Two Crucial Planning Steps for Small Business Decision Making

In a prior small business planning blog, Use Critical Success Factors for Small Business Planning I shared how one of our clients narrowed down their potential list of new initiatives, projects or tasks from 20 tasks to 7 in only two short hours. They were able to do this because they first identified their Critical Success Factors.

They needed to reduce their possible action item list because as I shared in the blog “How to Use Your Small Business’ Limited Small Business PlanningResources Wisely” a small business has limited resources in the form of its time, money and talent so it must choose to utilize their resources on initiatives that provide it with the largest and most immediate payback.

So how do you use the above mentioned Critical Success Factors as a tool that to assist and guide you (like a park ranger) with this decision making process. Since your Critical Success Factors are the things that will either make or break your business, that is, they are the things that your business must absolutely do, and do correctly, in order to be successful you want to sift all of your possible projects or initiatives through this sieve.

Your Critical Success Factors are the actions or objectives that are indispensable in order for a business to accomplish its Vision. The first step in determining your Critical Success Factors is to analyze your business and look for things that must be done correctly. If not, your business will fail—they are indispensable to your business’s success.

These are not just nice things to have or do in your business; they are the things that will either make or break your business. That is, if you accomplish your business’s Critical Success Factors and everything else in your business “falls apart,” will you still be successful. If it is not a make-or-break item, it does not belong on the list. For instance, re-doing your reception area most likely would not be Critical Success Factor whereas developing and implementing a comprehensive marketing plan could very well be a Critical Success Factor for your business.

Once you have developed your list from step one, the second step is to review the list and look for the things that you must do well every day in order to be successful. You want to eliminate this from this list items that do not impact your business very consistently, even daily. With this step in mind you might remove “Have an annual company holiday party to build morale” but leave on “Build a team environment where each employee truly feels that they are important”. This step does not mean that you may eliminate your annual company holiday party, but you would only do that if you have the resources after you had tackled your Critical Success Factors, Together these two steps will guide you to your Critical Success Factors.

The Six Separate Areas of any Large Business or Small Business

If you look at any business, no matter how large or small they are, a start up business or a Fortune 100 business, you will see that they have six separate and distinct areas of their business, namely:

• Vision and Leadership

• Marketing and Sales

• Production

• Finance and Administration

• Human Assets

• Information Technology

Small Business PlanningWhen you analyze and complete the above two steps you want to look at all six of these areas of your business to identify your Critical Success Factors. 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)?

I will continue discussing how to use your Critical Success Factors to guide your business in my next blog, Targeting the Use of Your Small Business’ Resources Properly.

As a result of using this Critical Success Factors small business planning you will now have a systematic tool for determining what areas of your business are candidates for devoting your limited resources to and which items on your action item list will yield the greatest impact on your small business.

 

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