Category: business advice

Keeping Costs Down On The Net

This article originally appeared in the November 2008 Sensis “Small Business, Big Opportunity” newsletter.

There are few areas in business that change as fast as the Internet, particularly when it comes to business connection plans. What was good value two years ago can be pretty ordinary today.

Now we’re in uncertain times it’s a good opportunity to review what your Internet provider is giving you for your money. The right plan can help your business get the most from the Internet.

It’s often said there are three factors in an Internet plan: price, speed and reliability. You can choose any two of them.

I’d like to say price shouldn’t be the deciding factor, but in reality none of us have bottomless budgets. So the first step is to look at what you currently spend and decide what you can afford.

Budgets can vary dramatically between businesses. A $50 a month plan is fine for a home based business while tens of thousands per month isn’t out of the question for a larger business with heavy needs.

Regardless of your business size, forget the super cheap consumer plans. You need a supplier you can rely on. Business grade providers will also offer important add on features like fixed IP addresses and priority support.

Nothing breaks a technology consultant’s heart more than seeing a business struggling with a substandard Internet connection. The lost productivity dwarfs the fifty or hundred dollar a month saved from scrimping on connection charges.

So having set a realistic budget, we have to choose between speed and reliability.

Reliability is non-negotiable. The net, and in particular email, is a key business function and telling customers “sorry, the Internet is down” simply doesn’t wash anymore. As businesses move more towards Voice over IP, software as a service and web 2.0 applications, always-on fast Internet becomes essential.

This leaves us with speed. Internet speeds are split into two parts; download, the data that comes into your system, and upload, the data that goes out.

Internet plans usually state their speeds along the lines of 1500/256 which in this case means the download speed is 1500kbps and the outgoing speed 256. This is called an asynchronous connection which is the “A” in ADSL.

Home plans usually use ADSL connections because web surfing downloads far more data than it sends but office applications like email, remote access and Voice over IP need a higher upload speed.

So if you have lots of people working remotely, or you’re making phone calls over the Internet you’ll have to consider plans that have higher upload speeds.

There’s also data allowances, these can be tricky for all Internet subscribers as the fixed price plans shape the connection, meaning they slow you down once you go over the limit. For businesses that rely mainly on email, these plans are fine.

If your business Internet needs are more demanding though, the alternative is excess use plans where you are charged once you exceed the limit. This can mean horrendous bills if the wrong plan is chosen.

The good news with data allowances though is this is one of the areas that has dramatically changed in the last few years. So this is an area where the canny business can get more value for their Internet spending.

Even if your Internet Service Provider won’t come to the party on reducing your prices, there’s a very good chance you can negotiate a better deal in data allowances and speeds to help your business have the edge in these uncertain times.

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Respecting your network

This article orginally appeared in Smart Company on November 25, 2008

Australia’s Spam Act is just over five years old, and it’s had some success in keeping locally sourced junk email to reasonable limits along with catching the odd perpetrator.

The Australian Communications and Media Authority has plenty of Spam Act information for business owners on its website and the requirements can be summarised in three principles – get consent, identify yourself, and make it easy to unsubscribe.

Before you can send commercial emails to people, they need to ask for them. In itself, this requirement eliminates your emails being classified as spam given the definition of spam is unsolicited emails.

Identity is important, as the recipient needs to know who the email is from. All legitimate businesses should have no problem with this.

Finally, unsubscribing is simply good manners. For a business owner there is absolutely no point in irritating potential customers and partners who don’t want your messages.

The sticking point in all of this is defining consent. The loophole in the act defines “inferred consent” if you have an “existing business relationship”. The current interpretation of a business relationship is merely having the business card of the recipient.

Sadly this gives any dolt you’ve been foolish enough to give a business card to at a networking function permission to bombard you with invites to get-rich-quick seminars and share boat schemes.

I can’t tell you how irritating I find idiots sending me three pointless emails a week because I put my card in the door prize bowl or gave the courtesy of exchanging cards while talking.

Even worse are the dills who start sending SMS messages to your mobile phone. In fact I’m amazed that anyone thinks ultra intrusive text spam is an effective way to generate goodwill for a business.

A particular difficulty with spamming people in your network is that your paths will almost certainly to cross again, which can put all parties in a difficult position.

So don’t simply add everyone who gives you their business card to your mailing list. By all means send them a follow up email, phone call or postcard, and certainly offer to connect to them on social networking sites like LinkedIn and Facebook, but spare everyone the spam.

Understanding your responsibilities under the Spam Act will help you get more from your mailing lists. Adding some common sense and manners goes a long way too.

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Sweet point for iPhone apps

Thanks to Techmeme, I came across an Venture Beat article that illustrates some of the points in my earlier post.

The $9.99 iPhone app is exactly these price points at work. The price isn’t too much to discourage buyers but equally allows the developer to turn a profit from the application.

It’s interesting how the price points settled so quickly in the App Store and how a similar thing happened with the 99c price point in iTunes.

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Where does your business sit

One thing that’s been in my mind recently is how businesses will survive the downturn.

The way I see it is there are three broad segments we can put business and products into; essential, deferrable and discretionary. These are going to need different strategies to survive.

Discretionary

Stuff we don’t really need.
Examples: Expensive travel, cafes, TV’s, spa baths, gourmet food, farmer’s markets, designer shoes, branded bottled water, 90% of what’s on sale at the typical suburban shopping mall.

If your business is in this category then you have a problem. You’re going to have to demonstrate some sort of need or value to the customer. 

To survive in this category it’s going to take innovative thinking in marketing and production along with some radical revisions of pricing and cost structures.

We see some of this with fast food chains offering things like 99c and $1.99 meals. I expect we’ll see many cafes offering 99c coffees and restaurants offering $19.99 “recession buster” meals.

To make money on these deals business owners are going to have to keep a canny eye on their costs, the prices customers want to pay and be very innovative in their marketing.

Deferrable

Things that can be put off for the moment
Examples: Computer repairs, mechanics, homewares, mobile phones, motor vehicles

As a former computer tech, this one’s close to my heart and there’s no doubt the tech sector’s already being crunched by this as people put off purchases and maintenance.

The key to surviving here is in motivating customers not to defer purchases. It’s going to be a matter of cutting costs and reviewing product range and price points.

This means more marketing that emphases the benefits of your product (eg cleaning up your computer extends its life and saves you money) or making the service more affordable (eg 30 point inspection service for $29.95).

Essentials

Stuff we can’t do without.
Examples: Basic groceries, energy, telecoms, shelter

Strangely I think this sector will see the most blood on the floor. For the simple reason too many business owners believe their products are essentials.

A good example is the belief if you are in food and groceries you should be fine. That’s only true if you sell food and groceries people need and can afford.

For instance many of those stall holders at your local farmer’s market might sell food, but people don’t need cold pressed, extra virgin olive oil at $20 a litre or ash rolled goat’s cheese at $40 a kilo.

Even if you are selling basics, you’re going to have to watch your costs and your competitors. You need to be able to meet the price point savvy consumers will demand in the next few years.

If you’re selling tomatoes a $7.99 a kilo when the guy around the corner is getting them out the door for $4.99 then you need to look at your suppliers and your costs.

The overriding themes through this post are “price points” and “marketing”.

We are going to have to let them know we can deliver what they want at the price they want.

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Everything old is new again

It was a funny week last week. It seems everybody wants to announce Software as a Service websites.

The first SaaS experience I had was over a cup of coffee with Mark from MyWorkSpace on Tuesday. I like to hear what smaller, Australian operations have to offer and this one seems quite good application.

On the Wednesday I went to the Telstra-Microsoft Joint Venture announcement. This was a strange beast as the current T-Suite services are simply managed Exchange and Sharepoint and in that don’t seem to be anything new over what Telstra was reselling from WebCentral until recently.

The main thrust of the press conference was that you’d be able to do this on a mobile phone.

Unfortunately none of the mobile phone manufacturers has had an opportunity to put Telstra’s new application on their Windows Mobile smartphones, which meant we only saw demonstrations and had no opportunity to try it ourselves.

From a distance it appears the mobile service is just the same synchronisation tool you get with a Windows Mobile device setup to use the Telstra servers.

On a positive side, both the MyWorkSpace and the T-Suite applications are reasonably priced and a good deal for smaller businesses, particularly those start ups wanting to save cash.

In my Smart Company column tomorrow l’m explaining what SaaS, cloud computing and Web 2.0 mean.

The funny thing with all of this is everything is new again. We’re going back to the 1970s way of running computers.

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Forget the domain name hype

New top level domains won’t change things for most businesses

Last week the proposal to allow a new breed of internet domains triggered talk of another “internet gold rush”. I’m not sure this is going to happen, however it is a timely reminder of the importance of protecting your own business name.

The Global Top Level Domains (gLTDs) are the suffixes such as .com and .net at the end of internet addresses. There are 22 of these and they are controlled by the Internet Corporation for Assigned Names and Numbers (ICANN) which is chaired by an Australian, Dr Paul Twomey.

ICANN has proposed to make new gLTDs available to anyone who makes a suitable application. So somebody can apply to create a .smartcompany or .australia domain to replace the boring old .com or .com.au.

I have to admit my first reaction was “this was just a revenue grab” by ICANN but Twomey, in an interview on ABC Local Radio last Friday morning, stated the expected “low six figure sum” for registering a gTLD will only recover ICANN’s costs.

Those costs are going to be substantial as the ICANN announcement indicates there is going to be quite a rigorous evaluation before any are approved.

The cost and evaluation process means we won’t get a repeat of the mess we have seen in spaces like the .com domain where the low cost and ease of obtaining an address has meant many opportunistic registrations.

Because of this, I doubt there will be a “gold rush” as the barriers for entry are too high. The business model of registering hundreds or thousands of potentially valuable names in the hope someone will offer big dollars for a few of them doesn’t work when each registration costs over a hundred thousand dollars.

I also suspect the branding aspect is overplayed. The cost and time of buying, setting up and establishing the new top level domains will put even some of the bigger brands off unless there’s a compelling business case for doing so. Many will simply defend their brands through the disputes system.

In his interview on ABC Radio, Twomey indicated this will probably be a similar process to the existing domain dispute mechanism – which only makes the risks for cybersquatters even greater.

At the moment, it’s cheap to register a name but expensive to dispute it. This works to the cybersquatters’ advantage as most business owners will pay $10,000 to buy the domain rather than $25,000 in legal costs to dispute the ownership.

Under the ICANN proposal, the legal costs will still be high, but not as high as the cost of registration. This means speculating on global Top Level Domains becomes a very risky proposition and probably beyond the resources of most speculators.

Another aspect working against a gold rush are the popularity of the current suffixes. Of the 21 existing gTLDs most haven’t worked; when was the last time you saw a .coop, .pro or .jobs internet address?

If you did see one of these addresses, did you automatically type .com or .com.au the first time you tried to use it?

This is the big problem for any new domain; internet users are already conditioned to identify .com, .com.au and similar suffixes as internet addresses. So any new domain owner is going to have to spend a lot of money and time convincing the community to use the new address.

Long time Crikey subscribers will remember Stephen Mayne’s struggle to remind radio interviewers to include the .au at the end of the Crikey web address. All too often it was back announced as crikey.com which sent potential subscribers to the personal website of a Seattle based British expat.

To overcome this confusion I suspect brands that do grab their own gTLD will also retain the equivalent .com addresses and point those to their new domains. So for instance were Gucci to obtain the .gucci domain they would arrange that when customers type in gucci.com it automatically resolves to the .gucci address.

Where I think the new names will be successful is in large corporations where it’s relatively easy for the system administrators to setup the entire company’s computer network to use the domain.

For instance Telstra would get the .telstra domain then have internal addresses like sales.mobiles.telstra or servicecentre.ballarat.telstra. These addresses could be exposed to the wider public internet when necessary.

Most businesses though will find these domains have limited effect. It may be that buying a new address on a domain like .shop or .sunshinecoast will be worthwhile, but registering your own global Top Level Domain is overkill and beyond the means for all but the biggest corporations.

Where business may be affected by this is with trademark infringements. So this is another reminder to protect your enterprise’s most import asset; its name.

For the moment, it’s not worth worrying about the new names, especially given they won’t be around until at least the end of 2009. In the meantime, stick with your existing internet addresses and make sure you are protecting your brand names.

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