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.

 

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