I’ve found that ‘dumb’ questions actually reveal the smartest answers. To reassure people that ‘dumb’ questions are not foolish at all, I have decided to delve into the very history of the question mark itself. I discovered that the question mark is an abbreviation of the Latin word quaestiō, which you may have guessed means question. At some time in the Middle Ages, quaestiō became ‘qo’ – and over time ‘qo’ was simplified through several stages into the modern day question mark (?).
Just as the ‘dumbification’ of the question mark created an efficient way to show people that a question was being asked, I believe that asking the ‘dumb’ questions can streamline the business evaluation and creation process. As an investor who regularly undertakes due diligence on businesses, I’m used to asking a lot of questions, and what I find is that the simplest questions are usually the ones that unpeel the business back to its core and get right to the heart of how they tick. I advise all entrepreneurs to ask themselves and their team the ‘dumb’ questions. Below are six of my best ones.
1. How do I sell it?
If you can understand the end-to-end journey of one transaction, you can really get to the nuts and bolts of the business. I try to unpeel a transaction by finding out what is needed to provide that product or service, how it is marketed, and how much it is sold for and to whom. This stripping-back-to-the-basics approach will quickly tell you who you need to hire and where you need to promote your product.
When I recently looked at a transaction for one of my new ventures, I discovered – even though it was an online business – that many of the processes were done offline. It made me realise that the business needed a top technology guy who could automate those processes. By investing in that individual, the business could reduce our cost of service delivery in the long-run and in fact provide a far more enjoyable experience to customers.
2. Why would I want that?
Most entrepreneurs ‘assume’ that their product is exactly what the customer needs. Assumptions are dangerous. As Isaac Asimov wisely points out “your assumptions are your windows on the world. Scrub them off every once in a while, or the light won’t come in.”
To get the light to come in, you need to talk to real customers and find out if there is product-market fit. That customer may already use an alternative solution that is cheaper and better for them. If your product is groundbreaking, you need to understand the USP; and if it’s something that already exists, you need to know why someone would choose your product over the competition.
Unless you’re Steve Jobs creating a revolutionary product that people never knew they wanted until they saw it, you should always ask your customers for feedback at the early stages. Doing this will save you from investing too much of your time and money heading down the wrong path, or it will show you how the product needs to be tweaked to put it back on track. I’m sure Asimov would agree that the way to keep your ‘window to the world’ nice and clean is to speak to customers and have a very clear view of what they want. After all, great customer insight creates great products, which in turn goes on to create great businesses.
3. What does that mean?
Customers don’t understand industry jargon. If they don’t know what they’re buying, they won’t know why they should buy it. I often ask entrepreneurs to sum up their business in a Tweet, so in 140 characters. Not 141 characters. This helps to focus one’s mind. You may have an amazing product, but if people can’t navigate through the jargon to understand what it is, they won’t realise that it’s actually something they need.
Similarly, if your business is pursuing a strategy, those implementing it need to understand what it is they are supposed to be doing and why it is important. I’ve seen it time and time again where it seems as though ‘the blind are leading the blind’ because people within the company haven’t asked the simple question ‘what does that mean?’ A team that doesn’t know what it’s doing and how that ties into short, medium, and long term goals loses motivation, momentum, and productivity.
4. What have I got to lose?
This is probably the most important question an entrepreneur should ask when making a big commercial decision. All decisions come with risks, and sometimes it seems as though the risks are too high. But, if you look at the opportunity and weigh up the potential upside against the downside, the route you should take will become clear. I tend to look at key business decisions as evaluations of an investment case. Are we prepared to risk £100,000 to potentially start a new business division that could contribute £1m to our gross profit? This is a more focused way of asking ‘should I hire John and pay him a six figure salary to launch our office in America?’
I have some first-hand experience with this. One of my businesses was recently weighing up the option of opening an office in the U.S. The founder thought that it might be too risky. When I asked him what the potential revenues could be if the new office was a success, we soon realised that the pros massively outweighed the cons and decided to go for it. We evaluated the probability of the initiative being an aborted effort and were comfortable with our odds. Before that question was asked the management team had debated the issue for months; after it, they knew in minutes.
5. What happens if I get hit by a bus?
A business has to be able to exist without its founder, especially if you’re planning an exit to cash in on your nest egg. You need to make sure that you have a strong team who you can trust to run the business in your absence. A great commander, after all, is judged in his absence.
If, when asked this question, you realise that your product or service would be significantly impacted if you were no longer in the business, you need to find a way to give more responsibility to your team or hire the A-players that will fill the gaps for you. Even if you don’t plan to exit the business, being a one-man band is a sure way to burn yourself out.
6. What happens if we run out of money?
Sometimes entrepreneurs dwell too much on controlling the burn rate when they should be trying to grow the business. In order to control that fear, you need to have thought through the possibility of running out of cash. By taking actions today – and having a plan in place should that become an eventuality, you can invest in your business without worrying about it falling off a cliff.
Too often, founders brush this issue under the carpet and it stifles the growth of their business causing it to fall behind the competition and eventually fail.
Asking ‘simple’ questions will result in better, faster decisions as well as a more productive workforce. These questions have helped me navigate the treacherous terrain of business and have also helped me coach the founders I have backed. It may seem counter-intuitive, but spending ten minutes each day to ask yourself the ‘dumb’ questions will give you the wisdom to avoid making foolish decisions. When you peel back the layers of ‘dumb’ questions, they turn out to be quite ‘smart’ after all. Unsurprisingly, the Chinese had this all figured out many centuries ago. According to an ancient Chinese proverb, “He who asks a question is a fool for five minutes; he who does not ask a question remains a fool forever.” I’m pretty sure I know which type of fool I’d rather be.