More than half a million new businesses were started in the U.S. in 2003. It sounds great, until you realize that the same number of businesses closed that year.

There’s nothing easy about sustaining a small manufacturing business, let alone growing it. But there are seven irrefutable rules to small business growth that provide a roadmap to success, according to Steven S. Little, a business consultant and writer specializing in small business growth and the future of opportunity. Little will deliver the afternoon keynote address at the WMEP Manufacturing Matters! Conference 2007, to be held April 25th in Milwaukee.

The good news is as tough as it is for small and mid-sized manufacturers, “it’s a myth that manufacturing is dying in the U.S. It’s not what it once was, but it’s an extremely vibrant and important sector,” said Little. In Wisconsin, the manufacturing sector is responsible for 94% of all exports. Nationally, it contributes 63% of all exports. “There are small and mid-sized manufacturing firms that are doing very well.”

Another encouraging sign is the increased interest banks are taking in small businesses. “The financial community is recognizing small business as a powerful force for the first time in a long time,” Little said. “Small businesses are definitely being helped by larger financial firms. Lack of access to capital used to be the greatest limitation to small businesses 30 to 40 years ago. Now, they have access to capital like never before.”

The downside is that sometimes certain attitudes on the part of business owners can create their own set of problems. One common challenge is what Little calls “the people problem.” Some business owners regard the hiring and retaining of good employees as “the thing that gets in the way of doing their real job. That is their real job. Everything else is secondary. Some people say, ‘I love my business, I love the industry, but the people drive me nuts.’ They don’t hear how funny it sounds. But it’s a big barrier to growth,” said Little.

Other owners have a tendency to focus only on their strengths. “They don’t want to do things that don’t make them happy or fulfilled,” said Little. “They focus too much on the tasks they perceive as most important rather than on what customers or employees consider important. They don’t want to look into areas necessary for the business to function.” Little’s seven rules are designed to provide businesses with a system for growth that is practical and proven. The first four rules are:

1. Establish and maintain a strong sense of purpose. “Human beings like to know why they get out of bed in the morning. While making money can be fun for a little while, money will get you out of bed for about five years. After that, you need a higher calling, a strong sense of purpose beyond personal wealth accumulation,” he said. For some businesses, this may mean greater involvement in the community. However a business accomplishes this, both managers and employees need something “that sustains them beyond the money.”
      
2. Thoroughly understand the marketplace. Market intelligence, or an organization’s ability to first recognize and then adapt to fundamental change, is crucial, said Little. “It’s the ability to see changes and do something about them. On the whole, small business owners are good at internal focus – cash flow management, order flow management, staff management, but not at external forces of change. They can’t see the forces affecting them. It’s the opposite in big business.”
   
   Little owned an apron manufacturing company in the mid 1980s, the kind of aprons worn by employees in the hospitality and retail industries. One of his competitors was making tea aprons for maids and waitresses. “She misread the market. She had no idea what she was really selling,” he said. She thought the key to business growth was efficiency, which she interpreted as better machine utilization and less expensive fabrics.
   
   But Little knew a better apron would do well, and he made his with heavier, stain-resistant fabrics. His aprons cost more and his marketing efforts reflected the higher-end merchandise. “Our brochure looked like a fashion catalog,” he said. “It was so simple, but so hard for a third generation company to see.”
   
   Little succeeded, in part, because he was an outsider. He was able to see overall trends in the market instead of getting bogged down in the details of the industry. In the end, his value-added strategy beat out the competitor’s low-cost approach. The other company went out of business after about two years.
    
3. Build an effective growth planning system. When a company has a written plan that is communicated throughout the organization and regularly updated, “it’s the best predictor of  growth,” said Little. “Only 12% of U.S. companies have that kind of plan.” The process of developing such a plan can itself lead to growth, “because it forces you, on a regular basis, to consider what’s happening in the marketplace and to re-evaluate and make changes as necessary.” Otherwise, there’s a danger that important decisions will be made haphazardly.
         
4. Develop customer-driven processes. While it’s true that most businesses are more customer-focused than 20 or 30 years ago, “there’s still so far to go,” said Little. For example, virtually all businesses send out invoices, but most do batch processing, an internally-defined process that is easier for the business. The technology exists to easily customize invoices so that each customer receives an easy-to-read invoice that includes the customer’s part numbers and is sent by standard mail, e-mail or by fax, depending on the customer’s preference. “It’s one of a thousand processes where you can distinguish yourself from the competition,” said Little.

Taken together, the seven irrefutable rules are a strategic roadmap for small businesses that provides real-world solutions to common problems, moving businesses into high growth, high-profit territory and laying the groundwork for continued success.

Steven S. Little is a graduate of Miami University. He has been president of three fast growth companies and is currently a speaker, writer and senior consultant for Inc. Magazine. His book, “The Seven Irrefutable Rules of Small Business Growth,” is in its 6th printing.