Most business owners deliver an excellent product, but know little about running a business. This is what you need to know.

Its very clear that there are many many business owners who deliver a terrific product or service. They are passionate, effective and deliver a terrific product or service. Not always on time, not always completely but overall I believe there are many effective business owners who know their specialty and can deliver what is asked of them.

But do they know anything about their business? Most have not a clue.

I ask the following questions of business owners all the time and receive blank stares and glossy eyes, as if they have left their body the moment I asked a business question… especially when the question has anything to do with numbers.

Here are some of the basic questions I ask, that every business owner should know:

1. What is gross revenue per month?

2. What will annual revenue be?

3. What is your gross profitability? Net profitability?

4. What is your break even point?

5. What is your payroll ratio to gross sales?

6. What is the productivity of your workforce?

7. How old are your receivables? Payables?

8. How many times are you turning your inventory per month, year?

9. How many new clients have you acquired each month?

10. What does your repeat business numbers say

Here are some of the non-numeric questions I ask, and it appears that with these I am speaking in a foreign language as most have no idea what I am talking about.

1. Do you have a business plan?

2. Do you have a marketing plan, a financial plan, an operational plan?

3. Do you provide a career path including training, reviews and incentives for your employees?

4. Do you get, read and understand your financial statements weekly, monthly, quarterly, annually?

5. Are you controlling your business by monitoring key indicators?

6. Do you have a flat organization or is it a pyramid type.

7. What type of organization are you, C-Corp, S-Corp LLC, partnership or proprietorship, and is it the best type of organization for your situation?

These and other questions along this line, are typically answered with blank stares. How can we reach our goals if we have no benchmarks to help us determine how we are doing? How can we control our business if we have no way of monitoring our progress and identifying and thus controlling losses and profits.

When will the small business owners come to understand that working hard and doing your best is a failing plan. The only plan that works is a written, monitored and controlled, well thought out plan and managing the plan with all the questions asked above and answered on a regular basis. This is what an owner should do:

Track, Monitor and Control

Plan, Train and Review

These are the functions business owners should be involved in and as we grow our business. The track, monitor and control functions should become the objectives of your managers with the owners oversight while the train, plan and review process is a responsibility of senior management, the owner.

Instead owners tend to micro manage and play far to integral a role in operations, missing the bigger picture they should be focusing on.

Think about it, and then adjust your ways.

Call me if you need any help.