The Great Recession has taken a serious toll on small and medium-size businesses in the U.S. But while many businesses have been hit hard, others have actually thrived. St. Paul–based business consultant Carol Jean Peterson helps businesses start up, grow, turn around and expand. Her technique? She advises owners to recognize their strengths and weaknesses so they can perform better. In fact, some of Peterson's startup clients at Business Growers have performed so well they're currently planning expansions into additional locations. Just how are they doing it, and how can you follow in their path?
We recently asked Peterson to weigh in with strategies for success during weak economic times.
Q: A lot of small and medium-size businesses are struggling—some are even failing—in this long, drawn-out recession. How is it that other businesses not only survive, but thrive in these tough times?
A: The small and medium-size businesses I see thrive are the ones that have taken the recession very seriously. Smart business owners know the world is more complex now. They understand they can't be good at everything—they need trusted advisors to guide them in planning, strategizing and operating their business. They understand that for every dollar they spend on professional advice, they'll save about $10. To succeed as a small-business owner, you must zero-in on what you're good at and hire out the rest.
Q: How do business owners determine their strengths?
A: The biggest weakness among small-business owners is they don't know what they don't know. They're experts in their technical skill or area of business, but rarely anything beyond that. As a consultant, I've given business owners a questionnaire and instructed them to evaluate their skills based on six key areas: planning, execution, operations, marketing, finance and human resources. The exercise enabled them to realize their areas of expertise and uncover the weaker areas for which they might consider seeking help. Once you know where your skills rank, you can focus on what you're good at and reduce the time you spend on other areas.
On a similar note, while you may be able to complete a task, like running payroll, it may be more efficient and cost-effective if you hire someone who can do it faster. For example, if your billable rate is $100 an hour and it takes you two hours to run payroll each pay period, wouldn't it be better to pay a service $50 to do the same thing? Sure, you can do it yourself. But you'll be out the $150 you could have earned on a paid job.
Q: After identifying my skill levels, where should I go to find help with my weak areas? How would I find someone I can trust?
A: The Small Business Administration (SBA) and the Service Corps of Retired Executives (SCORE) are two excellent resources for business owners. Both are nationwide agencies that help entrepreneurs start, grow and manage businesses. The SBA provides education and counseling, as well as finance opportunities. A nonprofit association, SCORE pairs up entrepreneurs with mentors who are primarily retired executives with business backgrounds.
Another option is to seek an advisor or independent business consultant, someone well connected in your community and with strong credentials, such as an MBA or a professional consultant certification. In addition to providing you in-depth business support, they can provide referrals for help with things like payroll services, graphic design or legal counsel. Independent business consultants usually maintain a stable of professionals they can refer you to. Getting a high-quality referral is important because one of the challenges business owners frequently encounter is going to non-referred sources for help. They get taken advantage of, or they don't get what they need. Recently, I had a client who needed branding and graphics help. I referred the client to a tried-and-true, top-notch graphic designer whom I work with. My client paid $800 for a job that was worth $4,000. The work was extremely high quality, and the client was delighted with the result.
Q: My brother is a graphic designer; can't I just get help from him?
A: The marketplace is moving at a faster pace than ever. As a result, business owners need to come to grips with the fact that getting "free" or "discounted" services from friends or family is not always a good idea. Over the years, I've consulted with hundreds of businesses and can recall countless stories of entrepreneurs hiring a friend to build their website or having a cousin do their QuickBooks management. It sounds like a good deal until two years later when they still don't have a website or they are going out of business because their QuickBooks management wasn't handled properly. It can also be difficult to "fire" friends and family when the job isn't getting done. I owned a restaurant for 12 years, and during that time, my brother and sister worked for me. I'm here to tell you, it's the very rare person who can remain impartial when it comes to family and friends. It's best to stay on a professional, nonpersonal level when outsourcing talent.
You can reach Carol Jean Peterson, MBA, at firstname.lastname@example.org or via LinkedIn. Go to Business Growers for more information on how to make your small and medium-size business thrive.
Note: The opinions expressed in this article are those of the author and do not necessarily reflect the views of FedEx.
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