Thoughts on Building a Business

Just a quick Post to wish you all a very Merry Christmas and a Prosperous New Year. Remember:

"Everything will be Fine in '09"

I believe the obvious place to look at for spending your Marketing Dollars, is the Internet. But then I would, wouldn't I. Afterall, one of the Services we offer is Website Design. But hear me out.

When you look at all the Marketing Channels you can choose from, the Internet is easily the fastest growing. More and more people are now using the Internet to not only look, but to review, Products and Services they want. On top of that, in most cases it is also the cheapest form of advertising - particularly when you take into account it's reach. So why wouldn't you want to be part of that.

Up until about 2 years ago, I knew very little about the Internet. As a Business Advisor, I knew that it was a valid marketing strategy and told my clients that they should not neglect it. But over the last 2 years, I have learnt a great deal and am continually being surprised by the opportunities that can be found. But let's start with the basics.

A simple website is a great way to give additional information to a Prospect and to build credibility. The simplest way to view it is like an online brochure. The advantages though of the website over the brochure is that you never run out and in many cases, you can update it regularly to keep it current. So not only is your website more up to date, but it is cheaper in the long run then those Brochures.

From here, you can look at a more advanced website (latest technology). These take you beyond a simple online brochure website, to a website that allows you to interact with your visitors. This can be something as simple as a Newsletter Subscription Form, or something as involved as a Members Only Area. The advantages of these types of Websites, is that it becomes stickier. By this, we mean that potential customers will come back to your website more often. And research shows, that the more contact we have with a business, the more likely we will choose it over a competitor. Not only will they come back to your website, but you can also email them info.

Then we have the Online Shop. This enables you to sell products on the Internet. The main advantage here is that you can suddenly reach a lot bigger marketplace. If you where a traditional store, you would only be pulling customers from your surrounding area (how far out you go depends on the uniqueness of your product or service). With an Online Shop, you could potentially sell to the world. Better yet, you can automate most processes, so that not only can you sell every hour of every day, but you can minimise the number of staff that you need.

Lastly, you can start looking at the host of other opportunities on the Internet. Examples of this would be: Affiliate Programs, Social Media and Online Communities to name a few. However, these are areas for us to discuss at another time.

In this Blogpost, I wanted to expand further on my last about managing a Business during a Recession. I finished off with a few points that I thought you should look at within your business. One of those points was to maintain your marketing. So now I would like to talk more about why you should market.

So let's start with some facts for all you sceptics out there. Below is a graph (courtesy of mactech.com) of the results of a McGraw Hill research project during the 1981 - 1982 recession in the US. They analysed 600 companies from a wide range of industries, starting from 1980 to 1985, to see what they did with their marketing spend and how their sales responded. And here are the results:

As you can clearly see, the companies that maintained their marketing spend outperformed all others.

The reason for this (as I alluded to in the last post), is because their competitors cut their advertising and essentially freed up the airwaves. That is, the companies that continued advertising, had more chance of being noticed by their potential customers, because their message wasn't being drowned out with all their competitor advertising. The fact of the matter is that people still spend money on Products and Services they want and need. So if you fit this bill, the best thing you can do is continue marketing.

The biggest problem I find in this current economic climate, is that people are far to ready to blame the economy for something that is fundamentally wrong in their business. It's way to easy to blame the economy for your troubles, then to take a good look at your business and see what you may be doing wrong. As I mentioned in the previous paragraph; "people still spend money on Products and Services they want and need". So if your Sales are dropping, the first place to look is at what you sell. Is it what people want and are you delivering it in the way they want it.

Now I'm not suggesting that a Recession can't affect your Business. What I am suggesting, is that the Economy should be the last place you blame after you've exhausted all other avenues.

Lastly, many successful companies see Recessions as a great time to grow Market Share. While their competitors look at downsizing, they continue marketing and growing so that they come out the other side with a bigger market. So take my advice, and look at new ways to market and keep doing it.

Today I wanted to write a follow up to my last post on my frustration with the media and the "Financial Crisis". Specifically, I wanted to write about what I believe you should do if you are a Business Owner.

Firstly, as I stated in my last post, there are always people who make money during a recession. It is also true that there are always people who will lose money and become bankrupt during a recession. If you are like me, you should be excited by this news. Why I hear you ask?

Downturns in the economy are a good way to separate those businesses that are well run with solid foundations from those businesses that aren't. When the economy is booming, there is always a flurry of new businesses that make money in spite of themselves. These are the sorts of businesses that can (not always) give your industry a bad reputation and make it harder for you to make a sensible profit, by continually undercutting and providing poor service. As the economy slows, they are generally poorer placed to handle the lower revenues and go "belly up".

So even though the industry spend may drop, there are fewer businesses sharing in it. So in fact you can still turn over the same if not more. Furthermore, some of the businesses that do survive, start cutting all of their expenses (including Marketing) and go into their shell to try and weather the storm.

So what we need to do is make sure that we are the businesses that not only survive the slowing economy, but prosper in it. My suggestions would be:

• Focus on your fundamentals to ensure that they are solid (ie: cashflow forecasting and reporting)
• Review all your expenses and look for opportunities to lower them (as long as it doesn't impact on your products or services)
• Continue spending money on marketing (or even increase it). It's easier to be noticed when your competitors are all cutting back on advertising
• Keep an open mind and look for new opportunities
• Whatever you do, do not blame the economy. It is an easy cop out and may make you miss what the real underlying problem is
• And lastly, choose not to partake in the "Recession", but focus on achieving your goals.

I've recently taken to changing Channels or turning off the Radio and TV, whenever I hear the words "Financial Crisis". Talk about a Media beat up. Last month I had the pleasure of hearing Doug McTaggert talk about the Australian and World economies. If you haven't heard of Doug, he is one of Australia's top Economists and is also the CEO of the Queensland Investment Corporation. During his talk, he made the comment that all of the current financial concerns were purely in the Financial Markets and the real Markets were going strong.

That is, the Stockmarket is suffering due to the problems with the Banks and various Funds, but the general economy (where we buy and sell goods and services) is still going strong. The problem is, with the media having a field day with the "Financial Crisis", the everyday person is starting to think that there is a problem and starting to change their behaviours. A good example of this, is a conversation I had the other day with someone that told me that they needed to stop spending so much and focus on paying off their debts. They were concerned with what they were hearing on TV etc. When I asked them if they believed that their job was at risk, they unequivocally stated that they felt their job was perfectly safe. So I then asked them what was different now, then 6 months ago (other then what the media was saying). To which they stated, "nothing". So I ask you, why should someone like that stop spending and focussing on getting debt free? Assuming that they are not already in high, unsustainable levels of debt.

The problem as I see it, is that the Media is creating a self fulfilling prophecy. By this I mean that the average person who sees the doom and gloom on TV, reacts and stops spending and focussing on saving. Even though their personal circumstances haven't changed and don't look like changing in the future. As they stop spending, Businesses that they usually spend their money at, start to experience a drop in revenue. As this revenue drops, they are forced to cut expenses (like jobs). The media then reports on these job cuts and creat even more fear amongst the Average person, causing them to stop spending even more. Before you know it, we have a snowball effect and the real economy does go into meltdown. Then we have exactly what the media is talking about now - their prophecy has been fulfilled.

So I recommend that you do what I'm doing. Stop listening on the Doom and Gloom and continue growing your business. Remember, in every Recession, there has always been someone who has made a tonne of money. So let's focus on being that person.