Becoming competitive in the face of economic pressure from both outside and inside the U.S. economy is a timely topic for small business. Hardly a week goes by without some mention of the need for American business to be more competitive - especially in the face of strong foreign pressure in our markets. The impact of the current slowdown within our economy also gets its share of air time because this pressure from inside our economy affects almost everyone, small business included.

Successfully developing and maintaining a competitive edge depends on possessing skill, technology and information that are better than those held by a competitor. Unfortunately, of these three, the role of improved competitive information is often overlooked. Even with many of the benefits of the data processing revolution available to most small businesses, getting clear, factual information that can boost competitive capability is viewed as a real challenge. As a result, the process of improving competitiveness by gathering and analyzing key competitive data is underutilized or missed entirely.This column discusses the kinds of questions that should be asked to successfully gather this information, along with how and whom to ask. How is this type of competitive information gathering done? Basically two ways: looking "inside-out" and "outside-in." In the "inside-out" case, gathering competitive information is accomplished through use of an anonymous internal opinion poll of company employees. In the "outside-in" case, some systematic calls to a representative group of customers and/or suppliers are required.

- Looking "inside-out" - the internal opinion poll:

Because, in the end, the relationship with your business for most employees involves paying their bills, a special level of care is exercised by them about information which they perceive to be potentially upsetting to their income. As a result, things that "most everyone else knows but the boss," are often "invisible" to top management because there is no "safe" way to communicate them. This is why the anonymous aspect of the internal opinion poll is essential.

How should these questions be asked? What topics should be covered? Approaches vary, but here are a few suggestions:

1. Use a true/false format. This way you can more easily "boil down" the data you get back into information.

2. Survey a large enough group so that people feel confident that no one individual can be singled out.

3. Ask questions that will provide answers to help you change the business for the better. Generally, these questions deal with productivity, customer service and problem solving. Here are some sample statements to which respondents could be asked to reply true or false:

- My work group could be more productive than it is.

- Getting something shipped is more important than doing it right.

- A problem has to become a crisis before we do something about it.

As you make gathering this information a habit, you will find both the questions and the answers that really get to the heart of staying competitive. Also, if you solicit this kind of feedback regularly, say yearly, you will build a baseline file of information that can be helpful in finding trends and measuring progress.

- Looking "outside-in" - the customer survey:

Taking a look at the business from the "outside-in" is a little easier in the sense that there is no real need to keep responses anonymous. Approaches to this survey vary also, but two methods are common.

The first method involves providing the customer with a checklist-type questionnaire. The most common examples are found in hotels (Marriott Corporation has a very effective format). Questions revolve around how well customers are served, the degree of satisfaction with the product or service provided, etc. One drawback to this approach is that the response rate is often low and is skewed toward those customers who have a complaint.The second approach is more open ended, and is really rich in its ability to provide all-around data. To keep it somewhat systematic, a list of questions to ask each customer should be chosen. Then, from your customer list, customers should be selected and called at random (to keep the data honest). Explain that you are trying to get a look at your business from the outside-in, and that what they tell you will affect your future plans for the business. Almost all customers will be willing to take five to 10 minutes to answer a few questions when approached in this manner.

What questions should be asked? Here are a few examples from actual surveys performed by local small businesses:

- What do you consider to be the strengths of the (company name) product?

- How easy is it to deal with (company name)? If hard, why?

- Are there any inefficiencies you observe in connection with our customer services that should be corrected?

Most businesses that try this type of survey are truly surprised at all the things customers see them doing right. Where improvements are warranted, these recommendations come through loud and clear, and can often be acted on at low cost.

With this new storehouse of competitive information, a small business can operate with very real data that are not that difficult to obtain. Those who own and run these businesses can then accomplish additional objectives that will help keep the business competitive long into the future.

In conclusion, one caution: When you begin to gather this kind of data, you open your business and yourself to information that is potentially critical. For some small-business managers or owners, this may put more "ego" on the line than is really comfortable. But on the other hand, to combat recession, competition or both, there is really no substitute for the facts. It may be worth a try.

Ronald K. Mitchell is a CPA who researches and writes in the field of entrepreneurship and serves as a management consultant in Salt Lake City.