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Plan of Attack

If you can't find your own leading indicator, here's one you can borrow: Elkhart, Ind. David Pairitz, chief financial officer of Fastec Industrial, which distributes approximately $25 million in industrial fasteners and related products each year, says that Elkhart -- home of Fastec's corporate headquarters -- often leads the U.S. economy into and out of recession. One likely reason: Elkhart is a center of recreational-vehicle manufacturing, and RV sales reflect the rising or falling economic confidence of middle-class Americans. Even though Fastec's sales are national, Pairitz still keeps an eye on business conditions in his neighborhood. "Knowing what Elkhart can mean to the rest of the economy does help put things into a larger perspective for our company," he says.

Stay tuned

Sometimes even a leading indicator isn't enough. Some industries change so quickly that CEOs need a constant stream of up-to-the-minute information to adjust their plans. Peter Tracy, the president of seven-year-old MicroPatent, an East Haven, Conn., company that distributes patent information on CD-ROM and over the Internet, finds the pace of change in his industry a constant challenge. "I've never seen anything like it. In this business, from one issue of Wired magazine to the next, the whole industry changes," Tracy says. "You just think, 'Am I stupid -- or how in heaven's name could anybody keep up with all this?'"

In that frenetic environment, Tracy's $5-million company makes and monitors financial plans and goals, but its strategy has to be constantly adjusted to accommodate changing technology. One tool Tracy has found that helps him and his employees keep pace with change is a subscription to a customized electronic-news service offered by a company called Individual Inc. For $29.95 a month per user, Individual's "Heads Up" service each day transmits to every subscribing MicroPatent employee the first few lines of articles that are relevant to that employee's particular areas of interest. It will also transmit whole articles for an additional charge. Tracy himself uses Individual to track big strategic areas like intellectual property, but his marketers have more mundane applications. They've found, for instance, that by tracking mergers-and-acquisitions activity through the service, they can locate likely customers; acquiring companies are often looking for patent information about the new industries they're entering.

Know your costs

If your business forces you to make quick decisions, it's critical to have a sound basis for making them. That was Karen Goode's key lesson from her strategic-planning course. The class forced her to break down her business into revenue streams, called strategic business units, and then to analyze the profitability of each. The results surprised her. Goode does transcription business for local hospitals and medical clinics and occasionally for publishing companies. She had always assumed that the clinic business was a minor adjunct to her core (hospital) business. When Goode broke out the numbers by strategic business unit, she realized that the clinic business could be very profitable -- if she managed it properly. Because the clinic accounts require less-specialized medical knowledge than the hospital accounts, she could assign lower-paid people to them. However, without careful planning, she might end up putting her highest-skilled, most expensive people on those easier accounts, thus missing out on her potentially high margins.

Goode used to approach every sale the way most entrepreneurs do: more is better. Today she goes after only the work she knows she can profitably perform. "We can all fool ourselves into thinking we're making money," she says. "It opened my eyes to be able to say, 'This account makes x dollars for me.'" That information has altered Goode's entire strategy. As she sells she's also thinking about how to manage the new account. Goode now has something every business owner could use: a plan that continually adjusts to changing conditions, one that she has internalized and can use to make day-to-day decisions. But Goode puts it more simply than that. "I just approach clients and customers and business differently than I did a year ago," she says. "Now I think ahead."