Plan for Small Business Success

by Pedro Hernandez

Want to grow your business? Learn how the right approach and the right tools can better your chances.

If you want to achieve small business success, nothing beats a plan. In what should not come as a surprise, Sabrina Parsons, CEO of Palo Alto Software, a provider of business-planning software, espouses this opinion.

"If you plan, you're going to grow your company 30 percent faster," says Parsons citing a recent survey that her company conducted. What's more, planners have a 60 percent chance of making it through the first two years, a period when most startups fail.

Those results should be enough incentive to start people planning today, but there's still a problem. Unfortunately, the first step that most business owners take involves sitting at their PCs and plugging away at outdated or unsuitable software technologies; and they make little progress. How can you avoid such a fate?

How to Plan for Business Success

1. Set Goals

It may sound obvious, but it's startling how many business owners muddle through without setting goals. They simply put one foot in front of the other with little thought about where the march will lead their companies—often right off a cliff.

In many cases, setting a direction for your company requires a change of perspective. You must balance your passions with business acumen. If you're a bike shop owner, for example, Parsons suggests that you take a "step back from 'I'm the expert in bikes.'" Instead, start thinking along the lines of "I need to run a good business."

Through this lens, determine where you want your company to be in the next quarter or in the next year. Then formalize and document revenue objectives and other benchmarks, and set up business processes and procedures to help you attain these goals.

Suddenly, the steps to running a successful business become clearer, and you'll have a destination in sight that is not clouded by assumptions, preconceived notions and your own biases. Although your passions may drive you, it helps to have a GPS of sorts to lead the way.

Where can you find this GPS? Since you asked...

2. Find the Right Technology

Microsoft Excel, while an enduring and powerful tool, is not the best business-planning software. In an era of GPS and location-aware smartphones, it's like unfurling a creased and faded paper map that's spent a few too many years in your car's glove compartment.

Today, there's a software solution for practically every need, says Parsons. "Unless you're a trained accountant with a ton of Excel skills, you shouldn’t use Excel for accounting," she says. "You need to use an actual accounting program."

Growing a business requires using the right tools for the job. Cloud-based business software, including accounting, forecasting and planning products, help small businesses get up to speed with the latest innovations at very affordable subscription prices. Although choices abound, Parsons suggests that you get your feet wet with user- and budget-friendly products like Wave Accounting, Xero and QuickBooks Online.

Finally, lose the "too busy to learn" excuse. "In the world of software as a service, it's just a matter of taking half a day to research," encourages Parsons.

3. Track Your Progress

Once you have found the right tools, use them.

Numbers scare people, says Parsons. Admittedly, some fear comes into play. After all, it's never fun to look at dwindling bank balances or underwhelming sales reports. "I don't even want to look at bad news" or "math is not my thing" are commonly-held attitudes among entrepreneurs.

Rather than approach these tools and the data they generate with trepidation, view them as you would a traffic status update or accident alert on your GPS (to extend the metaphor). Do you drive headlong into a traffic jam or reroute?

"You've got an assumption of where you want to go," says Parsons, adding that using the right tools to track your progress provides you with an understanding of where your thinking is wrong. Once you have that black and white information in front of you, "you can make the right decisions."

Products like QuickBooks Online, which recently received a "Minty" update, offer valuable tracking features. Intuit and other business software providers have ditched old-school business software interface methods in favor of presening vital information in the form of eye-pleasing charts and graphs. These give shop owners an at-a-glance look at how their businesses perform over time. Use them.

Parsons' own company offers LivePlan software that provides a scorecard. This view summarizes sales, expenses and other vital metrics. It also compares it to past months (and years) and the goals shop owners set in their business plan, giving them insight into both the health of their businesses and the progress their making toward success.

Pedro Hernandez is a contributing editor at Small Business Computing. Follow him on Twitter @ecoINSITE.

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This article was originally published on Friday Feb 14th 2014
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