Are You Thinking Strategically About Your Business?

I just finished reading the latest version of the CIC Small Business Economic Summary report (a copy is on the CIC website, if you’re interested in reading it).  Because the report is entirely created by gen-AI, I always read every word of it before I release it to the public.  'Trust but verify', as they say.  This is good advice for anyone using AI.  ChatGPT is my gen-AI program of choice.  I have found its accuracy has improved greatly, but I still check it.  

It always interesting to read the economic summary report.  It amazes me that a computer can process so many news articles—770 in the latest case—and come up with such a brilliant summary of not only what they all mean, but what the effect might be on small businesses, looking forward.  As a small business advisor, the report gives me a lot to think and talk about in my discussions with entrepreneurs.  I think it makes me a better business advisor because I’m so finely tuned into current events. 

Each month, as I’m reading through the report, I extract excerpts from the report that stand out to me.  They’re like sound bites that resonate with me, for whatever reason.  It's my own little summary of the report.  I pull out the text that I think is most important.  Here's an example that more or less summarizes my conversations of late with entrepreneurs:

"People are still willing to spend, but they are becoming more intentional, more value-driven, and more cautious about big financial commitments. For small businesses, this kind of behavior often shows up as inconsistent demand—strong in some areas, weak in others, and harder to predict overall."

Think Strategically

Although this wasn’t specifically mentioned in the report, the primary thought I took away from this month’s report is the importance of entrepreneurs thinking strategically about your business.  Louis and I talk about the importance of this on the podcast.  In fact, it’s the entire reason why we do the podcast.  We want entrepreneurs to think strategically about their business.

What exactly does it mean to thing strategically about your business?  It means picking your head up from the day-to-day activities of running your business and looking out at the horizon.  What do you see?  What's changing in your neighborhood and your industry?  What's changing in the world?  And what do these changes means to your business? 

In order to think strategically about your business, you need to know what’s going on in the world, at both the macro and micro levels.  Maybe you don’t have time to read 770 news articles from 50 different sources.  Not only do I do that for you, I give you a computer-generated summary of what the articles mean to your business.  All that’s left to do is for you to think about how this new knowledge can be applied to your business.  I call that ‘strategic intelligence’.  It’s the most important and valuable responsibility of every small business owner.  It ensures that your business is optimized not just for today, but for the future. 

Admittedly, the future is a bit murky right now.  We’re in the most challenging environment for small businesses that I can ever remember in my lifetime, other than the early days of Covid.  We’re experiencing major changes almost every day.  How can you plan for the future if you don’t understand what’s happening today?  And like I said, there are a lot of things happening right now.  The environment has changed dramatically, and it has become much more difficult for small businesses to survive.  These are the stories I hear everyday when I speak with small business owners.  I understand the challenges and frustrations.  I tell people, “You’re not alone”, which provides minimal solace.  On the other hand, other businesses are doing quite well.  And I understand the reasons why in both cases. 

For those businesses that are struggling, the remedies usually aren’t easy to implement.  In some cases, I can’t even confidently say they’re likely going to work.  Entrepreneurism has very few absolutes.  You try to mitigate as many risks as you can think of but there's always an element of uncertainty that can't be predicted, or even anticipated.  That's why most folks opt for a salaried job, 'working for the man' (or woman).  Entrepreneurs are the people who are willing to accept the risks and give it a shot. 

The common thread I’ve seen in the latest GPT report, which parallels my own observations, is that the more discretionary your product / service is, and the lower the disposable income of your core customer group, the more you’re likely to be struggling in this economic climate. 

I saw a news article recently about Walmart changing some of their stores and products to go after customers with a higher income.  This is a huge shift for Walmart, who fancies themselves the 'low cost leader'.  And who knows it it'll even work.  They're taking a risk that could ultimately change their entire brand perception. If they're successful, that is.  After careful research, I'm sure, they concluded that the key to survival right now is to figure out how to tap into the precious wealthier customer demographic.  Granted, it’s easier for a corporate behemoth like Walmart to do this than it would be for a small business, but it may just be what’s required for a small business in a similar position to do in order to survive. 

Know Your Customer

Before you throw your current business model out the window and try to emulate Walmart, I have a better idea for you.  Another takeaway from reading this month’s report was the importance of knowing your customers.  Specifically, what they want and don’t want.  Ask yourself, how well do you know your customers?  Regardless of how well you think you know your customers, you can always know them more.  And that incremental amount of new knowledge could be the idea that takes your business to a whole different level. 

Taking care of existing customers is a lot easier than finding new ones.  Walmart will spend many millions of dollars, I’m sure, to learn this lesson.  And they’re prepared to do exactly that.  Small businesses, on the other hand, don’t have that luxury. 

Talk with your customers.  I know, you're busy.  I learned early in my career a very valuable lesson, which is: Never pass up an opportunity to spend time with your customers.  They have the most valuable information that your company needs.  Ask them why they do business with you.  Ask them what else the want that you don’t presently offer.  If they’ve scaled back their purchasing, ask them why.  Don’t just listen to social media.  Talk with people, directly, one-on-one. 

Regardless of what type of business you’re in, it involves people.  And what makes humans more valuable than AI is the ability to make meaningful connections with people.  Relationships are the cornerstone of every business.  I guarantee the stronger those relationships are, the more successful your business is, and will be.  Be the face of your business.  I know time is tight, but make time for your customers.  Those missing links that you can’t seem to figure out?  They’re held by your customers.  To unlock them, all you need to do is talk to them. 

Need Help?

Louis and I had a special guest on the last episode of our podcast (episode 21).  Catherine Marx, who is the CT District Director of the Small Business Administration, talked about all of theSBA resources that are available to small businesses, most at no cost.  I'm talking about the Service Corp. of Retired Executives (SCORE), the Women's Business Development Council (WBDC), the Small Business Development Center (SBDC), and Veterans Business Outreach Center (VBOC).  If you have an SBA MicroLoan, you also have a Technical Assistance Business Advisor. 

Again, help is available for small businesses. The challenge is how to get small businesses to help themselves.  A lot of small business owners don’t look for help until it’s too late.  Asking for help should be a proactive function, not reactive.  That's also what 'being strategic' is all about. 

The opinions and viewpoints expressed herein are those of the author.  Community Investment Corporation makes no warranties or representations as to the accuracy or forward-looking guidance of the material.  Readers are encouraged to conduct their own, independent research and consult professional advisors before making any decisions.  Oh, and one other thing - none of this was written by AI.