Take Business on Main’s eight-question quiz to find out where you rate on our leadership scale for startup and small-business management. Choose the response that most closely matches your attitudes about business planning, cash management and employee performance. Then use our scoring key to see how your skills and strategies measure up.
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1. Setting company objectives
[5 points] We’ve survived the recession — that’s an accomplishment in itself.
[3 points] I did a complete business plan when I applied for my first loan at the time of startup. Now we do annual budgets that we give to our commercial lender. Success is when we beat our budget.
[1 point] We have a three-year plan and a more detailed one-year plan of key department initiatives. Our board and staff have signed off on it. If we meet this year’s targets, all employees get an extra bonus plus a celebration day at the local amusement park. Booyah!
2. The CEO’s workday
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[5 points] I hold everything together. Whatever needs to be done, I do.
[3 points] I have a lot of lists and know what needs to be done. If I had fewer interruptions, I’d get more accomplished.
[1 point] With our three-year plan in place, my top job is to find the capital, partnerships and right employees to reach our goals. I also make at least two calls each day to bring a new customer to our company. Everything else is secondary.
3. Employee alignment
[5 points] Employee reviews are too corporate, too “blue suit.” I don’t do them.
[3 points] We conduct reviews when we absolutely have to fire an employee. We want to avoid litigation by having the right paperwork in place. Otherwise, we conduct a three-month assessment for new employees or for employees who ask to be reviewed. We can’t really afford big raises.
[1 point] We conduct formal annual employee reviews each year, plus meet with employees each quarter to update priorities. The quarterly meetings give employees quality time to ask questions and offer ways to improve the company’s performance.
4. Managing underperforming employees
[5 points] I feel like I’m in the adult day care business. It’s impossible to find good employees these days.
[3 points] We’ve got some great employees and some others who can be unreliable. I’m worried about making changes that might upset other staff members.
[1 point] We can’t reach our company goals without everyone contributing at a high level. Since all employees meet with their bosses each quarter, the maximum amount of time we invest in an underperforming employee is nine months.
5. Using board members and advisors to get to the next level
[5 points] I don’t need a board; I can manage by myself without their interference.
[3 points] I have a highly supportive board that I trust. They’re always available to sign documents and show up for board meetings.
[1 point] My board challenges me to be a more effective, strategic leader and is available to help me sort through unexpected business problems.
6. Monitoring and taking control of cash
[5 points] I know exactly when our company needs extra cash because I have to pull money from my savings account or credit card to make payroll.
[3 points] My controller monitors our cash needs. It’s covered.
[1 point] I know exactly how much cash we collect and spend each week. Our sales reps and accounting staff are incentivized to avoid sales to deadbeats and collect outstanding invoices quickly.
7. Sales and promotions
[5 points] We need to increase our sales, so I’m going to spend more on advertising.
[3 points] We looked at last year’s promotions and know which initiatives were a complete waste of money and which ones are worth doing again.
[1 point] We don’t compete on price or discount our services to attract new business because our larger competitors will always be able to afford steeper discounts to price-sensitive shoppers. Our promotions are bonus-related to maintain our margins. Our customers think they’re getting more for their money, too.
8. Customer service
[5 points] Our customers can write to us through the Contact Us page on our website.
[3 points] We have a dedicated person to respond to customer service problems, plus we engage our customers to comment on our new research and development initiatives.
[1 point] Our customer service initiatives are company-wide. It’s part of everyone’s performance review — including mine! Customer service is our company’s best safety net because we can make mistakes anywhere or at anytime. Existing customer re-orders are our company’s most profitable business. It’s easier to retain customers by keeping them happy and treating them with respect — listening to their concerns and correcting problems — than it is trying to sell to complete strangers.
8 to 11
You’re living the dream of entrepreneurship. You set high standards for your business and seek out employees and advisors who want to collaborate, work hard and share the joy of achievement. Keep going.
12 to 29
Whether you’re a company of one or the boss of many employees, you’re selling your leadership capabilities short by not challenging yourself to set high standards for your company’s business performance. Usually, it’s not a matter of time or cash resources, but of confidence. Start by upgrading your board of directors and circle of mentors and advisors. Disclose all problems. Tell them what you want to achieve and ask them to hold you accountable for business results.
30 to 40
You know the saying: “It’s easy to get lost if you don’t know where you’re going.” It’s time to reinvent your business and your approach to business management. Before you invest another dime in your company, take the time to rethink where your company can carve out a prosperous position in your industry or geographic territory. Develop a detailed business plan that’s more than just a list of short-term initiatives to sell more customers. Startups advance only when every aspect of a company’s operations moves forward in a productive and complementary way.