Tag: business

Avoiding business dependency issues

Relying on one supplier, customer or social media platform for you business is a big risk.

Fortune magazine this week describes how Facebook’s change to the Timeline layout has killed business pages and the billion dollar industry in maintaining those pages.

According to Mashable, views of Facebook business pages have halved since the timeline feature was introduced which in turn has destroyed the markets of businesses like Buddy Media and Vitrue who were making a good living from setting up corporate Facebook pages.

Once again this shows the danger of being locked into one service or platform to do business – you genuinely have all your eggs in one basket.

Whether it’s relying on only one customer or one supplier, the business who is locked into a single channel risks ruin whenever the owners of that channel decide to change something.

In Facebook’s case, it isn’t greed or simply bastardry that has killed these businesses, just an unintended consequence of an improvement to their service.

For many businesses throwing all there resources onto social media platforms, they should remember that Facebooks – or Twitter, LinkedIn, Google’s or Pinterest’s – business objectives are not necessarily theirs and any business partnership is at best unequal.

If you’re going to depend upon one customer or supplier, at least make sure you’re making a fat profit to cover the risk that losing them will kill your existing business.

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The Death of the IT Guy

The IT support sector is being disrupted as cloud computing service shake up what was a settled industry.

Until recently the cottage industry of computer repairers was thriving, having been born with the massive take up of computers by homes and businesses in the 1990s.

Over the years, things got better for the local IT guy as businesses and then homes became networked. Some of the smarter technicians started selling and supporting servers and things got better.

The arrival of the Internet, the approach of Y2K bug and, in Australia, the introduction of the GST made even more business for the local computer tech and the Windows virus epidemic of the early 2000s guaranteed plenty of work for anybody who knew how to wield a screw driver and a boot disk.

As the industry matured, maintaining office servers and looking after the regular glitches in desktop computers was a steady, reliable source of income for most support companies.

Every few years businesses or homes would upgrade their computers and that would trigger a cascade of costs as data was migrated and older peripherals like printers, serial mice and ADB accessories had to be replaced.

Then all came to a stop with the arrival of cloud computing services where many of older computers could access online applications just as well as newer computers.

For IT organisations with a business plan based up customers upgrading systems every three to five years this was a disaster.

These businesses were already feeling the pinch with the late arrival and market rejection of Microsoft Vista and now their customers could sit on older XP machines and happily use the latest online applications.

Sensible IT folk have understood the change and the good support companies now have an armoury of cloud based services for their customers. These businesses know the IT hardware and support spend of most businesses is shrinking and taking the market with it.

Unfortunately there are a few holdouts trying to keep the old business model alive who have a hundred reasons why cloud services are no good for their customers.

To be far to those fixed on the old IT model, this attitude is probably even more prevalent in corporate IT departments and among CIOs with cloud services seen – probably rightly – as a threat to their power and income.

One of the biggest risks to those support folk who aren’t at least evaluating cloud services for their clients is that shrinking IT spend and eventually there won’t be much money, or customers, left for the old model.

A similar thing is happening to bookkeepers and accountants as newer businesses and those with younger owners or managers are moving to cloud based software while the older ones are wedded to their legacy systems.

The older accountants who won’t move to the newer systems are finding their businesses growth stagnant while their younger colleagues are picking up the work from new businesses.

Computer support was always a business based upon the transition to a digital workplaces, similar to the men employed to walk in front of early motor cars with red flags.

Now workplace technology has matured, there’s less work for the IT guy. Hopefully most of them will make the change and not get run over like the guys clutching red flags.

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Little disruptions

A hotel’s change to iPhones is symptomatic of a change in technology.

Seasoned travellers learned long ago to treat the phone in their hotel room with caution as massive mark ups on call charges were a nice profit centre for most establishments.

With the arrival of the mobile phone, that revenue stream started to shrink and now one hotel in Vancouver has decided to replace their room phones with iPhones.

The Vancouver Opus hotel already supplies iPads in their rooms and the phones seem a natural extension to that, particularly given the chain has a “virtual concierge” app to guide guests.

Increasingly it’s only the older hotel chains that rely on excessive charges for things like telephone calls and Internet access. Those establishments rely on the more senior business traveller who are locked into a 1970s way of travelling.

When you stay at cheaper accommodation or newer boutique establishments, you find many of the expensive extras in the major chains are available cheaply or free. It’s a quandary of travel that a backpackers’ hostel will offer free Wi-Fi while the Sheraton up the road will charge $60 for an often inferior service.

The opportunity for the Sheratons, or the Hiltons, or the Four Seasons to charge those sort of rates is dying at the same rate their older clientele is retiring. Its a dead model.

Fortunately for those hotel chains, slamming guests with fat phone charges was just icing on a very rich cake, the loss of those revenues over the last two decades has been unfortunate but not fatal.

Other businesses though might not be so lucky – if your business relies on big, unreasonable markups then right now you are in a sector very ripe for disruption.

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Are small business owners whingers?

Too many businesses are blaming others for their problems.

People of the same trade seldom meet together, even for merriment and diversion, but the conversation sends in a conspiracy against the public, or in some contrivance to raise prices.” Adam Smith – The Wealth of Nations.

At a meeting with the state’s Small Business Commission I was once again reminded of Adam Smith’s words – that business owners will try to seek whatever opportunity they can to raise prices and whinge when they can’t.

Over the last few months I’ve heard business owners complain the government doesn’t do enough to protect the quality of their imports, give them more onstreet dining permits, stop their neighbours from having onstreet dining permits and, my favourite of all, regulating discounts offered on group buying websites.

Restauranteurs are complaining their customers don’t appreciate the cost of running a business – which is true, but it isn’t the customers problem.

A spectacular example is the anti-carbon tax propaganda where local businesses are displaying letters from a political party claiming their prices will go up and one franchise chain was dumb enough to even write down their plans to blame price rises on the new tax.

We also have the ongoing narrative that local councils – particularly those controlled by Green or Independent groups – are “anti-business” and killing commerce through unfairly enforcing parking rules and building bicycle lanes. Something that nicely fits the talking points of the Corporatist political parties that anyone who isn’t endorsed by a major party is “a dangerous radical”.

The best of all though is the ongoing campaign to eliminate the GST and import duties threshold for overseas purchases, which claims all the problems of the nation’s retailers would be solved if customers were forced to wait a week a pay a couple of hundred dollars in administrative fees.

Some of these gripes are fair – some councils are unreasonable (interestingly usually in areas where local government is seen as a stronghold a big party), the current tax rules are unfair and there are truly stupid people deeply discounting on group buying sites – but most of them are just excuses.

Business is always tough, if it wasn’t everybody would be doing it and taking it easy.

If all you can do is whinge about prices, your council, the government, your competitors, staff or your customers then maybe you should think about getting a job or at least taking a holiday.

 

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Your business personalities

A business reflects the owner’s personality. Deal with it.

Eccentric Sydney restaurant Wafu made headlines a few years ago over the owner’s strict insistence that diners followed her house rules.

A few weeks ago Wafu announced it would close and owner Yukako Ichikawa gave Sydney diners a serve of abuse on the restaurant’s site (currently down due to bandwidth issues).

There’s no doubt diners at Wafu had to accept Ms Ichikawa’s rules or else. Bring your own “doggie bag” or container and don’t waste anything or else you would be in trouble.

Wafu was a reflection of the owner’s beliefs, she wasn’t just running her business to make money. As she’s quoted in the Sydney Morning Herald,

“Wafu is viable, as a business, if I continue to accept inconsiderate, greedy people.

“But I couldn’t do it. Wafu has always been, and will remain, more to me than simply just another business.”

People often misunderstand why someone would start a business – it isn’t always about the money. Sometimes it’s because the founder or proprietor wants to do things differently, sometimes because they don’t want to work in an office anymore and sometimes it’s because they are unemployable anywhere else.

Often it’s because the business founders are sick of dealing with jerks. The freedom to refuse to do business or work with assholes is a great liberating feeling and something that those working in a corporation or government department will never experience.

Whatever the reason, those businesses reflect the owner’s personality and they have put their money, and their livelihoods, where their mouths are.

I wonder how many corporate warriors and armchair critics of Yukako Ichikawa have ever done that in their lives?

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Deep mining business data

Big data means big opportunities for businesses prepared to look at what their customers are doing

This post originally appeared as Mining Business Data: Get ready to drill and excavate, the June 28, 2012 post on Smartcompany.

The IT industry loves buzzwords and the phrase coming into fashion is “big data”. Forget “social media” or “cloud computing”, much of what you’ll be reading about in columns like this over the next few years will be about mining the information piling into our businesses.

Big data’s power is illustrated in yesterday’s report that Mac users will pay more for hotels than those on Windows systems. So travel site Orbitz now plans to headline more expensive options to visitors using Apple computers.

While social media and cloud computing are falling out of favour, we shouldn’t discount those old-fashioned terms as they are two of the main drivers of big data. Cloud computing makes it possible to crunch data cheaply, while social media is generating even more data for people to play with.

Sydney business Roamz is a good illustration of how social media, cloud computing and big data come together. Born out of founder Jonathan Barouch’s desire to find local activities for his young child, Roamz pulls together data from Facebook, Twitter and Foursquare to build a picture of what’s interesting in your neighbourhood.

It’s no coincidence direct marketing giant Salmat has invested in Roamz, as the data being gathered allows companies to paint a comprehensive picture of what their customers like.

Another business making sense of big data is Kaggle, set up by former Reserve Bank economist Anthony Goldbloom. Kaggle is a crowdsourcing service which runs data analysis competitions on business problems through to things like HIV research, chess ratings and dark matter exploration.

Like most things in the computing industry, these services were only available to those who could afford supercomputers a few years ago, today they’re available to anyone with a credit card and internet connection.

The era of big data might help us overcome Pareto’s Principle – otherwise known as the 80/20 rule – that 80% of your profits come from 20% of your customers. We can also be sure that 80% of our problems come from a different 20% of clients.

Having the ability to crunch numbers quickly means we can identify the good payers and problem customers before we do work for them. It might also mean we beat another business truism by finally being able to identify the 50% of our advertising budget that is being wasted.

Even if you don’t think your business is ready to dive into the world of big data, it’s worthwhile at least having a look at your website analytics to see what your customers are looking at.

Who knows? Like Orbitz, you might identify those cashed up Mac users who love spending money.

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Refocusing on Asia

Australian business are looking again at Asian markets.

One of the interesting things about Australian society and business in the last twenty years is how the nation seems to have turned away from Asia.

In the 1980s and early 90s, the country was focused on exporting services and building long term relationships in sectors ranging from Malaysian construction, Thai diary farming and legal services in China.

Twenty years later, Australian businesses and government seem to have given up with the consensus among industry and political leaders now being that all the nation can export is raw minerals, bulk agricultural goods with a sprinkling of third rate educational services.

Globally focused Australian businesses – particularly those in the startup sector – look to Silicon Valley for funding, inspiration and markets. Only a minority are looking North to Asia rather than across the Pacific.

ViDM – Ventures in Digital Media – is one of those businesses and CEO Willie Pang of the Sydney based advertising technology startup believes the time is to seize opportunities in growing Asian markets rather than concentrating on Silicon Valley financing and exits.

“Focus on building a great business. If you have a great business someone will buy you,” says Willie.

The opportunity ViDM sees is in advertising trading platforms bringing together publishers and advertisers across the digital, print and broadcasting channels. Willie expects this market to be worth eight billion dollars across Asia within five years.

Many of those opportunities in the Asian market are in business-to-business markets such as advertising platforms which is another difference to the largely consumer focused Silicon Valley model.

For Australian business, Willie doesn’t see funding as being an issue with money being available for smaller startups and mature companies.

Like in Silicon Valley the real problem lies for business in the middle stages of their development where they are too big for angels and smaller funds but not interesting for the bigger investors. That grey zone lies between two and ten million dollars.

For the companies that do raise the funds and go hunting in Asian markets, the rewards can be great. Not only do this economies have great growth rates, the diversities of Asian countries mean there are different opportunities lying in each nation or even provinces.

Right now, US businesses are focussed domestically or just on a narrow range of opportunities catering to affluent Chinese consumers in Beijing, Shanghai and Guangzhou.

Willie sees that as another opportunity, while US and European companies are distracted it’s a good time to be entering the Asian markets. But that window of opportunity won’t last forever.

“We’ll either play in that space or the Americans will do it” says Willie.

The opportunity is open to us. Will we grab it?

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