Category: business advice

Do you have customers or just users?

Are subscribers, visitors and users really supporting your business?

“I was on your mailing list for general info, for spams and scams etc which were helpful. Suddenly it changed and now the business format is not useful to me” said an lady when unsubscribing from one of my newsletter mailing lists.

The lady concerned had been on one of the mailing lists for over ten years and, once upon a time, had been a paying customer for my old business, PC Rescue. Although we’d only earned a $100 off her and that was seven years ago.

While it’s sad to lose a subscriber – you don’t run a service business for twelve years without caring about those who use your services – the question is was the lady really a customer?

This is an important distinction where many of us are giving away much of our knowledge for free; are our users really customers?

For the social media and web2.0 sites, this is easy; users are the raw material for their aggregated and segmented data feeds and audience, the customers are the advertisers. This is just a modern twist on the broadcast model that sustained the radio and TV industries for most of the 20th Century.

Many of those social media platforms aren’t making much money from that data and there’s a good argument those who are have been wildly overvalued by investors.

The value of user data, whether it’s aggregated or identifiable appears to be nowhere as high as most of us think, unless you intend to rob your users’ bank accounts.

Overvaluation of your customer, or user, database is a common problem for smaller businesses too. If you’re the local plumber, computer repair guy or coffee shop then the value of any mailing list is probably way overstated – the only metric that ultimately matters to the business is how much money you’re making from the customer.

If you care about the people that you deal with, this may be a hard reality to face but those who visit your shop, subscribe to your newsletter or download your free e-book aren’t your customers, only those who are prepared to pay are.

This is something we have to understand in this era of abundant free information and online services. The challenge for most of us is how many users we can convert from being window shoppers and freebie seekers into customers.

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Losing sight of what matters

Are we losing focus of what matters in our business?

Last Night Google’s chairman Eric Schmidt testified before a US Senate antitrust committee on the search engine company’s market power.

In opening his testimony, Schmidt alluded to Microsoft, saying “twenty years ago, a large technology firm was setting the world on fire. Its software was

on nearly every computer. Its name was synonymous with innovation.

“But that company lost sight of what mattered. Then Washington stepped in.

It’s an interesting and probably accurate perspective given how Microsoft has effectively lost its way for the last decade – although given Google’s urge to become an identity service and its buying a mobile phone manufacturer doesn’t auger well for their focus on the core search business.

Losing of focus of what matters is a problem for all business owners. We’re busy, it’s hard winning orders, getting paid and keeping customers happy so we lose track of the reason we went into business.

For most of us it was because we had a great business idea or a belief we could have a better life being our own bosses.

That latter objective is often the first one lost, usually we find ourselves working harder, taking fewer holidays and seeing the family less than if we’d stayed in a comparatively safe job with BigCorp.

Great ideas can also be our undoing – if you’re constantly having brainwaves, you find you have lots of ideas but no time to execute on any of them.

Similarly, one great idea that turns out to be dog can be bad news as well. Often, we’re loath to admit we’re wrong and hold onto a failing business idea long after it’s shown not to be viable.

Probably worst of all is when we violate our own values; many of us went into business because we didn’t like the values of the corporation we worked for.

Then one day we find we’re screwing subcontractors, that we’re leasing an expensive car the business can’t afford while cutting staff benefits and we’re tying up customers in legalistic contracts in attempt not to deliver the services we promised.

Just like the big company we swore we’d never become.

If you’re a big company with a lucrative business niche – like Google or Microsoft – you can get along quite nicely with the rivers of gold flowing subsidising your indulgences and distractions, most of though we don’t have that revenue buffer protecting our assets.

The cost of losing focus is a killer; even if it doesn’t kill our businesses, it will destroy our souls.

Are you keeping focus on why you went into business?

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Cloud computing and Small Business September Digital Day

How can online tools help grow your business?

As part of the NSW state government’s Small Business September Digital Day for Startups and Growth Businesses, we’ll be looking at exactly what cloud computing is and how it can help businesses.

Some of the services we discuss in the presentation are listed in the Netsmart’s web post on the 5 essential cloud computing tools for business. Although there’s many more we’ll mention that can help organisations of all sizes.

Given the time constraints and the event’s focus is on the specific social media and cloud computing tools available to small business, much of the background information to the Online Tools to Turbocharge Your Business session is available in the previous series of posts about cloud computing previously done for the 2011 City of Sydney Let’s Talk Business series.

Detailed information from that presentation can be found on the following pages;

The networked business Part 1: What is cloud computing?
The networked business Part 2: The benefits of cloud computing
The networked business Part 3: Managing risk in the cloud
The networked business Part 4: The business case for cloud computing

All of the tools discussed in the Small Business September presentations are available in our ebook, Online Business Essentials which is available for all subscribers to our newsletter.

If you’d like to see the presentations themselves, both The Networked Business and Online Tools to Turbocharge your Business are available through the Slideshare service.

Seats are still available for both of the Digital Day presentations at the Telstra Experience Centre, Level 4, 300 George Street, Sydney. The Start Up session begins at 8.00am and the presentations for growth businesses begins at 1.00pm.

Come along if you’d like to learn how social media and cloud computing can help your business improve productivity while building an online brand.

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The quiet revolution

Productivity gains of the 1990s were based on accessible computer technology, are we about to see a cloud computing revolution in our workplaces?

Earlier this weekPricewaterhouseCoopers released their Productivity Scorecard, which showed Australia’s business efficiency isn’t improving as fast at it once was and the country’s relative performance is steadily slipping down international tables.

One of the notable things in the PwC report is the massive growth of productivity in the 1990s, a point emphasised by the accompanying paper on business productivity in a presentation by economist Saul Eslake last month to the Reserve Bank of Australia.

Economists attribute most of this late 20th Century growth to deregulation and privatisation by governments in the 1980s and 90s but the driving force was really computerisation that allowed most businesses to do much more with less.

Immediately noticeable for an Australian walking into a British, European or Japanese office during the early 1990s was the lack of desktop computers.

Australian businesses adopted technology a lot quicker than their counterparts outside of North America and this alone was probably responsible for the country’s relatively good productivity growth in that decade.

The arrival of computers – followed by desktop printers and Internet access – suddenly gave small businesses access the means to do jobs that even the biggest corporations had struggled to do previously and drove a rapid reorganisation of most offices.

Everybody from secretaries to architects and graphic designers to lawyers – even economists – suddenly found they had the tools at their fingertips to do work they could have only dreamed of prior to 1990. This drove massive productivity gains in businesses of all sizes.

From 2000 onwards, things became tougher as the easy gains had been made and the incremental improvements in technology, such as smartphones, cloud computing and web publishing didn’t have the same substantive effect the early PCs delivered with spreadsheets, word processing and desktop publishing.

The real challenge we now face in business – and government – is to start harnessing cloud computing driven online services that promise to deliver similar productivity gains to what we saw twenty years ago.

We have the tools; online office apps, Customer Relation Management services (CRM) and sharing platforms all deliver major improvements in the way we work within our businesses and with external partners like contractors, suppliers and event clients.

One of the most powerful aspects of cloud computing services is reduced capital cost meaning reduced barriers to entry into markets we previously may have thought were safe.

This easy access into established sectors is one of reasons the retail industry’s giants are now struggling as online competitors can setup cheaply and quickly while offering better prices and service.

Retail is only one of the more obvious sectors being changed by these technologies and as the decade continues we’re going to close to every industry be radically changed by low cost computers accessing the Internet.

As business owners and managers we need to look at our own processes and systems with an eye on how we can improve workflows and customer service within our organisations.

Those of us who manage to get these new technologies are going to reap the benefit of the next productivity wave, those who don’t are going to go the way that many uncompetitive and slow to respond industries did in the 1980s.

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Trusting online reviews

How do we spot fake reviews on sites like Tripadvisor, Yelp! and Eatability

Review sites where customers can post their experiences are changing consumer behaviour and bringing a new level of accountability to businesses, but how do we trust the comments on which appear online?

Travel review site Tripadvisor is a good example of how consumers are able to spread the word about their good and bad business experiences, much to the displeasure of the UK hotel industry and its media friends. To make things worse, many of those reviews are further spread by social media services like Twitter and Facebook.

While the travel industry complains about fake reviews from competitors and disaffected customers, the majority of fake reviews are from hoteliers themselves pumping up their own business. It’s always interesting how many gushing reviews are from anonymous posters with only one or two reviews to their name.

Should any of the threatened court cases actually make it before a judge, there may be a few hoteliers finding themselves in an uncomfortable position, a classic case of being careful about what you wish for.

That’s not to say Tripadvisor doesn’t have a problem, the comments in a recent Telegraph story about the service show they have the web 2.0 problem of lousy customer support which comes from a low cost, user generated business model.

A more serious point which is overlooked by most of the critics is that Tripadvisor, like most travel sites, is linked to certain booking services. If you attempt to use the site to book a property that isn’t aligned with the site, it may well falsely report there are “no rooms available”, which is deceptive and will almost certainly fall foul of competition laws in most countries.

For users of sites, it means we have to be careful with what the reviews and the sites themselves tell us. So what should we watch for?

Spotting dodgy reviews

The obvious thing is the planted review. The easiest way to spot this is by the number of reviews submitted by the commenter.

If a commenter only has one or two reviews then it’s almost certain they either have an axe to grind or they have been submitted by the establishment or it’s staff as most rational people don’t have the energy or time to build a comprehensive profile of reviews just to shaft one place.

Another useful tactic is to look at the reviews around it, do others disagree with that reviewer or are they consistent? Outlier bad reviews can indicate a plant, a grudge or simply a bad day in the kitchen.

Dealing with bad reviews

As we’ve pointed out before, consistent bad reviews on these sites usually indicate a structural problem in the business however if you suspect a fake or planted review, most services have a “flag as inappropriate” option or a dispute mechanism.

Be careful using these however as flagging a legitimate complaint as malicious or fake may antagonise the poster and give the poor review more publicity than you would like.

The social aspects of the web, such as review sites and social media services like Twitter and Facebook, are going to become more important over the next few years as internet users use them to help sift through the massive amount of information on the net.

All businesses, whether in hospitality or other industries, need to take these sites and the reviews on them seriously.

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A Capital Question

How do we raise money for a new business?

How do you raise funding for new venture? Business coach Lindy Asimus asked over the weekend. It’s a question that perplexes many people starting out a new enterprise or trying to grow an existing one.

The real question though is “how much capital do you need?” Being undercapitalised will often stunt a venture’s growth and is probably the reason why many otherwise excellent business ideas fail to achieve their potential.

How much money do you need?

While business plans are often disparaged, one of the great advantages of doing one is the budding entrepreneur gets an idea of the capital required along with the cash flow required to service any debts. Even if the business plan itself is filed away and never looked at again, understanding the upfront cash requirements can help avoid some nasty mistakes.

The other key factor is the business itself, if you’re buying a fast food franchise, setting up a store or fitting out a restaurant then there’s going to be some big upfront capital costs involved before you start trading but there is more to it than just the immediate cash needs.

What is the type of business?

A business’ capital needs are going to vary with the type of business and the objectives of the owners, not just in size but also in type. As business writer and educator Steve Blank says, there are six types of startups and for certain types an equity investment from say an angle investor or venture capital company will be more appropriate than a bank loan.

For small businesses, the type that Steve Blank describes as “work to feed the family” businesses, a bank loan that can be paid back out of cashflow is going to be the most obvious way to fund an enterprise while it would be rare a venture capital investor would even answer a phone call from such a business.

On the other hand, a family member or friend might be interested in taking equity in such a business, the old “families, friends and fools” is a time honoured way of setting up a venture.

Government grants

In these times of rampant corporate welfare for big banks and major corporations, it’s tempting to think the government may be able to help the small businessperson. Sadly most of the grants available are small sums for specific purposes like export programs or hiring trainees, they aren’t designed or intended to provide entrepreneurial capital.

Bootstrapping and “sweat capital”

Most businesses though are best served by “bootstrapping” and “sweat capital” for most, particularly in the service sectors, funding your business out of cashflow and the hard work of the founders is the way to grow a viable enterprise.

The term “sweat capital” refers to the founders working hard and capitalising their businesses from the sweat of their brows while  scrimping and saving every penny. Most founders of successful businesses have stories of spending years expending that “sweat capital” while living on cheap pizzas or packet noodles.

Bootstrapping, funding your business through sales, is the other great capital source. In many ways, this is the best form of capital in that it proves a business is viable and doesn’t involve signing over assets to banks or giving equity away to investment partners. Again a well thought out business plan quickly shows whether this is feasible.

So the question of capital is complex, but having enough is always the biggest struggle for those starting a business.

Of course it is possible to have too much capital and we might talk about that in another blog post.

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Online tools to turbocharge your business

Flying Solo’s Independents Day looked at how the web can help business productivity.

Flying Solo’s 2011 Independents Day conference featured our Online Tools to Turbocharge your Business.

We looked at some of the most popular cloud computing, social media, productivity and collaboration tools that can help a business make more money and grow faster.

Most importantly, it shows how business owners can free up some of their most valuable asset – their time.

Some of the tools we discussed include the popular social media platforms like Facebook, LinkedIn and how they can be used for customer service and market intelligence on top of being marketing services.

We also looked at how collaborative and cloud computing services can help small businesses work together and improve the ways consultants can work with big business clients. In many ways, collaborative tools like Google Apps, Zoho and Dropbox help build team and deliver projects more effectively.

The Online Tools to Turbocharge Your Business presentation itself is available on Slideshare and if you subscribe to our newsletter, you’ll receive a free copy of the accompanying Online Business Essentials e-book.

Online Tools to Turbocharge your Business

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