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People who ask HOW work for people who ask WHY

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Ask WHY a lot more than HOW.

Here are six questions, in the order you should ask them, that will help you start, grow and build your business. The most important ones are the ones you ask least often.

90% of the answer is asking the right question. Are you asking the right questions? In the right order?

Successful business owners ask Who, What, Where, When, Why and How, much differently than reporters use them. TIMING (asking at the right stages) is very important, and the FOCUS of the question is, too.

Here’s the order in which you should ask them as you start, grow and build your business:

WHY – the most important, least asked question (in both the long and short term). Why are you doing this? What is the end game? If you don’t know why you are in business (it’s not the money, it’s never the money), or why you are buying that copier (“it’s shiny” is the wrong answer) you are done from the start. Everything starts and ends with WHY. Ask it EVERY TIME you ask one of the other questions if you want to be successful.

WHAT – the favorite question of the “craftsperson” – the easiest question to get lost in. We’re taught to ask this question first – “What am I selling?”. If you answer WHY first, you’re much more likely to come up with the right WHAT to sell. Know WHY, then ask WHAT.

WHO – Once you know WHY you are in business, and WHAT you are selling,
a) WHO is your target market (hint: it’s not everyone who can fog a mirror)?
b) WHO will work with you? (they don’t have to all be employees).
c) WHO will you buy supplies from?
The best answer to all of these is whoever will provide the lowest maintenance, highest profit culture for you. Ask WHO long before you actually need any of these people – it’s a culture question and if you don’t have a great grasp on WHO before you need them, you’ll hire for skills. Never hire for skills, only for culture.

WHERE – Has multiple long-term and short-term uses, but is rarely used well. Answer it after WHY, WHAT and WHO.
a) “Location” WHERE – used to get a lease
b) “Marketing” WHERE – Know WHO, than ask WHERE to find them? Make it about a) demographics, b) associations, c) strategic alliances, d) cohort groups (similar demographics). The best “Marketing WHERE”? – WHERE do most of your future clients come from? Invest there!
c) “Direction” WHERE – closely related to “WHY” (knowing WHY informs WHERE you are going. Knowing WHERE you are going only helps if you put a date on WHEN you will be there. WHERE ARE YOU GOING?? (WHY?) Extremely Important.
d) “Sane Assessment” WHERE – Do you know clearly where you are right now? a) Strengths/Challenges b) decision-making skills c) leadership style d) business strengths/challenges (market, product, revenue, profit, cashflow).

WHEN – one of the least asked, best questions. We don’t like WHEN because it holds us accountable to do something, which is why we should fall in love with it. Just like with WHY, ask WHEN every time you ask another question, and employ the Three-Step Decision-Making Process:
a) Make a decision (that is not a decision yet)
b) Put a date on it (when)
c) Go public – declare the date and ask someone to support you getting there.

HOW – the worst, most asked question in business planning. HOW is a buzz-kill; it focuses on the fear of the POSSIBLE, not the PROBABLE. It will uncover 127 things that COULD go wrong (possible) without telling you which four of the 127 WILL actually go wrong (probable). It also gets us involved in all kinds of nonsensical preventative planning for things that will never happen while we ignore the four things that are already a problem. HOW is paralyzing unless it is always used in conjunction with MOVEMENT and the other five questions. There are two uses of HOW, one bad, one good:
a) “Long-term HOW” – you should almost never use HOW to answer a long-term question, such as “How do we get all the way from where we are to where we want to be three years from now?” That’s fortune telling and voodoo. Business planners love this question, but no question is of lower value than “long-term HOW”.
b) “Short-term HOW” – this is actually a great question – “How do I get from where I am to the next step?”, because you are asking it about current realities that actually need a HOW to solve them. Use HOW for short-term implementation, not for long-range planning.

WHY, then WHEN; rarely HOW.
Ask WHY first. Always. Then get used to asking WHY and WHEN with every one of the other questions. Only ask HOW when addressing the next few steps. Never ask it about the distant future.

If you get in the habit of asking WHY and WHEN with every question, and asking HOW only about the next few steps, you’re much less likely to run into problems, and much more likely to build a great business.

Which one of these questions do you need to focus on right now in order to build your business? WHY? And WHEN will you act on it?

How to Start a Business

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Don’t follow MBA, SBA or SCORE advice.

The SBA’s SCORE site had a “how to start a business” blog recently, but the traditional MBA-style advice is too “ivory tower” to work. It’s both much simpler and a little harder than they make it sound.

The SCORE blog post says figure out 1)what you’ll do 2)who your competition is 3)your overhead 4)how much money you can make 5)your potential profits, and 6)your funding. If you follow these six steps, you’re almost certainly going to fail.

It’s well-meaning advice, but doesn’t reflect how it really works. I’ve started and grown seven businesses, two that are international and made enough mistakes to figure out some basics. Here’s how I would start a business:

1) Take your product or service to market, put a high price on it (it’s always easier to come down than go up) and see if someone will buy it. If this doesn’t work, don’t do any of the other steps above – they are a waste of time if you aren’t already selling something. And if it does work, most of the other steps above will force themselves on you at the appropriate time.

Finding someone to buy your product or service is the first and only thing you should do before you do anything else. It should have been #1 on the SCORE list.

2) DON’T do a business plan (steps 1-6 in the SCORE blog) – they are nonsense and fortune-telling, and they keep you from going out and trying to sell your product to see if you have something viable. They also make you think you know what you’re doing, which keeps you from seeing great opportunities and obstacles. And they uncover 127 things that COULD go wrong (not WILL go wrong), which causes you to spend precious time and resources mitigating things that will never happen, and paralyzing you with all the bad things that might happen if you go into business.

The second worst thing you can do starting a business is to do a business plan. The absolute worst thing you can do is follow it. Check out the story of Webvan – a $2billion startup that is the classic case of a company that built an incredibly elegant business plan with brilliant management, then followed it right off the end of the earth (and they didn’t do #1 above until they were $1 billion in debt). Do a 2-Page Strategic Plan instead.

3) Figure out your profit margins. How? See #1 above – sell something at as high a price as you can – well above your minimum margin. Again, you can always come down. I worked with one client whose product cost $.35 all in (including marketing). They made a few of them, put it on the market for $8.50 and it didn’t sell. Over a period of a couple months they got the price down to two for $6.50 and they sold like hotcakes. Once they knew that their margins were huge, they had real data to determine their profitability. Do not determine your profitability in the ivory tower of a business plan – it’s voodoo.

4) Never take outside money unless there is no other way. 84% of the Fortune 500 companies never took VC or other early stage funding. It’s a myth that you need money to grow your business. VCs want you to believe it’s a must because they want to grow your business REALLY FAST so they can sell it out from under you and run off with cash. They’re building cash cows, not businesses.

5) Do NOT figure out your competition. You don’t have any competition except your own head. Do NOT look at what other people are doing to find out how to be successful. If you don’t have enough creativity and uniqueness to enter the market without looking at what others are doing, you shouldn’t be in business. See my blog titled Your Competition, Isn’t.

Doing it Wrong and Fixing the Process
I worked with a business owner recently who made the mistake of consulting with SCORE and doing everything they recommended. He had 80+ products defined and produced, a warehouse, financing, a great retail location, and $250,000 in inventory. When he finally started taking his products to market, the market wanted them packaged in entirely different ways and amounts and at different price points, and about 70 of his products were not selling.

We recommended he dump the warehouse, the retail shop and 75 of his products, and get on an airplane to major retailers, get their feedback, and learn his “business plan” in the trenches. With this approach his overhead is nearly gone, and he is now making money and profit. He would have been out of business in six months the other way. He can build all that other stuff after he makes some money.

How to Start a Business – redux; Sell Something.
Real businesses do not start with thinking, planning, researching, compiling, statistical analysis, building a “great” product in a lab, marketing, vetting your competition, estimating your overhead or finding a possible funding source.

Real businesses don’t start that way – not HP, Apple, Honest Tea, Google, 37Signals, Facebook, a plumber, or just about any other real business you can name. Read Bill Hewlett’s quote under HP’s Early Days here – he went and sold something (a few really stupid things) – this is how you start a business.

Go sell something. If it doesn’t sell, do what Hewlett and Packard did, sell something else. Don’t do anything else first. Once you have something that sells, your “business plan” will unfold in front of you in real time, in the real world. It’s counter-intuitive and doesn’t follow the mantra of the MBAs or the SBA/SCORE who think you should get it all figured out ahead of time, but it’s the way real businesses are successful.

Stop planning – get selling (quickly and inexpensively, on a very small scale).