10 Questions SMBs Should Ask

We help businesses communicate.  Effective communication, at its heart, solves problems.

As small and medium-sized businesses (SMBs) strive for growth and success, they must ask the right questions. By proactively seeking answers to those questions, SMBs can identify potential pitfalls, make informed decisions, and pave the way for long-term success. In this guide, we present 10 essential questions that every SMB should focus on.

What Solution Does Your Business Offer?

When it comes to running a successful SMB, understanding the solution your business offers is fundamental. This question delves deep into the core purpose of your business and the value it brings to customers. By clearly defining your solution, you can effectively communicate your unique selling proposition and differentiate yourself from competitors.

To begin answering this question, it’s essential to have a deep understanding of your target market and their pain points. Identify the specific challenges or needs that your business addresses. Whether you provide a product or a service, consider how it solves a problem, fulfills a desire, or improves the lives of your customers.

How Can Your Business Generate Income?

This one may seem super obvious at first glance. You sell a thing, right? Whether it’s a physical widget or a piece of art or a service, you sell a thing.  However, take the time to dig a little deeper.  Do you also sell maintenance for the widget? Can you sell prints or mugs or sweatshirts with the piece of art? Are there complimentary services that you can package with your core offering? Can you get paid for removing a thing and then get paid again for delivering and installing that same thing?

When running a SMB, you need every income stream you can lay your hands on. Taking the time to dig for all the ways your business can generate an income stream quickly proves worth your time.

Which Parts Of Your Business Aren’t Profitable?

Some business functions don’t produce profit in and of themselves.  However, all of them should measurably contribute to the core income streams of the business.  For instance, a receptionist who routes calls doesn’t make sales, but definitely speeds business up and keeps customers, vendors, and distributors who call in happier.

So, ask what parts of your business bring consistent profit, and what parts aren’t contributing. Are there even some sections dragging your business down? More often than we know, a particular product or service line costs far more than it contributes.  Keep looking for what adds value to the total of your business, and what’s just sinking money into a pit.

Is Your Monthly Cash Flow Positive or Negative?

If your month to month cash flow is negative, you’re in trouble.  One profitable month does not make up for six months of losing money, once you subtract expenses from income.  People often get so caught up in gross revenues coming in that they forget to do the averaging math.

If your monthly cash flow is negative, strategize as quickly as possible to get it into the positive.  Adding income and eliminating unnecessary expenses is the core method, of course.  However, before cutting people’s jobs, look at canceling business subscriptions you don’t need, canceling leases that aren’t being used, and other possible sinkholes.  Software as a Service (SaaS) is one of the most popular business models at the moment, but too many businesses pay for unused users.

Why Is Your Pricing Strategy Set Up This Way?

The cost per unit is your fixed cost plus your variable cost divided by number of units.  Fixed costs are, well, fixed.  The taxes on the factory cost the same whether you sell 1,000 units or 1 million.  Variable costs represent the cost per unit.  One example is the materials it takes to make a physical widget.  Each widget takes so much plastic, or metal, or wood.  The more widgets you make, the more in materials you have to pay.

So, once you take all your costs per unit into account, you must then calculate in a level of profit for yourself.  When calculating that cost per unit, don’t forget to include ALL of the expenses.  Too many business owners forget to include the receptionist and customer service people’s salaries in the cost per unit, and so don’t price their product correctly.  If you base your pricing strategy based solely on what others in your field offer, you could be losing money.  Know why you price the way you do based on your own numbers.

What Is Your Customer Retention Rate?

It costs far more to get a customer than to keep a customer. With as much as Apple pays in marketing and advertising, it takes an average of three years for them to start making a profit on any individual customer. So, they must keep a customer for longer than three years in order to make any profit at all.

What is your cost per customer, and how long does it take you to get that cost back? You have to keep customers longer than that, or you’ll bleed money regardless of how big that gross revenue is.

How Effective Are Your Employees At Generating Revenue?

Each and every role in your company should have quantifiable success metrics.  Employees obviously want the company they work for to succeed. Make it easier on them by giving them objective benchmarks that explain what exactly success looks like.

If your employees are not as effective as they could be at generating revenue, process analysis, training, and standardization of tasks often fix that.

Will Your Customers Make Referrals?

Referrals are simultaneously the cheapest and most effective form of marketing there is.  If your customers are willing to make referrals for you, treasure them.  If your customers won’t, find out what you have to do in order to inspire them.

While referral rewards programs can come in quite handy, nothing will help if your customers don’t like your quality or customer service.  We suggest doing surveys, taking valuable clients out to lunch, whatever you have to do in order to find sticking points to making referrals.

Can You Identify Your Most And Least Valuable Customers?

The 80/20 rule represents one of the oldest truisms in business.  20 percent of your customers bring you 80 percent of your profit, and 80 percent of your customers bring 20 percent of your profit.  How do you identify and add to that most profitable 20 percent?

If you don’t already keep excellent customer records, take this as the sign to do so.  Ensure those customer records remain accessible and updated across all departments.  Customer relationship management (CRM) software like HubSpot and Salesforce represent the latest, greatest way to do that.

Is Your Marketing Effective?

Marketing represents the most expensive and least understood piece of the business puzzle.  Ensuring your marketing is effective on an ongoing basis gets tangled, to say the least.  Think of marketing like publishing your business as far and as wide as possible.

Honestly, the easiest way to ensure your marketing stays effective is to hire someone good at it, who can explain the relevant metrics to you in a sensible fashion.  They’ll toss around words like MRR (monthly recurring revenue), CPC (cost per customer), churn (how many customers you lose vs how many you gain), and other jargony phrases.  If you feel bamboozled, don’t hire that marketer.  If it all suddenly makes sense, you found a good one.  Then keep an eye on those numbers.

Why Is This Published By A Business Phone Company?

Here at NoContractVoIP, we believe that your success creates our success. And, since we specialize in business communication, we work to help you communicate better while staying safe. We create the cutting edge communication systems that modern companies need. And we geek out on tech stuff, so we study it for you.

To talk to a business phone system specialist and never worry about any of this again, call 866-550-0005 or contact us today.

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