Category: business advice

Should you join an industry group?

Do industry groups add value for entrepreneurs?

This post is an expanded article on yesterday’s stream of consciousness in Start Up Smart. Hopefully this clarifies my thoughts.

For a new business – be it a high tech startup, a local service like a hairdresser or a manufacturing company – it’s tempting to join an industry group to get your views heard, get access to some useful training and do some helpful networking.

Often though, industry groups don’t deliver for their members. So what should we be looking for when we’re asked to join one.

In their truest form, industry groups should promote the interests of their members with the aim of growing and promoting the industry they represent. Other add-ons are training courses and information on relevant changes in their sector.

While many do this, all too often the groups become locked into self-perpetuating themselves, promoting their own managements or advancing the interests of a small group of their members.

Worth the effort?

For start-ups, the investment of both cost and time in an industry group is something that has to be carefully considered.

To get an effective return on being a member of an active industry group requires participating in the events and being an effective ambassador for your industry.

While an industry group could be useful for your business, there are a few factors to consider.

Before joining, have a look at the events the group holds. If the events are expensive and don’t seem to add value then that organisation probably isn’t for you.

Also have a look at the management of an organisation. There’s a breed of industry group manager that seems to pop up regularly in all sorts of roles.

Red tape woes

Some of these people may be good lobbyists but many don’t have much real understanding of an industry. It’s better to have a large component of industry participants volunteering for key roles rather than a professional.

If there are a lot of employees, then it’s likely that industry group is going to be bureaucratic. This goes hand in hand with professional managers who are remote from the real needs of the organisation’s membership.

Often the reason for a lot of employees or bureaucracy is that an organisation receives a large amount of government support.

This is not necessarily a good thing for industry groups or their members as it may mean the body is better at submitting grant applications than actively looking after members’ interests.

More costly than coffee

Another reason for many employees is that the industry body is on a constant membership drive to cover its operating costs.

This is often a spiral found in business associations; the management need more subscriptions to cover their costs so they hire more sales people to recruit new members who in turn require more managers.

Ultimately, few industry associations deliver useful results for entrepreneurs. Most of us working in our own businesses are more in need of getting away from the office and meeting other people where we can refresh our perspectives.

Often, the best thing for those building new businesses is to get out and have a coffee with their customers or contemporaries at any of the many coffee mornings or informal industry events like Mobile Mondays or Sydney’s Silicon Beach.

If an industry group can offer that then it might be worthwhile joining, but don’t fall for the hype.

eBusiness Introduction

What is the eBusiness book

Introduction

At the time of writing the e-Business book in early 2011 social media use has exploded, Facebook has raced past 600 million users, Google has offered six billion dollars to buy daily offer site Groupon; and smart phones are outselling personal computers. The way we do business is rapidly evolving as these technologies change our world.

Many businesses feel challenged by these changes. At the end of 2010 some of the Australian retailing industry tried to turn back the tide with a campaign for tax changes to stop people buying online. These shop owners didn’t understand the Internet’s real effects on their businesses are a lot more subtle and powerful than saving a few GST dollars.

Driving most of the change is how our customers, suppliers and employees are becoming more informed by using the web to discover who we are and talking to each other about their experiences in dealing with us. In this environment, having an online presence becomes a business essential.

There are many reasons why businesses haven’t gone online: the cost; the jargon; and the time it takes to set up a website or social media presence. This book will show you how to set up a full web presence in just seven easy steps — it won’t take you more than a weekend to implement a basic but functional and professional look.

eBusiness will help anyone who wants to get their ideas, project or business onto the internet cheaply and effectively. Much of the advice here is for small or start-up organisations that want to get their message out to the world.

You can also visit the book’s website to find bonus resources such as links, frequently asked questions and advice on web consultants.

Towards the end of writing e-Business Google and MYOB launched their Getting Australian Businesses Online project, which also helps local merchants set up a website. The appendix includes an overview as well as the instructions to help you maximise your results through this terrific service.

I mentioned three reasons for why businesses are not online, but there’s also a fourth reason and that is that many businesses think they don’t need a website. Those days are over. In a world where our customers, staff and suppliers are online, we have to be online as well. This book will show you how to create an internet presence quickly and effectively so you can grab the opportunities on offer.

Like to learn more? eBu$iness is available at all good book sellers and online through the John Wiley website.

Picks and Shovels

A business gold rush a great time for entrepreneurs, are you prepared?

It’s often said the real money in a gold rush is made by those who sell the picks and shovels. A great example of this is yesterday’s announcement that Dealised, who provide software for group buying services, has raised $5 million in investor funding.

Undoubtedly we’re in a gold rush for group buying sites with new services being launched weekly. One thing that many observers don’t understand about group buying sites is they aren’t really technology businesses, but sales driven directory services which have more in common with the Yellow Pages or the a giveaway local newspaper than Google, Facebook or Microsoft.

Technology though is important to these businesses as they need to track and publicise their deals which is what Dealised does. By offering this as an off-the-shelf service, it frees up capital and makes life easier for the dozens, if not hundreds, of group buying services being launched around the world each week.

Reducing barriers to entry is one of the things the tech industries are extremely good at ­– as the early group buying sites like Groupon and their local counterparts have found – and it’s something that all businesses need to keep in mind.

The wave of group buying start ups is part of a broader wave of disruptive businesses that are entering all parts of our economy. As we see cloud services remove the cost of buying equipment and software, it becomes easier for new, hungry entrepreneurs to find opportunities.

Another interesting aspect of Dealise’s business model is that the business itself is a spin off from the Spreets group buying service which was sold to Yahoo!7 at the beginning of the year.

Overlooked in most of the coverage at the time was that the sale only covered the group buying operations and not the Dealise technology. This freed up the founders and their investors to focus on developing the Dealise software without the distractions of running a daily deals site with its troublesome sales staff and pesky customers.

Most importantly, it kept the software platform which is the most scalable part of the business in the hands of the founders. This has given them the opportunity to build something that can be resold to thousands of other businesses.

In the tech industry we’ve seen examples of this in the past, the best example is when Bill Gates and Paul Allen licensed their MS-DOS software to IBM rather than selling it outright which allowed a massive new industry around IBM compatible computers to develop with Microsoft getting a payment for every computer sold.

While we may not see Dealise become the next Microsoft, it’s worthwhile considering some of these lessons, certainly both the gold rush and the licensing aspects show how we shouldn’t jump for what appears to be the easiest money.

Our industries may not appear to be in a gold rush, but those reduced barriers to entry are affecting everyone from booksellers to manufacturers and café owners. Have a look at some of the software your competitors are using, it’s no longer business as usual.

The Lulz are on us

What can we learn from the recent wave of security hacks?

Last weekend’s announcement that the LulzSec group of jolly hackers was breaking up was met with bemusement at what has been one of the most mysterious, albeit entertaining, chapters in the information wars of 2011.

It’s quite clear that 2011 is the Year of the Hack with organisations ranging from electronics company Sony who now appear to be the joke of the online security world through to major banks, the FBI and even Google’s Gmail service being the subject of serious online attacks.

That many of these attacks were successful is a reminder to all of us how important online security is and it is our responsibility to protect our customers’ and staff details by taking basic precautions.

Take security seriously

Many of the business hacks appear to have been because of slack security practices including out of date software and default passwords being used.

Even if you don’t have a server yourself, make sure your computers have all current updates installed and that strong passwords are in place.

Password Security

A basic precaution is to have robust passwords. A combination of letters and numbers is the best.

One nice little tactic is to use a phrase as a password and separate the letters with a character, for instance using “mary$has$a$little$lamb”, although you might want to choose a more intimate phrase.

Keep in mind too that strong passwords aren’t much help if an incompetent corporation leaks them onto the web, along with your banking details. So use a layered approach where critical passwords for bank accounts are different to those that you might use for an online game or social media site.

Restrict access

The real risk to our security lies with our own staff, many “hacks” are actually employees erasing or give away data, which could be deliberate or accidental.

Don’t give passwords or access to people who don’t need them, keep the business accounts away from your sales staff and lock employment records away from the IT folk. Private client information shouldn’t be shared around the office and particularly not with outside parties.

Backup, backup, backup

The DistributeIT debacle, which one is hesitant to describe as a “hack” as their complete loss of hardware, client data and backups sounds more like an internal problem than an outside attack, shows how important it is to keep your own backups.

As we move our businesses to online and cloud based services, we have to put a lot of trust into those who provide those products. It’s good insurance to have easily available copies of mission critical data in case a problem.

Invest in technology

We’ve all heard CEOs and ministers claim they will save millions in outsourcing their IT departments. Those savings come from somewhere and information security is one of those corners that’s cut when reducing operating costs.

Experienced tech workers have plenty of examples where management cries of “we’ve been hacked” have actually been hardware failures or staff mistakes bought on by poorly trained staff working with inadequate equipment.

Sony appear to have fallen for this, having reportedly sacked many of their security specialists before the hacks began.

Make sure you are making sensible investments in your technology and not going for the cheapest, or free, option simply to save a few pennies.

Obey standards

Nothing is more embarrassing than losing clients’ confidential data, particularly banking details.

If you are taking customer payments, make sure you are complying with the DSS-PCI standards for card payments by giving the work to a reputable payment gateway.

Have a contingency plan

“There but for the grace of God….” is a good phrase to keep in mind when you see another business affected by a hacker, hardware failure or any of the millions of other unfortunate things that could stop your business.

Even with the best planning in the world sometimes dumb luck just doesn’t go your way. You need to have a fall back plan to keep your business running if the unexpected happens.

Be honest

One thing that jumps out in a number of the stories is how some organisations are simply not honest with their customers.

The process starts with misrepresenting how they secure and protect customer data. When an outage hits, they hide behind a call centre and often lie, or at least understate, the effects of the problem.

In an age of social media, blogs and user forums trying to spin your way out of trouble is not the answer. If customers are going to trust you, they need to have confidence you won’t mislead them.

As consumers, the various data breaches we’ve seen so far this year should make us pause before we give valuable personal data to businesses. It’s quite clear that some don’t deserve our trust.

For businesses we need to show that we are worthy of our customers’ trust. The first step of that process is taking their privacy seriously.

LulzSec, anonymous and all the other various hackers, anarchists and general troublemakers on the web are reminding us that we need to take our online responsibilities as seriously as any other others.

Make sure you’re protecting your own business and your customers’ data.

Carving up the web

What the new domain names mean to your business

As we discussed in 2008, there’s a new type of Internet address about to sweep into the online world. It may well change the web, but not quite in the way the promoters are saying.

On Monday ICANN, the International Committee of Assigned Network Names, approved the release of custom global Top Level Domain names. Organisations can now buy their own Internet addresses rather than adding a .com or .com.au to the end of their online business names.

For example Telstra can replace their telstra.com.au or telstra.com addresses with .telstra and offer sites like support.telstra or shop.telstra.

Some are claiming this portends the end of the dot com era as business drift across to these newer domains and abandon the addresses we’ve become used to over the last 20 years. Others say it will make data easier to find and consequently kill the search industry.

In truth, the immediate effects on business are going to be limited, but these new names are part of a much bigger change that is happening in the online world.

Take up will be slow

One of the first things to understand with these domains is they are mired in bureaucracy with ICANN itself estimating the approval process will take between eight and eighteen months.

Should an application be approved, there will also be a period where approvals will be subject to appeal, this in itself will prove interesting when conflicting claimants  decide to fight over a domain.

The arguments over who owns generic names will probably end up in the courts while geographic disputes say between Melbourne, Florida or Melbourne, Victoria over the .melbourne address will require some very tricky negotiation.

Costs are high

The application cost of one of these global Top Level Domains is estimated to be $185,000 US with $25,000 annual fees so this is a game for only the biggest players.

Even then, we’ll see many corporations not bothering. Given the current proposal includes strong provisions against cybersquatting, there’s no need for trademark holders to rush, it’s quite feasible that many will sit out the hype and wait for the prices to drop.

ICANN’s track record is not good

Over the last decade ICANN have approved 14 new domains ­– .aero, .coop, .museum, .name, .pro .asia, .cat, .jobs, .post, .tel, .travel, .biz, .info, and .mobi – the last three have been mildly successful but most of these names have been ignored, a precedent that doesn’t bode well for a corporation or government building their own domains

There are some useful network management reasons and possibly some branding opportunities with these names, but the risk of confusing customers or web surfers seems to be high.

In this respect, the argument that the new domains will kill search engines seems odd as more addresses is going to increase the demand for a reliable way to find things online.

The middlemen assemble

Already some are touting the new domain names as an opportunity to get more money out of businesses with the idea various sectors can be enticed to use industry or location specific names. However history isn’t on the side of those schemes as we’ve already seen the release of the .travel and .jobs domains being greeted with a yawn.

One effect we can expect is that we’ll be told over the next few years how important it is be to list our business names with a whole lot of new domains; musicians might be urged to sign up with .music or Perth based enterprises to lock in a .perth name. In many ways these ideas already seem to be an attempt to replicate the old directory businesses that the Internet has destroyed in the last decade.

Locking down the web

Along with being a cash grab by ICANN, the custom domain name is part of the attempt to divide the public Internet into a cluster of privately controlled fiefdoms.

We’re seeing with social media sites like Facebook – and we can be pretty sure .facebook will be an early candidate for listing – striving to lock users onto their service. These new domain names will help them do that and in turn protect data on their networks being shared on the wider Internet.

This is going to play out in a very interesting way over the next few years as the large players jostle for their slice of the web.

Some larger businesses, and gullible governments, are going to fall for this money grabbing exercise, while the majority of Internet users will be excluded simply by the cost and bureaucratic requirements.

This grab for the Internet is a game for big, well funded players and most of us will be spectators in this struggle. Have no doubt though that while watching the big boys fighting over their Internet turf will be fun sport it will be us that will pay for the results.

The boundary of success

Customer facing workers are not an organisation’s fringe

Management speak is fascinating in the way the language constantly develops new words and phrases. One term gaining currency right now is the “boundary worker”.

In its most charitable sense, a boundary worker’s job is client facing, being where the organisation meets its clients. Generally these are the salespeople, customer support officers, call centre workers and check in clerks.

There’s a common factor here, most of these people are considered dispensable by a modern management, with most of the job descriptions of “boundary workers” being those eliminated or outsourced when costs need to be cut.

A story in the computer trade press last week illustrated this attitude where an airline announced they were moving their boundary workers – their check-in staff, cabin crew and pilots – to a basic email service while keeping their office staff on the more sophisticated and richer IT platforms.

What jumped out of that story was the underlying assumption that these “boundary workers” are on the periphery of the organisation’s operations despite being the people directly responsible for getting passengers, otherwise known as paying customers, safely to their destinations.

This idea that anyone outside of head office is at best an irritating cost centre isn’t just confined to airlines, management focus on building bureaucratic empires while neglecting the organisation’s purpose is a malady that in many ways goes to the root of what ails the modern corporatist economy.

Australian governments suffer badly from this because “boundary workers” have largely felt the burden of the last two decades of public service cost cutting. This has stripped government organisations of any corporate memory or the skills to manage programs and people, which in turn has caused politicians much grief as they find they can’t execute promises.

The corporate sector is also guilty of this; a recent “digital business” product launch by a major telco directed prospective customers to a “coming soon” website. Despite this organisation having hundreds – if not thousands – of bureaucrats, it couldn’t effectively launch a product line around its core services.

Probably the best example of this syndrome was Nortel, the Canadian based telco that never recovered from the dot com bust after expanding aggressively through the late 1990s.

As Nortel’s finances suffered, the company responded by steadily shedding support, engineering and sales staff, locking the business into a death spiral as competitors’ sales staff tempted clients to better products with superior customer service.

The funny thing with Nortel was it was fairly rare to see senior managers be affected by lay offs, so the proportion of head office bureaucrats grew in relation to staff numbers. By the time the company sank into receivership, its manager to worker ratio wasn’t probably too dissimilar to a Soviet potato collective.

While it’s tempting to think this is just a big organisation problem, many smaller businesses face it too as owners and managers starve their enterprise of resources while spending up big on prestige cars and other expensive management treats.

On an IT level, it’s common to see the business owner proudly toting a new iPad while his secretary and staff struggle with temperamental ancient desktop computers. Not to mention the proprietor’s home Internet connection being five times faster and more expensive than that of his office.

In an economy where it appears that global corporations and major banks are protected from the consequences, it’s easy to think that we too can ignore our customers and indulge our managers.

If your business isn’t part of a market dominating duopoly then your entire organisation is on the “boundary”, don’t fall for the conceit of marginalising the workers your organisation depends upon.

Planning for change

In a time of change we need to be flexible

Last weekend’s ABC Radio spot looked at setting up a blog. There’s a whole range of reasons why you’d one to build one; to start a business, to publicise a charity or to show off your hobby.

We were lucky to get food bloggers Thang Ngo from Noodlies and Rebecca Varidel from Inside Cuisine calling in to tell their experiences of setting up successful websites.

One common factor for both was they had started off using the free Google Blogger service and then moved up to the more robust and scalable WordPress platform as their sites took off.

Rebecca and Thang’s journeys, which is common for many businesses and entrepreneurs, illustrates how our plans have to be flexible and the tools we choose must be able to adapt to changed circumstances.

The nineteenth century German general, Helmuth von Moltke, said “no battle plan survives first contact with the enemy”. The same is true of business plans; none survive first contact with the realities of the marketplace.

As our businesses adapt to the ever changing economy and the needs of our customers, we can’t afford to get locked into static tools and responses. Our choices have to reflect that we will make mistakes, assumptions will be proved wrong or our customers, suppliers and staff will change.

Being flexible and open to new ideas is essential to survival in the 21st Century economy. The days of doing things because they have always been done this way are over.

The ideas revolution: How to set up a blog

It’s never been easier to tell the world about your ideas, passion or business

It’s been a big month for ideas in Sydney with the Sydney Writers Festival, TEDx, Vivid Sydney, AMP Amplify and XMedia Lab along with many other events intended to stimulate thought and action.

One of the things that’s great with the Internet is we’re able to get our ideas out to the world very easily without spending much money. If you have a great idea, for a business, community group or just an interest there’s nothing stopping you letting the planet know about you and your dreams.

During the Sydney Writers Festival we saw debates between food bloggers and the print critics, particularly notable was Food blogger Rebecca Varidel and her Inside Cuisine website.

Earlier in May, Louise Hewson launched her 52 Suburbs book and exhibition which was born out of her website chronicling her discoveries around the suburbs of Sydney.

The biggest challenge is setting up a website so you can be found on the net, today’s tools make it very easy to set up a site. Here’s a few you can use.

Facebook

If you already have a Facebook account, it’s very easy to set up a page covering your topic or idea.

While it’s simple to create a Facebook Page, be aware there are risks as the company has some quirky policies and not everybody has a Facebook account or is comfortable with it.

Blogger

This is the best basic starting tool which also has the attraction of being free.

Blogger’s simple layout which you can change by dragging and dropping the various parts of the website works well and you can add features such as subscription services, advertising, e-commerce and other features by turning on various “gadgets”.

52 Suburbs and Grab Your Fork are two good examples of Blogger based sites. In Louise’s case she registered the 52 Suburbs domain name – the bit behind the “www” or “@” in an email – which costs around $20 a year.

WordPress

The big daddy of Internet publishing is the WordPress tool. This free software drives most websites and is becoming the software of choice. Rebecca at Inside Cuisine and this website are using WordPress along with thousandds of businesses.

One WordPress’ great attractions is it features thousands of ready to use “widgets” and templates that makes it extremely easy to add features and customise your website.

WordPress offers a free service that gives you the basics of the platform. To get the most from WordPress you need to host the site with a web hosting provider and this can get more expensive and complex.

Other tools

There are hundreds of other platforms you can use to get your ideas out to the world. Worpress, Blogger and Facebook are just three of the most popular and easy to use. It’s worth exploring with what you find works well for your idea or business.

Growing your site

As your site grows, you’ll need to manage content, track visitors and promote it through the various social media and traditional methods. We have some free resources from NSW Microbusiness Month that can help you manage and grow your online presence.

More information

In July we’ll launching eBu$iness: 7 Steps to Get Your Small Business Online… and Making Money Now! Which will cover all the steps of getting your business online, promoting it and tracking your success. Pre-release orders are available now.

We also have some free workshops for business wanting to get online sponsored by the NSW Government, contact us for more details.

If you subscribe to our newsletter we also make available various free offers along with keeping readers up to date with smart new ideas.

There’s nothing to stop you getting your ideas online. If you want to do something interesting, or even change the world, the tools are now here for you to do it.

Business Web Essentials

A free e-book to help your online presence

In conjunction with Microbusiness Week, a New South Wales government initiative to help smaller and startup businesses, we’re happy to release our Business Web Essentials e-book.

This e-book is free to all subscribers of our newsletters lists the online tools that can help your website be more effective online. While it’s aimed at business users, if you’re a blogger or community group running a website you’ll find most of the information in the book will help you as well.

Business Web Essentials lists the important web hosting, search listing, social media and cloud computing services that will help you promote and track the progress of your online presence.

Subscribe now to our weekly newsletter and receive the e-book free of charge. If you’re an existing subscriber, you’ll get the link in our regular newsletter.

Building business communities

Setting up next door to your competitor could be a good idea

Last night the NSW Government launched Digital Sydney, an initiative to bring together the various groups that make up the digital media and IT industries while raising the city’s profile as a global digital centre.

This project was something close to me as I’d been involved in developing the concept through 2009 when working with the then NSW department of Industry and Investment.

Originally the idea had been to create a digital hub around the Australian Technology Park to the south of the city. Over the decade of its operation, the ATP had attracted some high profile tenants and various high tech business start ups but there was a feeling it could be a more dynamic centre of the Sydney tech sector.

Digital hub failures

The setting up of “digital hubs” around the world has not been a great success – in Ireland an attempt to set one up in central Dublin’s disused Guinness brewery cost the European Union well over 100 million euro and subsequently collapsed amid acrimony between the various governments and businesses involved.

Even if there was a track record of success it’s unlikely any Australian government, state or Federal, would be prepared to spend money on the European scale. So the idea of building a “hub” had to be kept within industry, particularly the IT and digital media sectors.

Existing industry hubs

In talking to the industry, it became apparent that Sydney already a digital hub spreading across the suburbs immediately to the south and west of the city centre and centred around Surry Hills with an vibrant community of developers, designers and entrepreneurs occupying the old factories and warehouses being vacated by the city’s rag trade.

The proximity of competitors, clients and suppliers was why the hub had developed; exactly the reason why the fashion industry had previously concentrated around that district.

This is consistent with history; the great industrial hubs such as the English midlands of the 18th Century, the US mid west of the 19th Century along with today’s Chinese coastal manufacturing centres and event Silicon Valley happened with little government forethought.

Like-minded businesses clustered together because they could find the essential resources for their industry such as raw materials, labour, transport, markets and capital.

A shortage of capital

The access to capital is a problem for all smaller and innovative businesses in Australia, not just those trying to build digital businesses or hubs. Start up enterprises have been starved for capital and a few late stage Venture Capital investments like the recent ones in Atlassian or 99Designs are not on their own enough to build vibrant businesses of the future.

In Australia, it’s difficult to see any government in the near future changing the tax and legal regimes which favour property and stock market speculation over investment in new businesses and technology so the best hope is initiatives like Digital Sydney, along with the profiles of similar industry hubs in Brisbane and Melbourne, can encourage investors to look at the start up and innovation sectors.

Why big cities?

The real question is though is why is this just the major cities? Why can’t we have hubs in Renmark, Esperance or Hobart?

Access to skills and talent are the driving forces behind the local hubs and in that respect some smaller towns and regions do have the skilled workforces and businesses capable of building industrial centres and we’ve seen some regional hubs develop like the wine industry in various places.

So it’s worthwhile considering where your business is located, maybe it would be better to set up next door to your competitor? For many organisations, being part of vibrant industry hub is part of their success.

postscript;

Joe Kelly, former Commercial Director of the Dublin Digital Hub Development Agency, takes me to task on the claim the Dublin Hub collapsed. His comment is as follows:

As the former Director of Commercial Operations at The Digital Hub Development Agency, I felt compelled to correct you on your assertion that the Digital Hub in Dublin collapsed. That is incorrect. Media Lab Europe, an entirely seperate entity collapsed at a cost of over 100 million euro. The Digital Hub continues to thrive with over 100 companies located there. Please refer to www.thedigitalhub.com for further information.

The listening business

What a crook can teach us about paying attention to customers

Some years back a crook computer repairer did the rounds of Sydney and regional NSW. For all his sins Joe, as we’ll call him, always stood out as an example of a business that effectively listened to the customer.

Joe would advertise in local papers and you could spot his ads by the line “all our technicians are qualified computer programmers”, which is a nonsense slogan like a landscape gardener claiming all her labourers are civil engineering graduates, but it was an effective catchphrase in a market that didn’t know better.

After a while the local community would start wise up to Joe and his “computer programmers” and when the complaints and fair trading investigations mounted, he’d change his business name, move to another suburb or town and the cycle would start again.

I was reminded of Joe at the City of Sydney’s discussion on the connected consumer at the latest Lets Talk Business seminar last week and wondered how he’d survive in today’s markets where people are quick to go online and criticize.

Dealing with criticism has always been big businesses’ Achilles heel; bureaucracies have a tendency to protect themselves and when there’s managerial or team bonuses at stake there’s strong incentive to ignore the concerns of customers.

A good example of this Vodafone where the chief executive, Nigel Dews, has been open in admitting the company failed to listen to their customers as their network failed to meet the demands placed upon it.

While the network itself was buckling under the strain, the company spent millions on sponsorship and advertising effectively trying to drown the criticism under a wave of tightly controlled good news stories, promotions and competitions.

It didn’t work, just as Facebook’s PR agency Burson-Marsteller failed dismally in planting an anti-Google story, which saw the two organisations not only busted but also descend into an unseemly argument with their client while frantically deleting Facebook posts.

All of these actions – deleting social media comments, ignoring customer complaints and attempting to distract critics with pictures of pretty girls and racing cars – smack of the old way of doing business in an era where tightly controlled mass media was the only channel complaints could be heard. Those times ended with the arrival of the Internet.

At the Lets Talk Business event one of the panellists, Jody Fox of Sydney’s Shoes of Prey described how her business is engaging with customers online and discussing any concerns openly on the Facebook page, not deleting them.

This is the new reality of business, if you don’t listen and engage with upset clients or ­– even worse – try to control their comments on your sites, you’ll only get them angrier and they’ll go elsewhere to tell their stories.

Another striking difference between the new and old business was Jody’s point was that shoes of Prey treats customer service as a marketing expense, not a separate cost centre. In most large organisations helping paying customers is treated as an unnecessary expense that should be outsourced and minimised as much as possible.

This sort of works when you have a licensed oligopoly like telecoms or banks but fails dismally in competitive industries. Without purchasers there are no shareholder returns and eventually no executive bonuses.

Ignoring customers worked nicely in the era of mass media when it was difficult for upset clients to be heard above an expensive marketing campaign; Vodafone, Burson-Marsteller and even governments are finding it doesn’t work today.

Joe the computer technician would have understood this, if he’s still doing dodgy IT support then he’ll be watching the Facebook pages, Twitter feeds and blogs for bad news.

Somehow though I suspect he’s no longer in computer repairs though, my guess he’s making a lot more money in social media or search engine optimisation these days.

Too old to surf?

Do older customers use the web?

“For those of us aged over forty, we don’t use the web. And neither do our customers!”

An audience member threw this statement to the panel at last night’s Let’s Talk Business seminar discussing The New Consumer. One of the panel members, Adam Ferrier of Naked Communications, replied flatly; “you’re wrong”.

That business owner assumed her own likes, priorities and experience are shared by her customers. This isn’t always true, what we think is true about our clients and markets often proves not to be the case.

Just because you don’t have time to surf the web, use social media or play online games doesn’t mean your clients aren’t using these tools.

Assuming that the internet is for young folk means your business focus is on older people who don’t use the net – which is probably the fastest declining segment in our society as seniors move online.

The US based Pew Internet Survey’s Generations Online in 2010 Report reported older user were rapidly increasing their net use while in Australia the 2010 Sensis ebusiness report came to the same findings saying;

“The groups most likely to report below average usage were those aged 65 and above and retirees. For those Australians 65 years and above only 66 per cent reported accessing the internet in the past 12 months. However, usage in this age group has increased by six percentage points over the past year.” – p. 17 Sensis e-business report.

Six percentage points to 66% represents 10% growth in the over 65 age group. At that rate we’ll see the seniors reaching the 97 to 98% levels of Internet usage sometime in 2013 and the 50-64 year age group will be there next year.

Restricting your business to an 8%  slice of the market  – which will soon be 3% – is up to you, it may well be that is where your customers are. But it’s a big risk and one you wouldn’t want to make on some blind assumptions.

Many of us may be too old to surf the point at North Narrabeen, but we’re all using the web and older users are the fastest growing group. Rather than assuming your customers aren’t going online, it’s time to ask them what they are doing with their computers.