Category: business advice

Why paying for Twitter followers is a dumb idea

I’ve just read the Smart Company article on uSocial’s Social Media marketing services. I find the idea of paying for followers in Twitter, or friends in Facebook or contacts in LinkedIn, bizarre.

What uSocial’s prospective clients don’t understand is social media isn’t a game to collect the most fans, it’s a way of building communities around you and your brand.

It’s far better to have twenty passsionate fans than two thousand Twitter followers who just ignore you anyway.

To build a community you need people who care about what you do, your product or your brand. If you have to pay to get the appearance of having people who care that shows you don’t have anything worth caring about.

You can’t buy friends online or offline, so save your money and focus on why you’re different and why people should love what you do.

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Why networking is essential

business-card-2I met a business owner last week who complained other business at his local chamber of commerce meetings spent most of their exchanging business cards.

He couldn’t see this was the point of a local chamber of commerce; to meet and get to know the other businesses in your community.

Community is what business is about. Every business, big and small, is part of a community. Put those communities together and we have a society.

Running a business is a social endeavour above everything else and networking is one a required skill. Some of us do it well while many of us do it poorly.

But you still have to do it.

If you have a problem networking, or you don’t like exchanging business cards, then you need to hire or partner with someone who does.

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A failure of trust and communication

Webcentral’s much publicised e-mail failure left thousands of small business owners without email last week.

The most breathtaking aspect of this saga is the total lack of communication by WebCentral. They failed on every level to keep their customers informed.

A simple, short message stating there was an outage on the front page of their website and on their support lines would have saved many of their customers hours of troubleshoting and stress.

The amazing thing is after this embarrassment, WebCentral still launched their new online backup service.

The success of software as a service depends upon trust and Webcentral has shown they cannot be trusted with their client’s critical systems.

The joke is Webcentral’s parent company, Melbourne IT, uses the slogan “trusted for online success”.  Webcentral has shown they cannot be trusted.

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Big hairy audacious goals

goalpostsWhile reading the details of the Federal Government’s broadband plan I was reminded of Jim Collins’ BHAGs, or Big Hairy Audacious Goals.

The Federal government’s plan is a BHAG and the beauty of this particular one is that it will spawn many other BHAGs.

Has your business got a big hairy audacious goal? If so, what are you going to do about achieving it?

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Lipstick myths

Is the lipstick theory of recession spending really true?

Is the lipstick theory really true? I’ve been hearing a lot about it lately and I’m not so sure.

The “lipstick theory” is people will spend money on small, modest priced luxuries in a downturn to make up for not being able to afford big luxuries.

It’s been used to justify everything from increased fast food sales to Belgain chocolates to expensive beer to, well, lipstick.

I recently heard it used by a software developer as the rationale for investing in a software as a service product.

But is it true?

The Economist isn’t so sure and shows there’s little correlation between past recessions and lipstick sales.

My suspicion is if it was true in the twenties and thirties, it was more because better manufacturing and distribution techniques meant a better, cheaper product could get to the market.

Even if the lipstick theory is true, it’s dangerous to assume your product is the same.

For a start, some lipsticks will do better than others, partly because of marketing and partly because their price points are smarter.

Should your “lipstick” product be successful, it might not make much money for you anyway. In the last recession we saw McDonalds and other fast food chains introduce $1 and $2 meals, we’re seeing a similar trend at the moment with sub $500 computers.

These “recesssion busters” may keep your market share up, but they aren’t going to be particularly profitable. Indeed, for the computer manufacturers, the sub $500 laptops may well be cannibalising what’s left of their profitable product lines.

The reality is a lot of the products that are claiming the “lipstick theory” will save them are really doomed. The vast majority of shops selling expensive chocolate, lingerie, beer and other pricey but non essential products are simply marking time until the effects of the popped bubble reach them.

It’s best to base your business plans on sound evidence rather than blind hope in an idea that may or may not be true and may or may not apply to your products.

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Dangerous Game

Associated Press have warned they will start taking action against news aggregrators like Google. Rupert Murdoch made similar noises last week.

As Fred Wilson has pointed out, the problem for AP and News is the web is now the newstand and taking publications off the shelves is not good business sense.

We see that with the Australian Financial Review. Its position as an Australian journal of record has been diminished by Fairfax’s incompetent obsession with protecting content.

As result, other channels such as The Australian, Business Spectator and blogs have stepped into the vaccuum and eroded the AFR’s online authority.

Following the RIAA path and suing Google, the Huffington Post and any blog that dares link to their sites will backfire on the news industry just as it did on the record industry.

In many ways newspapers are even more vulnerable as journalists employed by organisations like News and AP are quick to rip stories off from blogs, web forums or MySpace and Facebook pages with little regard for permission or attribution.

I suspect it’s one legal quagmire Associated Press or Rupert Murdoch might rue becoming bogged down in at the very time their business models are challenged by both economic and technological change.

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Motivation

I was listening to a speaker yesterday describing the difference between public sector and private employees.

An interesting point was that the motivations are different; public sector staff are more motivated by a work/life balance while private sector workers are more motivated by money.

This started me thinking about recent blogs I’ve read by Valerie Khoo and Seth Godin regarding the motivation of Wall Street bankers and entreprenuers.

The question of money motivating people is vexed and I suspect overstated. As Seth says in his column, once you’ve an income over a million or so dollars money really isn’t that important; it’s all about status.

A point made by yesterday’s speaker was when he managed scientists he found most researches care about about peer approval. Money matters far less to them than appearing at conferences, presenting papers and being recognised for their hard work and discoveries.

In a strange way, that’s the real explanation for the financial industry’s massive salaries and bonus. The dollar amount is simply a yardstick to measure one’s status. The bigger the yacht, house and birthday party you can afford, the more recognition you have among your peers.

Which brings me to entreprenuers. Unlike Valerie, I don’t think business builders are interested soley in amassing banker like piles of cash. The cash is nice, but they are more interested in doing great things with their businesses or invention.

Cash is a useful measure and it’s nice to have some spare, but that’s as far as it goes. Far more important for most people is the recognition of their peers, security of their families and the satisfaction of a job well done.

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