As published Jan/Feb 2011 in:
A Simple Strategy for Small Business Success
by J. Michael Barrett and Mike Cadenazzi1
In its simplest form, implementing business strategy means taking stock of what you believe are
the best means of addressing your market’s future needs and placing bets by allocating resources
to maximize your exposure to areas where you see the most potential. Yet, while many small
business leaders agree in principle that strategy is an important enabler of their overall success
they nonetheless claim finding the energy and discipline to set and implement strategy is a
challenge during the best of times, much less during this current chaotic period of unknown
consumer demand, poor economic indicators, and rising health and payroll costs.
As a result they find themselves riding never-ending waves of crises, frantically jumping from
one trouble spot to the next. Simply put, however, if you don’t know where you are headed how
can you possibly know how to get there? Finding success amidst today’s ever-changing business
environment requires a deliberate strategic focus on pursuing what you perceive to be critical
enablers of near and mid-term business success. The alternative—which is sadly the way all too
many small firms drive themselves into the ground – consists merely of chasing clients and
opportunities in a haphazard manner without deliberate forethought or focused discipline.
One simple technique for a manageable strategy is to follow a straightforward 4-3-2-1
breakdown of your time, budget and other resources. This approach begins with identifying your
core business opportunity. This could be your primary customer or the one you believe most
strongly will lead you to further growth down the road. Dedicate 40 percent of your total
productive time and operating budget purely satisfying the needs of that client or market.
Think of it as cordoning off two full days a week, or four days every two weeks, along with
roughly 40 percent of your operating budget focused solely on them. But beware—in practice
many small businesses try to skimp on spending their own money and instead end up penny wise
but pound foolish. In other words, while judicious money management is of course imperative,
customer retention is also essential for success. Deciding early on to allocate a significant portion
of resources to your most valued client ensures you won’t hesitate in making routine
expenditures that show your level of dedication and pay larger dividends in the end.
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The authors are entrepreneurs, strategists and co-founders of Diligent Innovations, a DC-based
consulting firm for the defense and national security markets. www.DiligentInnovations.com
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Having satisfied the primary client, focus another 30 percent of time and budget on your second
most important client or market. This matters because in turbulent times relying too much on
your primary customer means if they fail you fail - period. Since you can’t possibly control their
fortunes best to diversify risk by ensuring you have a fallback revenue source. Again, dedicate
some of your resources to keeping them happy and going the extra mile, a clear recognition and
the reality that you need them as much as they need you.
The next 20 percent should be focused on internal company business. This is in fact where most
small businesses fail, and fail horribly. They shortchange their efforts at managing their
personnel, their books and other internal housekeeping items in favor a modicum more near-term
attention to clients.
Over time this neglect manifests itself in all manner of highly disruptive issues including
disgruntled or continually-departing employees, poor oversight of accountants, lawyers or
salespeople, and even unnecessary and avoidable cash-flow crises. While it seems nearly
inevitable that dedicating just one day every week to addressing internal matters slips away in
favor of focusing on client concerns, the stark reality is that successful firms find a way to make
sure they keep a manageable pace, helping themselves succeed in the marathon vice continually
running a full-out sprint.
Finally, the least amount of time but in many ways most important facet is allocating 10 percent
of total time and budget to developing new opportunities. Again, the key is deliberate allocation
of effort aligned to a clear understanding of where the firm is headed. It can be very hard to let
certain clients or markets slip away, but this is where discipline and clarity play their most
important role.
While many firms fail to implement even such a rudimentary strategy as the 4-3-2-1 approach
most of the firms that are successful over time do in fact have some similar order by which they
manage the inevitable chaos of business. Armed with this approach to resource and time
management firms can discipline themselves to meet current needs while sowing the seeds of
future success.
The easiest way to start is simply by dedicating full days to meeting each of these core areas of
primary, secondary, and emergent markets and internal operations. Give it a shot—you may well
be surprised how a little discipline goes a long way towards evening out the cycle of perpetual
crises.
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