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(2022) Business Questions to Ask for Small & Big Companies

Here’s the bitter truth: half of all new businesses fail within five years of being incorporated. Startups are particularly vulnerable, with a failure rate of about 90%. At MentorCruise, we discussed four cases of failed startups and their implications.

There’s rarely one reason behind a company’s failure. It’s always a complex mix of several issues, such as poor planning, lack of capital, bad decisions from inexperienced management, and the list goes on.

While there’s no escaping this awful curse, startups can learn a thing or two from the mistakes of businesses that have failed before them. Failure rate can be a scary statistic for small and big businesses alike, but you can use this number as a benchmark to understand the risk associated with starting and running a business.

No matter where you are in your entrepreneurial journey, these business questions to ask will help you right the ship and implement a fail-safe plan to buck the five-year curse trend.

Business questions to ask for small and big companies

Here are some business questions that you need to ask yourself in order to grow a successful company. Here, there are questions regarding growth, hiring and scaling your growth to the next level.

In a nutshell, here are vital business questions to ask:

  • Do you have a mentor or an advisor to guide you in the early stages of your startup?

  • Does your business fill an unmet need?

  • Do you have the necessary industry experience to run the company?

  • When is the right time to scale up your business?

  • What mechanisms can help me scale my business to the next level

  • What is your customer retention rate?

  • What digital marketing strategy do you have in place?

  • Where can I find the right people to work for my company?

  • Is your business prepared to adapt to sudden market changes?

  • How will you face the possibility of failure?

Do you have a mentor or an advisor to guide you in the early stages of your startup?

Mentors can significantly shorten the time it takes for your business to get going.

Startup mentors are experienced business professionals who offer their wisdom and guidance to support startup founders in the early stages of their business. They provide sound advice on strategic planning, marketing, fundraising, and other areas that are critical to the success of the business.

Bill Gates, who was mentored by Warren Buffet, best explains the role of mentors, “As we look ahead into the next century, leaders will be those who empower others.”

Even Sir Richard Branson tremendously benefitted from having Sir Freddie Laker as a mentor, who was one of the first adopters of the low-cost, no-frills airlines business model.

Having a mentor can help you gain insights into how to build and grow your business throughout its life cycle. A mentor’s presence and indirect involvement have tangible and intangible benefits for your business and career as an entrepreneur.

It can be difficult to overcome the challenges on your own, but with a mentor ready to give a helping hand, you can avoid the pitfalls and costly mistakes. Not convinced? Mentored startups grow 3.5 times faster than businesses that go at it alone. Don’t know where to find a mentor? MentorCruise points you in the right direction and connects you with experienced mentors who are on top of their game in their respective industries.

Does your business fill an unmet need?

This is one of the most crucial business questions to ask for small and big businesses alike because it forms the basis of your company’s very existence in the market. For starters, ask yourself, “What customer problem is my business solving?”

Market opportunities come from unmet customer needs. Think of it as the intersection of a need and an available resource. For instance, a traveler who needs an inexpensive place to stay meets a homeowner who has a spare room in their house or an unused space (Solution: AirBnB).

By having a solid understanding of what consumers need, you’ll be able to create new products or services that serve as the most viable solution to their problems. Many companies go into business thinking that their products will naturally create a huge demand and customers will want to buy them because of their smart features and nifty designs.

It may work for a while, but what happens when the novelty dies down? When there’s no real market need for your products, then you’re in for a rude awakening.

As a business owner, you should be looking for better solutions to consumer problems. There may already be products in the market that attempt to do just that, but if they inadequately fill the gap, then that’s an opportunity that you should explore.

Do you have the necessary industry experience to run the company?

There’s no shame in saying no to this question. This is by no means a knock on your credentials or ability to run a startup company. But the painful truth is that inexperienced management is at the root of many startup problems, hence making this an important business question to ask.

With no experience and expertise in the industry you’re operating in, you’ll have a difficult time wading through the nuances and complexities of the market.

For instance, you wouldn’t be able to leverage your professional network to find the right people to handle important tasks that are specific to the industry.

Having no experience in the industry means having no track record and no connections that can match you with the right people for funding and recruitment. An ideal solution is to bring in a co-founder with industry experience who can help you tackle some of the most difficult business management questions.

Alternatively, you can bring some advisers on board who can offer guidance at every step of the process to keep your business running as smoothly as possible with little disruption.

In situations like this, having a mentor who has experience and expertise in setting up a business in your chosen industry can guide you in making important decisions and fielding the right business questions to ask.

Where to get startup funding for the business?

Lack of capital is one of the reasons businesses fail. Entrepreneurs struggle to get adequate funding to keep their businesses afloat when profits have yet to materialize. This applies to small and big businesses across all industries. When funds run out, everything else crumbles.

Before you embark on a business venture, you have to make sure that you have enough funding or at least access to loans or people with deep pockets. Venture capital firms tend to focus on businesses with high growth potential. If you have the numbers working in your favor, you may just have a chance, otherwise, you have to go elsewhere for funding.

Looking on the bright side, mentored startups or entrepreneurs backed by well-connected mentors are more likely to attract venture capitalists.

When is the right time to scale up your business?

The allure of scaling is strong in businesses that are growing faster than anticipated. If your business is experiencing a high level of growth and seeing high demand, you might be tempted to scale up haphazardly.

Don’t fall into the trap of scaling too soon. If you expand faster than your business can handle, you might be diverting your resources away from the revenue-generating business unit. So, before you scale, look at your financial data.

You have to make sure that you are consistently earning profits that can support an expansion. This will save you from falling into debt traps or scrambling to find angel investors when expenses balloon to uncomfortable levels.

On the other hand, if you scale too late, you may miss out on the opportunity to outpace your competitors.

What mechanisms can help me scale my business to the next level

Throughout your journey as an entrepreneur, you will need to manage different sides of your business to grow your revenue number and become a bigger business in general. What will help you get your first customers and grow your business to $10,000 in monthly recurring revenue most probably won’t be the same as what you will need to do to grow it from $10,000 to $1 million MRR. At the start of your entrepreneurial journey, you may have to do everything and adopt the role of an agile executioner who gets things done.

As you grow bigger, you will need to start delegating accordingly in order to focus on the overall strategy. It can be quite a difficult mental shift, but it’s something that you will need to do in order to keep growing and ultimately survive as a business. Learn the necessary mechanisms to scale forward, or risk having your clients pull the rug out from under your feet because you couldn’t accommodate to their growing needs.

What is your customer retention rate?

If your company is past the honeymoon stage, this is one of the data-driven business questions to ask yourself. Customer retention rate is a metric that indicates how successful or effective your company is at keeping your customers.

Every business aims to have a high customer retention rate because it’s an indicator of customer satisfaction and brand loyalty. Repeat customers serve as brand ambassadors who will promote your product or service to their families and friends, which can positively affect your profitability. It makes customer acquisition much easier and less costly.

A low customer retention rate is indicative of poor product quality or customer service. If your business is suffering from this, you have to overhaul your business strategy and improve your products.

What digital marketing strategy do you have in place?

It would be a grave mistake not to have a digital marketing strategy as part of an overall marketing plan. Social media users ballooned to 4.2 billion in 2021 and it’s expected to grow even more in the next three years. SEO has helped online platforms like VEED to grow to 6 million ARR in under 2 years.

Building an online presence through your website is not enough. You have to expand your reach and find your ideal customers wherever they may be in the social media space.

You must design a strategy that helps them find you on Facebook, Instagram, YouTube, and other social media platforms that is in line with your industry or product offering. It’s an effective way to interact with existing customers and engage new ones.

Where can I find the right people to work for my company?

Hiring people is easy. It’s finding the right people that businesses struggle with. You can do your own hiring the traditional way or use a staffing agency that has a large pool of qualified candidates.

Some companies use social media strategies for recruitment to find people who fit the company’s work culture. Whatever method you use, make sure that you recruit people with the skillset that will help your company deliver on its value proposition and meet its goals.

Highly skilled individuals may demand high compensation. If you’re bootstrapped and have no access to external funding, then you would have to look for the next best candidate that you can afford but may have the wrong skillset for the job.

Is your business prepared to adapt to sudden market changes?

This is a simple yet significant business question to ask because many companies start strong but falter when the market forces shift and cause a massive change in the business landscape.

In general, businesses that are quick to adapt and respond to changes in the market are more likely to succeed in the long run. Your company’s marketing agility enables you to make snap decisions when changes in the business landscape affect the way you operate.

Your business must be able to keep up with changing customer needs and preferences. It will help you stay ahead of the competition and weather economic downturns and uncertainties more effectively.

How will you face the possibility of failure?

Having a “failure is not an option” mindset is a commendable thing to have. However, with 1 in 12 businesses folding each year, the possibility of failure is inescapable. Success is not a guarantee, but you can minimize the risk of failure. It’s an important business question to ask because it will help you gauge your own readiness to change course.

Having a Plan B can help cushion the blow and protect you from total failure. It’s a way to breathe new life into a dying company. If done right, you can get back on track, but if not, you should be able to come to terms with failure and prepare to move on to the next business venture.

Find a Mentor

By asking the right questions about business startups and finding a mentor who will guide you, you’re already setting yourself up for success.

Let MentorCruise connect you to a mentor whose experience, expertise, and insights can help you make the right decisions and achieve your business goals.

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