Some 2009 advice for the small business strategist

The "ground" is changing and new ground has its own climate. For 2009, small business leaders need to work hard on the first step of the progress cycle: LISTEN. (If you're new to strategy, read "The Golden Key to Strategy" for explanations of the progress cycle.) With a new president and an economy that has big money looking for way to stay big money, expect a volatile and highly competitive neighborhood over the next year.

If you don't have your five "spies" hard at work, now is the time to build that network. (See "9 Formulas for Business Success") You cannot AIM without learning the ground. In addition, the changing business climate will require very fast progress cycles this year. If you are slow in getting from LISTEN to MOVE you will LOSE. The reason, because the business climate is likely to change by the time you make a decision. Know your position, study your competitors' position, and move through the LAMC cycle as quickly as possible. This will be a test of your COURAGE as a leader.

If you're worried about making a mistake, here's how to manage the risk. Accept the reality that you will make some bad decisions. What's important is not making a bad decision that you have to live with for a long time. If you start a bad project, you can stop doing it. If you sign a multi-year lease and it's a mistake, you're stuck with that decision for a very long time. Make very small advances this year, but make a lot of them. If you're wrong, that's okay. Reassess your position from where you are and advance again. Keep your projects at less than 30 days (2 weeks if you can). If you can't get it planned and done in 30 days, don't do it (unless you have a clear opportunity).

As large companies fail, small one's will take their place. Small creates fast. As the ground changes it creates new ground with fewer direct competitors, which again, creates speed (moving fast over open ground). You must be committed to quick progress cycles this year to survive. If you dig in, you're using the wrong strategy and will deplete your resources before the reversal occurs. In simple language, you'll be out of business or left too weak to compete.

Remember, opportunities are competitor mistakes. Watch your competition closely. They will lay off too many people, refinance to weather the storm, drop their service to reduce costs, and make dozens of other bad decisions. When they do, you have to be ready to MOVE. Reorganize to keep your people, you will need the excess capacity. When your competition leans their staff, their service will drop. When this happens, take their customers with superior service.

Recall that Sun Tzu's strategy is all about economy. Base your projects this year on expending as few resources as possible. For every project ask, "How could I get the same result, make the same contribution, without spending any money?" Be creative, there is almost always a way to do it. Use other people's money. If nobody else will pitch in to cover the cost, it's probably not a good venture. Partner with people, find allies, make friends, share the economic burden and the rewards. You will be tempted to keep the spoils but resist. When your people succeed reward lavishly. Encourage making progress. In this market, allies will be easy to find, be first.

Here are few ideas for the small business:

1. Small businesses that have been dependent on a good economy will fail. If you get your income from other people's "disposable" income, you're in trouble. This includes businesses that spice up events, throw parties, and do feel good training. The other category includes businesses that focus on internal "improvements" for their clients. If you don't contribute to your client's customer, you're in trouble.

2. Small businesses that contribute will thrive. Companies will start cutting back on people but not on value. If you own a business that takes care of your client's customer, you will do well. Focus on helping your customers customer.

3. Big companies layoff non-contributors. They don't let go of people that make money. Be wary of picking up "talent" that has been recently cut lose. They may be bright but they are brass polishers. They make the company look all shiny but don't actually contribute to making money.

4. Sun Tzu is big on systems. Your small business is a tiny sub-system that contributes to a larger system. Learn how that system works and focus on contributing to the entire system, not just yourself. This works in any economy, but is important now. For example, I own a medical clinic, it's part of the local healthcare system.The focus this year is on contributing to that system rather than only the clinic. We want to make a difference for the hospital, nursing homes, and other care givers. We collaborate with chiropractors, acupuncturists, and anyone else in an effort to keep people healthy (allies). The "rules" of an HMO are designed such that the HMO only makes money by NOT seeing patients. We help them out. You need to find allies as the market converges and be on the lookout for allies that can hurt your business so you can prevent them or break them up.

5. Take resources away from your competition. The ground offers resources that allow competitors to compete. What are they and how can you deny them to your competition? Offer year-long contracts to handle common customer demands. Take that money away from your competitor during this down year. It gives you a guaranteed revenue stream and keeps the money out of the hands of your competition. To sweeten the deal, add a layer of service on top of the contract that your competition won't. If you own a dog grooming business, offer a one year contract where you call them and set up the appointment monthly, drop off and pick up the dog, do it at their house, add a night of boarding for free so the family can go out. Partner with a restaurant for a dinner discount. Be creative. Above all, command the ground, the marketplace, and deny access to your competition.

Allan Elder
Strategist and SOSI Master Trainer