A good governance board will hold you accountable to your business goals by prompting regular discussion and reflection. Here are four key business growth questions your board should be asking you on a regular basis. These questions are designed to challenge you so you can identify opportunities to take your business to the next level.
1. How is the business performing compared to the wider industry?
Every business should have a set of key benchmarks by which they measure performance. For example:
- cash flow goals, or,
- industry averages.
The real question is––how often do you check in on these benchmarks?
Benchmarks are only useful if you measure how you’re tracking on a consistent basis. Your governance board should raise this question at least once every quarter, if not every meeting. The closer you monitor your performance, the better you’ll be able to identify business growth opportunities and risks.
“It’s also a good idea to consider tracking your performance against a number of lead and lag indicators,” says Bellingham Wallace Director Mike Atkinson.
“Lead indicators will give you early warning signs of any issues before they become real issues.”
2. How is the business tracking against its growth indicators?
Setting goals for business growth is one thing––meeting them is another. How often do you set goals, only to forget about them as each quarter or year rushes by? Your governance board should hold you accountable to your goals to make sure they are met––not just set.
Your governance board should hold you accountable to your goals to make sure they are met––not just set.
If you do fall behind on your goals, your governance board should help you come up with strategies to get back on track for the next financial year.
Some common business growth indicators include increases in:
- profit margin,
- average sale value,
- customer referrals,
- Repurchases, and,
- interest from new markets.
“Choosing growth indicators will come down to your overall growth strategy. Don’t try to do it all at once, but instead focus on the top three growth indicators that will have the most impact on your business,” says Mike.
3. Are any disruptive forces impacting the business?
You need to keep your eyes open for any potential risks or roadblocks. A lot of things could disrupt a business, from external factors such as market conditions and competitor activity to internal factors such as high employee turnover.
Some disruptive forces are not specific to your business. For example, cyber security threats (such as the WannaCry cyber attacks) or national weather incidents (such as the recent flooding and cyclones to hit NZ) all have the power to disrupt operations. It’s important to be aware that these disruptions exist and put processes in place to protect yourself in the event of a problem.
While you can’t always control or predict disruptive forces, you can choose how to react.
While you can’t always control or predict disruptive forces, you can choose how to react. A good governance board will be vigilant about encouraging you to identify disruptions so you can move quickly to minimise damage. They should also make sure that you have adequate insurance and risk mitigation policies in place.
If anything, good governance is about asking the tough questions and prompting you to think critically about every aspect of your business––both external and internal.
4. Who are the top five performers in the business?
High-performing staff are a business’s greatest asset. Your governance board should ask questions about your top performers so they remain at the forefront of your mind––you don’t want to overlook their contribution.
Your governance board should prompt you to think about:
- why these five staff are high performers;
- what other staff can learn from them;
- what would happen to the business if any top performers left; and,
- what proactive steps can we start taking now to mitigate this risk.
Make sure you have a succession plan in place just in case someone resigns. You don’t want the growth of the business to rest on the shoulders of a particular person or group of people. The business needs to be able to grow as staff members come and go.