Summary: Small businesses can mitigate the risk of permanent business closure by implementing strong operations and project management practices. The article focuses on the basics of project management as it applies to small businesses. The main takeaway is that any temporary endeavor should be treated like a project with a business owner and a person responsible for driving the progress forward (the project manager).
What is a Small Business?
According to the U.S. Small Business Administration, there are 31.7 million small businesses in the U.S., 6 million of which have paid employees. Gartner puts companies with <100 and <$50M at small and 100-999 and $50M-$1B at medium. The SBA has different small business definitions based on NAICS code, but in general, they say <500 or <$7.5M. Regardless of how you define an SMB, there’s no question that they have different needs than their multi-billion-dollar counterparts.
The stressful statistic that many small business owners often hear referenced is that less than a third of those businesses will last for more than ten years. While many factors can play a role in the life of a small business, such as cash management and succession planning, most of the issues we see in companies shutting their doors could have been resolved through strong operations and project management.
What is Project Management?
This question often sparks debates about methodologies, frameworks, and team sizes, but we like the way that the Project Management Institute describes it (with one small addition):
“Project management is the use of specific knowledge, skills, tools and techniques to deliver something of value to people [via a temporary effort]. The development of software for an improved business process, the construction of a building, the relief effort after a natural disaster, the expansion of sales into a new geographic market—these are all examples of projects.”
Here are some of the basic features of a project:
- It is a timebound effort.
- There is a delivery of value which is defined by a project owner.
- It has a start and end.
- The goal is to create a changed state for the organization.
What are Some of the Challenges that Small Businesses Face with Project Management?
- Small, multi-functional team members often have multiple responsibilities in the organization, distracting them from the many initiatives they are working on.
- There is not enough work for dedicated project managers on a regular basis, so small businesses either forego having PMs or they have PMs working on non-project work.
- Limited budgets limit the investment in project management and productivity tools.
- Most of the team lacks deep expertise in certain domain areas – often HR, finance, security, IT, and/or data management – which results in “educated guessing” and poor decision-making.
- Company growth is less predictable, so team composition and focus often need to be adjusted.
What is Project Management for Small Business?
In many ways, project management for small business differs very little from that of a Fortune 500 firm. The basics remain the same:
- Resources must be prioritized.
- Scope must be defined.
- It must be an effort with a clear start and end.
However, the project tool chest that is used needs to be lightweight and appropriate for the company based on the challenges that they face and the value they are trying to gain from the effort. Alex Tuck, our Managing Principal, wrote an interesting article on his LinkedIn Newsletter about the Five Key Tools for SMB Project Management.
The key to project management for small business is to acknowledge that most of the resources on the market are targeted at enterprise customers, and you must look at every project management piece of advice as a suggestion, not a requirement.
Small business project management is what we specialize in at Tuck. If you would like a second opinion on how you have your current projects set up, feel free to book a call with us, and we can give some initial thoughts.