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Table of Contents

Lead Story

A new era in digital marketing

News

Industry Update

Heartland settles some, loses one

U.K. checkless by 2018?

Diners Club: New brand, new voice

A new level of protection

Features

Research Rundown

A capital idea for growth

Selling Prepaid

Prepaid in brief

Understanding prepaid's target audience

Ciao prepaid

Brush up on terminology for 2010

Views

To checklist or not to checklist

Biff Matthews
CardWare International

Education

Street SmartsSM:
New year, new plan

Jon Perry and Vanessa Lang
888QuikRate.com

Manipulation is good

Daniel Wadleigh
Marketing Consultant

Effective tradeshow marketing

Peggy Bekavac Olson
Strategic Marketing

Digging into PCI - Part 7:
Restrict access to cardholder data by business need to know

Tim Cranny
Panoptic Security Inc.

Company Profile

mPayy Inc.

New Products

An ATM for all types of weather

Triton RL5000, Triton RL1600
Triton Systems of Delaware Inc.

Inspiration

Courting curmudgeons

Departments

10 Years ago in
The Green Sheet

Forum

Resource Guide

Datebook

Miscellaneous

2010 Calendar of events

Skyscraper Ad

The Green Sheet Online Edition

January 11, 2010  •  Issue 10:01:01

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Street SmartsSM

New year, new plan

By Jon Perry and Vanessa Lang

With the end of the holiday season and the return of daily routines, it is important to make sure to set aside time for strategic planning. The challenges of 2009 fostered many pearls of wisdom that are waiting to be capitalized on. Yet, people often skip the step of formally committing to implementing all of the great lessons learned from a trying year.

We recently finished a week-long strategic planning session that included not just reviewing our own business but also our key sources of referrals, vendors and prospective partners. At the end of the session, we had a road map for 2010 that will take us to the next level and keep us from making costly mistakes.

We asked GS Online's MLS Forum participants if strategic planning was important in 2010. Coach Bob believes so. "This is a time where everyone in this business needs to open their eyes, ears and minds to change," he wrote.

Steps in strategic planning

Having a vision of where you will be next year at this time puts you ahead of the competition and focuses attention on your goals and desires. To create your roadmap, try the following:

Strategic objectives

Strategic planning provides a look ahead to the next three to five years. Five years down the road might be a bit fuzzy, but the next 12 months should be reasonably clear. Strategic planning is at the 60,000-foot level; it's the broad strokes of where you want your business to be.

Tactics

Tactics support the strategy. Your tactical objectives should be specific and measurable. For example, "increase top line revenue 15 percent" and "decrease customer attrition to below 3 percent" are specific and measurable. Strategic objectives outline your plan of where you want to go. Your tactics are precise and tangible; they detail how you will achieve that strategy. Tactics often have to be flexible. As we experienced with the economic downturn, conditions change and tactics must be adapted accordingly. If you know where you want to go, your tactics involve working out the most practical, simplest or cost-effective route.

Budget

Your budget puts numbers to your strategy. Whether it entails a future business or personal loan, this is the part of the plan that financial folks will read with the greatest attention. Create 12-month cash-flow and profit forecasts that have an estimated two-year projection. If you have been in business for more than two or three years, you have a history of annual growth that can provide a more accurate projection.

Look at your monthly expenses. Write down every expense you can think of. Even if you work out of your home, costs are associated with electricity, phone service and office supplies. Be realistic and pessimistic. A wise banker once told us, "Once you are finished with your sales forecast and expenses, then double your expenditures and halve your forecast."

Completing your business plan

Start your business plan with a brief business profile that provides:

  1. A description of your business, along with the products and services you offer
  2. The physical makeup of the business, including profit margins, number of employees and location
  3. Your business growth to date
  4. The markets you serve and your geographical scope
  5. A description of your competitors and your competitive advantages

As you work through the three key elements just mentioned, the goal is to outline how you plan to move your business from where it is now to where you want it to be.

Importance of market research

An area overlooked by many businesses is market research. It is too often a weak link in their business plans. Market research needs to address:

  1. Financial, economic and market conditions
  2. Key suppliers
  3. Potential customers and competition
  4. Issues that do or can affect your industry (for example, the need for Payment Card Industry Data Security Standard compliance)

Your business plan should clearly indicate that you have done this research.

SWOT

A great way to provide a summation to your research is to conduct a condensed strengths, weaknesses, opportunities and threats (SWOT) analysis. Strengths and weaknesses pertain to your internal organization. Opportunities and threats refer to the external marketplace.

Boil down your SWOT analysis to these three simple questions:

  1. Who will provide merchant services with you?
  2. Given the thousands of other companies in the industry, why should businesses get their services from you?
  3. How will you provide service to your customers? (There are various front-ends and back-ends in processing. Which will you choose and why?)

Above all, it comes down to differentiation. What makes you different? If you list "low price," "great service" and "24/7 service," those can be claimed by any company and therefore are not differentiators. Differentiators are unique.

Strategic planning

Much of the business plan noted above can be accomplished internally. In strategic planning it is important to consider other organizations that impact your business and get them involved.

For us, we have organizations in one of four groups:

Ask members of these groups for their ideas and thoughts. Determine how the economy is affecting each of their businesses and work to ensure long-term mutual sustainability. No matter how small your business may be, involving your vendors and partners in strategic decisions will result in better relationships and more information to guide your decision-making process.

Change happens

It is hard to know where to go if you don't have a baseline to identify where you started. That is where having a solid foundation of measurements comes into play. Basic financials like your profit and loss will tell you at a high level how you are doing. List all of your expenses, and identify areas for reduction and improvement.

Key sales indicators might include number of accounts, profitability by account and the source of each account. Review accounts that were closed and understand why those accounts were not retained. Even if you have never measured anything, the numbers are there in bank statements, residual reports and other documents.

Lastly, if you do not have a written budget in place, make this a priority. We use our budget to ensure we are never late on a payment and never miss our top-line revenue goals. Once your financial and key metrics are organized, you will eliminate much fire fighting and stress caused by finances.

Use all of this information to create formal action items and goals. Get buy-in from key players that they will be proactive in supporting the proposed changes. Assign responsibility for each item and goal and define dates for completion. Create a strategic calendar of events that is monitored and managed. There are things going on that we cannot impact or change. Health care reform will likely become law. Inflation will hit. While we all have a voice to express our thoughts and concerns, many of these changes are going to happen whether we like it or not.

However, ensure that these items are identified in your plan and that you understand how to react should they occur. Creating a contingency plan will provide flexibility in your organization that is based on more preparation and less perspiration.

Plan to prosper

Donald Harrington on the MLS Forum wrote, "What makes you unique and of value to your merchants? 2010 is going to be a year of reality for many people and businesses. It will not be business as usual."

Our success in the industry is directly attributable to having written planning documents. Many reading this article may not be in this industry come December 2010. Those who have a written plan will have the greatest probability of continued success.

Jon Perry and Vanessa Lang are the owners of 888QuikRate.com, an ISO based in Ft. Worth, Texas, that was named Small Business of the Year by the local newspaper, The Star Telegram. For more information, tweet them at http://twitter.com/dfwcard, comment on their blog at http://merchantservices.cc or visit their profile at http://linkedin.com/in/jonperry or http://linkedin.com/in/vanessalang. Alternatively, you can contact Jon and Vanessa by phone at 817-857-3557 or by e-mail at jon.perry@888quikrate.com or vanessa.lang@888quikrate.com.

Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.

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