Yes I know, it seems early to be planning for next year already, but in my opinion you are planning all year round. But when it comes to your strategy and grand tactics, you must always evaluate how well you are doing and make course corrections.
One thing to consider is that bank debt will still be unavailable to the vast majority of small businesses next year. Sorry, but all the hype and hoopla about giving TARP relief for small business is a joke. There is already enough money to lend. The problem is that lenders are afraid because if they suffer another round of bad debt they will be hung. And lets face it, with interest at less than 8%, there is no real risk premium for the banks.
Small business also doesn’t really need as much debt as it thinks. Banks are not in a position to fund losses. This type of situation can be a godsend for small business if they wake up and “smell the coffee”. Are you working on sub-par clients who eat up huge amounts of your most precious resource (time) for little payback? Do you know your clients who fit the 80/20 rule? those 20% of clients who generate 80% of your profits? What would your cost structure be if you moved those other 80% of clients out the door and focused on those 20%?
Small business is a niche business. If you want to be big and service 5% or more of the market, then get investors. Live with their restrictions and requirements. Otherwise, get small and stay small. Stay focused. Get the maximum for your time.
Do you really know what your core business is? If you look at your top 20%, I bet you will see very interesting data… like they all center around a particular product or industry. But do you really know why these came to you and why the others didn’t?
Beyond your core business, have you figured out how to get out of the red ocean and into blue ocean? Have you analyzed your competition in regards to competing, not against their offerings, but against what they don’t offer? Be the niche. You won’t attract everyone, but do you want a huge number of customers?
More customers generally require you to reduce prices and expand your offering, which increases overhead. Overhead is not a bad thing, it is actually necessary and is the key ingredient to magic. You must decide on the right overhead structure to support the magic of your business, not just put it out there in response to pressure.
As you plan for next year, think first who you want to service and why. Next determine what your overhead structure has to be like to work with those customers and then make the throughput happen. If you would like help or more information write me at johnc@constprofit.biz