your hip pocket. When this information is known, leaders better understand what provides the best ROI and what's most beneficial for the business.
2. Who is the competition, and how is my business different and/or better?
Keep on top of the market and competition. It's difficult to smartly communicate your value and competitive differentiation if YOU don't understand your own strength and weaknesses in the market.
A critical self-evaluation utilizing a SWOT analysis (or similar tool) is a perfect starting point. With this knowledge, business owners and leaders are better able to compare their business against the market...and then focus on the strengthens that customers truly value.
3. How much cash is needed each month?
If a company or business unit is mishandling cash flow, quarterly financials can be thrown off track. If a cash flow budget is not prepared, then company leadership may not be able to answer important fiduciary questions.
Furthermore, a monthly variance report should be prepared to understand accuracy and burn rate. This ensures that leaders understands the differences between the business' actual and predicted results. Small business owners and investors will be interested in ensuring there's enough cash available to pay the bills. Larger corporation will want to ensure the cash burn aligns with expectations and reporting.
4. How are you marketing your product or service now, and what changes do you see in the future?
Marketing strategy must change as products (and businesses) go through expected life cycles. Companies, large and small, should plan for such product lifecycle needs in a product success plan that we detailed in a previous article. Marketing plans that worked during the initial rollout need to be revised as a business and/or product matures. Without a solid, contiguous plan, a business simply operates from day-to-day without any strategic direction for the future.
5. How would you use any available or added funding?
Business leader needs to be constantly looking forward to where investment is best served. Managers need to act when opportunity arises...don't be caught 'flat-footed.' Whether additional funds are provided by the corporation or secured through lenders/investors, business leaders should have a ready plan for success. Hesitation in answering could jeopardize an opportunity to secure available funds.
While strategic stewardship isn't limited to 5 questions, the ones listed above are some of the fundamental, day-to-day imperatives facing business leadership that should not be overlooked.