Business Techniques in Troubled Times: A Toolbox for Small Business Success (Book Review)
“I want to put a ding in the universe.” — Steve Jobs
I believe in the power of entrepreneurs to change the world. Whether that’s education, healthcare, or creating jobs.
And small businesses change lives.
I also believe in the power of business skills for life. As Michael Gerber taught us, working on your business, is working on your life.
I found a book that really gets it.
It’s Business Techniques in Troubled Times: A Toolbox for Small Business Success, by Thomas H. Gray.
It’s more than a book of proven practices for small businesses and startups. It’s an action guide, and a business toolkit. It’s filled with more than 70 business skills for small business success.
And, best of all, Gray is our Sherpa for business success.
The beauty of Business Techniques in Troubled Times is it’s focus on succeeding when times get tough, and how to turnaround a business that’s failing or flailing. It’s a book on how to survive and thrive. It’s a book on business transformation. It’s truly an “insider’s guide” to business turnarounds and business success.
I especially appreciate Gray’s great guidance on how to turnaround a business. After all, I’m in the business of business transformation. During my day job, I help the big business space – the space of CxOs (CEOs, CIOs, etc.) and Enterprises. Outside of work, I help the small business space by mentoring small business owners and startups.
I read a lot of “MBA in a Box” type books, and so far, I’ve never seen a better integrated “All-In-One” guide for the art and science of small business success. I think Gray’s magic is the fact that he’s got a wealth of experience in turning businesses around. He helps owners save and grow their companies for a living. He’s also a Certified Turnaround Professional (CTP), a Certified Business Development Advisor, a Certified SCORE Mentor, and an adjunct professor of business.
That’s a whole lot of certification going on, and I didn’t even know there was such a thing as turnaround pros. Nice.
With that in mind, let’s dive into Business Techniques in Trouble Times …
What’s In It For You
- How to start a business that matters
- How to design a more effective business using proven practices for improving business success
- How to envision a future for your business in a way that you can express and communicate the parts that really matter
- How to design better products and services
- How to really analyze the competition and differentiate in a meaningful way that justifies your business
- How to avoid many of the most common reasons for small business failure
- How to get funding for your business and how to avoid some of the common pitfalls
- How to figure out the numbers to help avoid problems and to shape the future of your business
- How to apply proven practices to all aspects of your business and test your results
- How to analyze and control your margins and cash flow
Chapters at a Glance
- Chapter 1 – Vision
- Chapter 2 – Business Plan and Target Market
- Chapter 3 – Competitive Analysis
- Chapter 4 – Sales Funnel and Sales Forecast
- Chapter 5 – Loans and Lenders
- Chapter 6 – Angel and Family Investors
- Chapter 7 – Product Strategy
- Chapter 8 – Pricing
- Chapter 9 – Distributors and Sales Force
- Chapter 10 – Effective Marketing Communications
- Chapter 11 – Using Your Numbers
- Chapter 12 – Thirteen Week Cash Flow Planning
- Chapter 13 – Process Improvement
- Chapter 14 – Family Employees
- Chapter 15 – Growth Through Focus: Pruning Your Business
- Chapter 16 – Employee Stock Ownership Plans (ESOPs)
- Chapter 17 – Situation Analysis and Bankruptcy
Here are some of the key features of Business Techniques in Trouble Times:
- 70+ techniques. Gray shares more than 70 proven practices you can apply to your business from envisioning to process improvement to exiting strategies.
- Actionable. This really is a “doers” guide. Actually, it’s strategy + execution put together nicely.
- Deep. Gray puts deep business experience at your fingertips from somebody how has turned many businesses around, even in the worst of times.
- End-to-end. This is a holistic and integrated guide that spans the most important activities of actually starting and growing a small business.
- Proven practices. There’s no need to start from scratch. The business world is full of lessons we can immediately apply. Good ideas are nice, but proven practices help you “stand on the shoulders of giants” and leap frog ahead. For example, you’ll learn a simple Nine-Cell Matrix to easily and effectively prioritize your product ideas.
- Results-focus. There is a hard-core focus on getting results throughout the book.
Here is a sampling of some of my favorite nuggets from the book …
The Trusted Outsider Perspective
With a small business, you’re on your own in a lot of ways. It helps to have a trusted outsider perspective to help you on your journey.
“People are always around but there is no one else to make the decision for you and often no confidante who understands the business well enough to deliver the solution. Advisors are expensive, and you fear their advice is too general to be worth the money.
This book provides the trusted outsider perspective that small business decision-makers have been missing. It collects and explains practical techniques to help small businesses make the right decisions, based on 40 years of management and consulting experience. This book is designed to be your toolbox and guide to “master difficulties and win opportunities.”
Difficulties Mastered are Opportunities Won
If you can master turning around small businesses, you’ll have private victories under your belt.
“This book started with the uplifting process of ‘Imaging Excellence,’ envisioning your business three years from now. We started on that very positive note, but the book ended on the subject of distressed businesses, turnaround, and bankruptcy! Is this depressing spiral the fate of most small businesses?’
“Of course not! If it was, the courts would be swamped and the consulting industry and turnaround firms would be as rich as tort lawyers and hedge funds! The problems leading to a turnaround are troublesome, but the turnaround process itself is the path from weakness to strength and success.”
“As Winston Churchill said, ‘Difficulties mastered are opportunities won.'”
Don’t just strategize. Roll up your sleeves and do stuff.
“Herb Kelleher, former CEO of Southwest Airlines, has a great quote to take us from considering to doing: ‘We have a strategic plan. It’s called doing things.”
Imagining Excellence: A 7-Step Proven Practice for Vision Development
Gray shares a process for “Imagining Excellence.” You can read about the success he’s had in “An Operational Turnaround’s First 100 Days” in the Turnaround Management Association’s Journal for Corporate Renewal.
Here are the 7 steps for “Imagining Excellence”, according to Gray:
- Step 1: Orchestrating
- Step 2: Defining Reality — Why Change?
- Step 3: Short-Form Vision
- Step 4: Long-Form Vision
- Step 5: From Vision to Gap Analysis — Old Way and New Way
- Step 6: From Gap Analysis to “Major Projects for change”
- Step 7: Personal Responsibility
What do you achieve from this process?
- Common understanding of the company’s current and likely future position in the industry
- Vision statement in short form
- Vision statement clarified by a vision for each of the company’s key aspects (long-form vision statement)
- Alignment and buy-in among key lieutenant and key contributors
- Prioritization and ownership of major initiatives needed to achieve the vision
- Measure of success
Values: The Way We Do Things Around Here
Gray offers a practical way to reframe company values as writing down behavior expectations.
”The same idea can take the form of behavior expectations, commonly called “values.” These are ‘the way we do things around here.’ Examples: we value teamwork; our integrity is never compromised; we deliver what we promise, to each other as well as to customers and suppliers; our behavior makes our colleagues proud.”
Key Aspects of the Business
To help you think about the long-term of your business, you need to know the parts of your business.
Gray shares a list of key aspects of business to keep in mind:
- Important customers or market segments, and how they perceive the company
- Product portfolio
- Differentiation from competitors
- Competitor perceptions of company strengths and weaknesses
- Market share and sales growth
- Pricing position: leader? discounter?
- Sales channels
- Employee skills and attitudes
- Supply chain
- Major operations processes and quality metrics
- Infrastructure: plant and office facilities, IT systems, other assets
- Organization and governance
- Profitability: margins, cost structure, major cost elements
- Financial structure: cash, debt
- Reputation with investors and leaders
- Reputation in the local community
- Legal and regulatory position
Simple Business Plan Outline
Gray shares a simple business plan outline, and then elaborates from there:
- 1.0 Executive Summary (written last)
- 2.0 Business and Product Description
- 3.0 The Market
- 4.0 Marketing Strategy and Tactics
- 5.0 Operations/Organization
- 6.0 Financials
30 Mistakes to Avoid in Your Business Plan
Small business owners tend to make some common mistakes that Gray groups under “Unrealistic Assumptions, ” Incomplete Analysis,” and “Confusing Presentation.” Here are my favorite ten from Gray’s list of 30:
- Market share too high for a start-up (e.g. 10 percent).
- Starting three lines of business at once, rather than succeeding at one before launching the next.
- “A low price is the only differentiation I need.”
- Sales forecast grows at unrealistic pace, uses most of the time of the owner, assumes customers pay right away, and has no source/model from a currently operating business in a similar field.
- Risks are not presented and discussed.
- No recognition or description of key operations processes (hint: if you include flowcharts of these processes in the appendix, you will really stand out as a disciplined planner.)
- Price is too low; contribution (gross) margin is too low; profit is less than 15 percent at maturity.
- No milestones offered.
- Executive summary is “creative writing” rather than a summary of the text that follows, or is longer than two pages.
- Pages and pages of beliefs, philosophies, and values rather than practical tactics for succeeding in business.
Do You Have a Reason to Be in Business?
Gray has a great section on competitive analysis and differentiation. If you can’t differentiate, then you don’t have a great reason to be in business. You’ll be lost among the sea of sameness.
Gray summarizes the competitive analysis and differentiation process:
- You define your target market so you can think like them about their buying criteria.
- Then you assess competitors on those criteria and find your differentiation.
- It is something that matters to prospects because ideally it is one (or two) of their top five to seven buying criteria.
- Having this differentiation you have a reason to be in business!
- Next you must figure out a ‘positioning’ slogan: how you want the customer to think of your company. It will relate to the differentiation but express customer benefits in a catchy style.
- Once you have positioning, you can develop your marketing program (the four Ps), where every tactic must support this positioning.
Effective Marketing is Key to Survival
Marketing makes the wheels of your business go round and round. When you know how to think about the full scope of marketing, it becomes obvious why marketing is core to your business backbone.
“Effective marketing is one of the three crucial elements for survival of a small business. Marketing is more than communications. It includes choosing the right target market; selecting your differentiation and positioning; designing your product, pricing, distribution, sales, and service tactics to support that positioning; and then communicating effectively to the right audience within a manageable budget.”
Your Customer Database Unlocks Revenue Potential
Do you know who your customers are?
“Your customer database is one of your most important assets — the tool for targeted communications to unlock your revenue potential.”
You are the Forecaster of New Work and New Revenue
Somebody has to predict revenue, costs, and cash flow on a weekly basis. It’s you.
“Small business owners usually understand their expenses very well, and they know what is owned them for completed work and work in progress. The problem is forecasting new work and new revenue. Their bookkeeper is not a forecaster, and their accountant looks backward, not forward, so the cash forecast becomes the owner’s task. Unfortunately, the owner of a small business spends most of his or her time working in the business, not on the business. They normally rely on others to track the numbers.”
Small Businesses Die When They Run Out of Cash
“Cash is king” and money fuels your business life-blood. Owning your business, means owning your books.
“Most small business owners don’t understand bookkeeping, QuickBooks, contribution margin, or cash planning, so they shy away from learning how to use their results to improve business.”
“Yet when small businesses fail, it’s because they run out of cash. Why does this happen, and why do owners allow cash shortages to develop in the first place? Too often, it’s because they don’t try to understand their numbers.”
3 Techniques for Small Business Owners to Understand Their Numbers
According to Gray, it’s not tough for small business owners to understand their numbers well enough to plan, even without learning software or bookkeeping. He says you just have to learn three techniques:
- First, require the bookkeeper to export the monthly QuickBooks profit and loss report to an Excel spreadsheet, with one column for each month of the year.
- Second, have the bookkeeper reformat the data in Excel into an income statement with a reasonable number of revenue and expense categories, and for each category heading show the “% of Revenue” in that line.
- Thirst, study where the money goes and create ideas to change those percentages.
Envisioning a Transformed Business Built on What Works
Gray shares an approach for transforming your business:
- Identify the Segments
- Gather Your Data
- Get Their Ideas
- Assess “Success Themes”
- One-Level Deeper
- Assign Champions
- Bring it Together
- Make it Happen
- Measure Progress
Transforming your business is an act of thoughtful pruning.
“Pruning your business means envisioning a transformed business built on what works That new business is your vision. A great technique for showing what’s different is to make a chart listing key aspects of the business and then showing ‘old way’ followed by ‘new way’ for each. “
52 Week Content Plan for Your Blog
One thing that surprised me was how Gray provides a very practical way to plan out your content for an entire year, if you want to launch a blog for your business.
It’s incredibly pragmatic and breaks it down from a scary big effort, to a simple and manageable plan. Bloggers everywhere can learn from this approach, even if they don’t have a business.
“For your blog, make a list of 20 topics that your customers may find useful. If your blog is a once-per-week event, 432 topics would cover the whole year, and you will certainly find more interesting topics as the year goes on and as you keep listening to the buzz about your industry.
Your blog topic list could include how to use your product, issues related to the need your product satisfies, the history of solutions to this need, potential future developments, community issues, social media issues, other useful new products, and upcoming trade shows/exhibits.
You want to write only a page, maybe 300 to 1,000 words, so you don’t need to know or explain everything about the topic! For bigger subjects, plan a series of articles.
You can supplement this list of topics with issues you come across in other blogs, in newspapers and magazines, in LinkedIn discussions, at trade events, and in conversations with customers and friends. Get input about topics from Google Alerts about your industry or from websites that claim to provide blog topics. See ‘Find Great Blog Topics with These 30 Can’t-Fail Techniques’ at the Copyblogger blog.”
Think about the sequence of topics, and then make a calendar to guide your efforts.”
This is one of the best business books I’ve read that dives into the nuts and bolts of starting and growing a successful business. If you can master this book, add the business skills to your toolbox, and apply them, you’ll have an advantage in helping yourself or others in the art and science of business success.
Get the Book
Business Techniques in Troubled Times: A Toolbox for Small Business Success by Thomas H. Gray is available on Amazon:
- Business Techniques in Troubled Times: A Toolbox for Small Business Success, by Thomas H. Gray
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