In his last book on management, before his death in 2005, noted management theorist Peter Drucker lists five questions that he insists must be answered if you want to succeed in your business, whether it’s the actual brick and mortar, or home-based business. But, before proceeding any further, a few words about who Drucker was. Drucker was a recipient of the Presidential Medal of Freedom, the highest award bestowed on a civilian in recognition of “an especially meritorious contribution to the security or national interests of the United States, world peace, cultural or other significant public or private endeavors.” This award was given in 2002 in recognition of his contribution to business and management, and the social sciences.
So, when it comes to business and management, Drucker knew whereof he speaks. Though he hated it, Drucker is often referred to as a management guru. His works challenged conventional and traditional management wisdom and shattered many long standing beliefs about how to run a successful business.
In this post I’m going to enumerate these five questions to provide you with a guide in your online business. Consider it a bit of online business training.
So, hereunder is the list. Take a look at it and see if you’ve gone into any of them and find out if you are on track with answering any or all of them..
1. What is your mission?
Here Drucker delves into the raison-de-etré of your business. Mission answers the question why you are in business. It is your business’ reason for being. He argues that having a written mission is important so you will always be reminded about why you exist. And, it is not something that you put away somewhere in your desk drawer. It must be prominently displayed and shared with the people who work with you – who share your vision.
He insists that the mission statement should be concise and sharply focused. “It should fit on a T-shirt,” those are his words.
Long-winded mission statements tend to lose focus when it gets into details about what the owner intends to do. These are things which should normally be included in strategies. This is one mistake entrepreneurs make. They include strategies in their mission statements. As Drucker points out – “the mission says why you do what you do, not the means by which you do it.” Put another way – “the mission says why you’re doing what you’re doing, not how you’re going to do it.”
2. Who is your customer?
It is important to know exactly who your customers are. Knowing your customers allow you to anticipate their needs. Answering this question provides a basis for determining what they value. Once you’ve answered this question, you can then focus on finding out what motivates them; what drives them. It is most important to do a research on your customers.
With specific customers in mind, your marketing efforts would be more focused and you would know exactly how to talk to them. The old advertising formula of AIDA doesn’t work anymore. AIDA is acronym for, Arouse Interest, encourage Decision, and push them to Action. This method is the shotgun approach to marketing. It simply pushes the product or service into the market, drumbeat it’s features and benefits and hope somebody notices. As St. Augustine once said, “you pray for miracles, but you work for results.”
3. What Does Your Customer Value?
Many business owners think that what is good for them would also be good for the customer. This is a dangerous assumption. Just because you think that what you offer as service or product answers your need doesn’t mean it does theirs. If your product or service doesn’t answer your customers’ needs no matter how good or excellent it is, you’re not going to make any sale. It’s just like diamonds in the desert, where lost travelers are hungry for food, not interested in diamonds.
With your background research on your customers, you would have had already a clear idea about what they value. What is important to them. For example, to some customers, price is not an issue so long as they get value for what they pay for. Others, prefer discounts on their purchases. However, customers who prefer discounts don’t mean they are cheapskates. It’s just how they operate in the market. It would be wrong to sell them something inferior just because they love discounts.
Target markets have segments too. What is true for one segment may not be true to another. Let’s say your target customers are health fanatics – you would looking at – athletes, male, female, dieters, etc. You would be right in thinking that these people value health and fitness, but between male and female, athletes and dieters there may be a lot of difference.
So, it may be good for your business to provide something that would be of value to each segment. Or, if you want to be more focused you can simply target one segment, say the dieters.
4. What Are Your Results?
“What can be measured, can be managed.” This is one of Drucker’s aphorisms. It simply means that if you set up a measurement system, you can track you progress, and achievements vis-à-vis your targets. This would tell you where you are at, at any given time and also tell how you’re doing. If you note any variances, you can analyze what you’ve been doing and come up with answers to your shortfalls. Then, you can take corrective actions.
According to Drucker, there are two ways to measure your progress and achievements; qualitative, and quantitative. Both measures are necessary, and are interwoven as they shed light on one another. Your business is supposed to change the lives of your target customers for the better. Measurements give a glimpse about how much of an impact are you making on their lives. This allows you to come up with ways to bring about that change. Thus, you not only look at numbers, you must also know what those numbers mean.
5. What is Your Plan?
According to Drucker, “a plan is a simple and concise summation of the organization’s purpose and future direction. It encompasses mission, vision, goals, objectives, actions steps, a budget, and appraisal.” A plan simply tells you how to get there from here, with what you have.
While Drucker says it is concise, it will need a lot of thinking on how to put a plan into writing. What some entrepreneurs do is hire someone to prepare a business plan for their organization. There is one serious drawback in this approach, even given the inputs of the owner. The writer does not have the feel of your business as you do. He may be an MBA and knows a lot about theoretical management, but he knew next to nothing about your business.
When you write down your own plan, you are able to think through to the end. You can visualize how you intend to put flesh into the words you write down. This will help in putting your plan into action when the time comes to implement it.
These five questions are crucial to the success of your online home business. The answers you will get, as you ask yourself these questions will provide you with a clear picture of how to go about setting up a profitable and successful enterprise.