What are the most important questions to ask myself when evaluating a business opportunity?
When I first heard this question my reflex response from 30 years experience of running a business was… When will I get my investment back, what is the percentage return on investment and what is the risk?!
My more considered response is to ask three initial questions. There are obviously many other issues but these are those I consider the most significant:
First Question – What is the purpose of this business and what is my real motivation for taking on this opportunity to build a business?
I would ask myself, what am I really focused on – my vision, mission and strategy to bless the nations. I would consider the eternal rather than short-term goals for the business and would seek to discover how the business could sustain itself having once outgrown me and my start up team.
Only after asking the question ‘WHY this business?’ can we gain proper perspective on the cost and risk of any investment. By investment, that doesn’t mean only financial, which in my view is the least important. Of much greater importance is the spiritual capital – investing in my own spiritual growth and that of all the stakeholders. What ultimately makes a good Christ-honouring business is a good worshipper at the helm, a skipper that does not skip the prayer meeting or church attendance. After spiritual capital, I would consider investment in terms of physical capital. My personal fitness and health is extremely important because without this I will not be able to work at the pace needed to build a sustainable business. Then there is my investment in relational capital, considering carefully the relationships in which to invest that will manage risk, build sustainability and encourage and bless the stakeholders. Another aspect of investment is intellectual capital to discover my God-given innovation or strategy and bring it to market. Lastly, comes investment in terms of financial capital – I must know my numbers in detail.
Second Question – How will this opportunity positively impact ALL stakeholders and thereby bring Glory to God and extend His kingdom?
Every business has many stakeholders, without which there is little hope of success. By stakeholders I think of organizations and, more importantly, people who are customers, employees, partners, suppliers, owners, community and potentially others who may be impacted in different ways according to the nature of my business. It is vital that nobody is ignored or passed over in the drive to build the business.
Each group must be carefully considered from the point of view of the business, to identify ways the company can make a positive impact in a God-honouring way. Circumstances change over time and therefore it is important to revisit this assessment from time to time. No business is worth pursuing if it is harmful to any group and, from my own experience that God, it seems that He generally blesses that which brings blessing to other people.
Third Question – How will I avoid failure in the three critical areas of a) generating ongoing SALES, b) ensuring sufficient CASH and c) avoiding SIN?
Without sales the business will perish! A viable sales and marketing plan must be drawn up, backed by appropriate market research that takes account of the RISK of changes in market conditions, competition, pricing etc. The biggest trap is to be blindly over optimistic, born out of enthusiasm to start and build the business. Whilst enthusiasm is essential and little progress is likely without it, we must none-the-less be realistic in our estimations.
Without CASH the business will perish. Even the best business ideas are doomed if they run out of cash. Consequently a clear, viable financial strategy with realistic forecasting is essential. This is a major consideration that is too complex to consider in detail here, but its importance cannot be over emphasised.
Finally is the issue of SIN. Many a godly enterprise has come to failure, not through inept management or difficult trading conditions but because greed or ambition has crept in. The solution is perhaps easier to state than it is to put into practice, but it certainly isn’t rocket science. It’s a case of maintaining right priorities and never allowing the business to become more important than our day-by-day walk with God.
David Skews is part of the ‘Ask a BAM Mentor‘ panel of mentors. David is a businessperson called to mission. In 1989, he established EDP Health Safety & Environment Consultants Ltd performing the role of CEO as he led EDP through sustained growth for over 25 years in both the UK and Asia. In 2004 he fully engaged in business as mission, as well as continuing to lead his business. Since then, David has focused his efforts into training entrepreneurs in Asia and Africa, and speaking internationally on business for good. He has also helped lead a mission agency through the process of embracing missional business. Today, he acts as a non-exec director for six successful BAM businesses and is part of the Advisory Board for BAM Global. David is transitioning out of his business in 2015 and into new BAM fields! David is married to Lesley and is based in the UK.
Submit a Question to the mentors panel via the Contact page, select ‘Ask a BAM Mentor – submit question’ as the subject.