Monthly Archives: January 2014

Small Business Planning – How to Put First Things First

We have been discussing that by using Critical Success Factors as a small business planning tool you will be able to quickly and easily identify the specific areas of your business upon which you will want to concentrate your limited time, money and talent in order to “move the needle” of your small business the furthest with least amount of effort.

In Targeting the Use of Your Small Business’ Resources Properly we completed looking at a three step process of determiningSmall Business Planning which projects and initiatives provide the largest and most immediate payback to your business. We saw that for a small business there are four initial areas on which you want to focus identifying your Critical Success Factors, namely:

1. Marketing – How are you going to market your products/services (part of your Marketing and Sales area)?

2. Sales – What will be your sales process (part of your Marketing and Sales area)?

3. Production – How are you going to produce what you are Marketing and Selling?

4. Financing of your business – How are you going to finance the start and growth of your business (part of your Finance and Administration area)?

I also covered the fact that the goal is to have between 7 and 15 Critical Success Factors in these four areas of your business because from my experience in working with a number of businesses, for a small business owner, this number of things in their Marketing, Sales, Production, and Financing of Your Business areas is a realistic number of “make-or-break” activities upon which to focus.

While the benefit, purpose and objective of identifying your small business’ Critical Success Factors is to decide which projects, initiatives or tasks will be give your business the biggest payback and payoff there are four overarching advantages of utilizing this tool, namely:

1. Identify company-wide goals.

2. Provide for the proper allocation of resources.

3. Inspire and motivate your business’s personnel.

4. Provide ongoing guidance for your business operations.

I will cover the first two items in this blog and the later two In Inspiring and Motivating Your Small Business’ Personnel.

1. Identify Company-Wide Goals for Your Small Business

Because your Critical Success Factors are defined as the things that you must accomplish in order to achieve your Vision for your business, they are automatically focused on your business’s company-wide goals. Alternatively, if you just randomly choose goals for your small business without first completing a Critical Success Factors analysis, you may end up achieving various objectives in your business, but not necessarily bringing your business closer to your ultimate objective: the fulfillment of your Vision.

Small Business PlanningBy using a Critical Success Factors analysis approach, you avoid being overly focused on one or more areas of your business that are in reality not as crucial as some other areas of your small business. The result of this ill-advised focus is that you may end up neglecting other areas that affect your entire business and instead concentrate on areas that only have a limited and localized impact on your small business. However, by using Critical Success Factors analysis you will concentrate your efforts on things that you have determined will affect your entire business. By determining your small business’ Critical Success Factors you will be able to prioritize the use of your business assets and consequently “put first things first” in your business.

2. Provide for the Proper Allocation of Resources in Your Small Business

Since the Critical Success Factors approach is a holistic approach, you are examining all of the areas of your small business in order to ascertain each of the “make-or-break” areas of your business; all areas are put on a level playing field with respect to what will result in accomplishing or not accomplishing each Critical Success Factor. Hence, the allocation of your small business’s limited resources becomes more properly weighted than if your try to allocate your resources without first identifying your business’s “make-or-break” areas. Conversely, if you follow a “the squeaky wheel gets the grease” approach to allocating the limited time, money, and talent that your small business possesses, you may utilize your business’ resources improperly.

As you can see from the above, the use of Critical Success Factors as a key small business planning tool will enable you to avoid various strategic resource allocation issues and problems in your business, “put first things first” in your business and place you solidly on the road to achieving the Vision for your business.

 

photos by: KB35 & Jack Zalium

Targeting the Use of Your Small Business’ Resources Properly

As we discussed in Two Crucial Planning Steps for Small Business Decision Making it is imperative that a small business utilize their limited resources on projects and initiatives that provide them with the largest and most immediate payback. We saw how by using a two step approach to identify your business’ Critical Success Factors (the things that will either make or break your business), you will be guided to the items that will generate the most positive impact on your small business. We explored the fact that you must focus your business’ new initiatives on the factors that your business must absolutely do, and do correctly on a daily basis in order to be successful

We further discussed that if you look at any business, no matter how large or small they are, a start up business or a Fortune 100 Small Business Planningbusiness, you will see that they have six separate and distinct areas of their business. However, for a small business the four most important areas of a business for which Critical Success Factors must be identified are:

1. Marketing – How are you going to market your products/services (part of your Marketing and Sales area)?

2. Sales – What will be your sales process (part of your Marketing and Sales area)?

3. Production – How are you going to produce what you are Marketing and Selling?

4. Financing of your business – How are you going to finance the start and growth of your business (part of your Finance and Administration area)?

A key during these previous steps is to record all of the thoughts that come to mind when you think about the things that you must do correctly in the Marketing, Sales, Production, and Financing of Your Business areas of your small business. At this point in this exercise, don’t limit your thinking. Try to come up with as many items as you can think about. As a result of this process you should end up with a fairly complete list of Critical Success Factors for your small business.

Combining Similar Critical Success Factors for Your Small Business

The third step is the further elimination of non-critical items from the list and the combining similar Critical Success Factors. The goal is have between 7 and 15 Critical Success Factors in these four areas of your business. Why 7 to 15?

Your Critical Success Factors function as your scorecard in monitoring how your small business is performing. The “measurement” of how you are doing at attaining your Critical Success Factors will be translated to a measurement system (or a set of “metrics”) called your “Key Performance Indicators.”

In my experience working with a number of businesses, I can validate that having 7 to 15 things for a small business owner to regularly monitor or juggle in their Marketing, Sales, Production, and Financing of Your Business areas is a realistic number of indicators. I have found that very rarely will a business have more than 15 items that are “make-or-break” activities in these four areas.

Small Business PlanningDuring this step you want to examine each of your items and determine if any can be combined. In combining two or more of your Critical Success Factors that are related to each other, you can turn them into a compound Critical Success Factor. What you want to avoid is having a bunch of smaller items which are in reality part of a larger, more comprehensive Critical Success Factor. During this process you may end up combining two, three or even four items are a very similar to each other or that are quite related to each other. For instance, these two Critical Success Factors:

• Have an effective sales process that communicates a “win” to our customers.

• Ensure that we provide proper incentives to our salespersons for using our designated sales process.

can be combined into one Critical Success Factor:

• Have an effective sales process that communicates a “win” to our customers and includes incentives to our salespersons for using the process.

The outcome from using this three step approach of determining your small business’ Critical Success Factors is that you will have identified the specific areas of your business upon which you will want to concentrate your limited time, money and talent in order to “move the needle” of your small business the furthest with least amount of effort.