Small Business Planning in Three Simple Steps

It is easy and effective to plan well in small business. Planning doesn't take a lot of effort, it shouldn't take a lot of time, and the best part is: it's free. Use these 3 simple steps to get an advantage over the competition.

1. Mission and Objective

What is the overall purpose for your business? Your answer should be detailed, specific, meaningful and measurable. To say "make a lot of money" is not an objective. To say "consistently exploit advantage X to create Y amount of value by date Z" is better. A good objective will be realistic, but ambitious. It will focus your attention and push you to take reasonable risks. It specifically defines what "success" looks like. Although the world of small business is constantly changing, with new opportunities and new threats all the time, your mission should provide a solid, consistent framework. Within that framework, you will plan, strategize, innovate and execute in a changing marketplace.

2. Strategy

How will you attain your objective? What fundamental rules or method will you use? That is your strategy. Strategy is a long term approach that underlies all of your short term actions, in the service of your objective or mission. A good strategy, like a good objective, will be detailed. It should be detailed enough to provide answers to a variety of important questions that you will encounter. But it should be general enough to only change occasionally. What major tools, methodology or resources will help to achieve your goal? What kinds of advantages, characteristics or unique qualities will allow you to stand out from the competition? These kinds of questions will help you develop a strong strategy.

3. Tactics

Tactics are the short term, day-to-day and week-to-week measures taken to support the strategy. Good tactical decisions allow you to compete more effectively. Tactics are inspired by two types of sources--internal and external. Internally-inspired tactics come from new initiatives and new projects that you think will help to further success. Externally-derived tactics are responses to short term changes in the marketplace, in the overall economy, feedback from customers or new moves by competitors. Success requires flexibility. Flexibility is what good tactical decisions are all about. By staying flexible and responsive to both internal and external developments, small businesses can find success consistently.

The Secret to Success? Low Overhead, Low Fixed Costs

Ok, maybe it's not that simple, but according to the recent Forbes study of the most profitable small businesses, low overhead, seen in professional services among others, can certainly help:

Two big perks with professional services: consistent demand (no matter what the economy is doing, people will still catch fevers and want to avoid paying taxes) and relatively low overhead. Little surprise that traditional industries--like manufacturing and retail, which are hard to scale--didn't make the cut. The top of that heap, including medical-equipment makers and wineries, clock 6% pretax margins; jewelry stores, 4.4%.

This compares with an impressive 17% margin for CPAs, who sit at the top of the list. The biggest insight from the report is that specialized knowledge pays off the most. As a result, professions like medicine or accounting which require years of study and deliver good value when the customer needs it most, are most likely to do well, irrespective of the current place of the business cycle.

Now, the Forbes analysis dealt with businesses making $10 million or less, which some would argue are not "true" small businesses. Still, how might your organization benefit from this kind of analysis? What kind of expertise or specialized knowledge can you offer to customers, with low overhead or minimal fixed costs, at a key time in their business or financial lives?

Ten Ways to Build Trust with Online Customers

By Darren Barefoot, Open Forum

1. Treat online customers as if they’re standing in front of you. The anonymity of the web sometimes makes us behave less personably to our fellow netizens. When interacting with others online‚ particularly when you receive criticism‚ ask yourself how you would react if they were in your office in a bricks and mortar business.

2. Abandon the superlatives and spin. The more intelligent your customer, the more heightened their distaste for unearned self-praise. Tell people what your product is, and why it’s good. Praise works much better when it comes from a third-party; that’s why media relations and user testimonials work so well.

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