If I were thinking about starting a small business from nothing or I were actively operating a small family company, there are eight questions that I would immediately ask myself about any entrepreneurial idea I had. These eight questions are:
- How do we make money? (What product or service do we provide at a profit? What makes a customer choose us over the competition?)
- How do we grow sales?
- What is our return on capital as owners?
- What is our return on time as employees?
- What is the total size of the industry in which the business competes?
- Is the enterprise scalable?
- Does this play to my strengths?
- What is my ultimate objective? To build and sell the business? To pass it on to my kids? To live off the earnings?
Unless I could answer those very quickly, each on a short, succinct index card, I wouldn’t even consider investing in or starting the enterprise.
Then, after all of that was done and I’m examining the results in front of me, I’d ask one final question:
- Does my involvement in this project conflict with the primary mission of my life?